The new international ethics code is already reshaping the accounting industry, and professionals across the market are scrambling to brush up on the facts to ensure they’re up to date on the latest rules and regulations. The often-times dense nature of the international ethics code has stymied the efforts of many ace accountants, however, and a great deal of them are struggling to figure out which essential tidbits they need to know about if they want to maintain their professional reputations.
Here are 5 key takeaways from the new international ethics code that you can’t afford to miss, and how they’ll help shape the future of the field of accounting.
1. A new focus on professional judgement
In the past, accountants may have gotten away will ill-founded judgements by claiming they were merely making a professional decision based on the facts at hand. These days, however, accountants need to do more to demonstrate that they truly understood the relevant facts and circumstances before making a decision if they want to avoid violating the new code. The restructured code offers a great deal of advice for struggling accountants who may not know how to make a decision in an ethically tricky situation, so it’s worth revisiting if you’re dealing with a particularly perplex case.
2. A greater emphasis on public interest
For far too long, many accounting firms and individual accountants have focused solely on their own interest, with little to no regard about how the public may be impacted by their actions. Scandalous breaches of the public trust have always led to additional regulatory and ethical sanctions on accountants, but the new international ethics code makes it clear that accountants who fail to frequently take in mind the interest of the public will be totally shunned.
Learn how to be an accountant in the public interest, and you should avoid the hassle of having to deal with accusations that you only care about your business’ bottom line.
3. Public practice isn’t exempt from the rules
Accountants who are engaged in business may believe that old ways of thinking ensure they’re exempt from some standard ethical considerations, but it’s a matter of fact that the new international ethics code places a greater emphasis on the fact that public practicing accountants are accountable to the rules, too. Differing ethics codes, like the AICPA and the IFAC, can still confound some accountants who may have a history of only working on the public or only in the private sectors, so you should brush up on those, too. If you don’t know how to compare ethics codes, you’ll never be able to spot changes in the future by yourself.
4. You’ll have to deal with a longer cooling off period
Accountants who are used to the old rules may soon find themselves griping about the cooling off period, which they new international ethics code changes rather drastically. Whereas previous rules assured accountants that they would only need to respect a 2-year cooling off period after a mandatory rotation of an audit engagement, especially for a merchant cash advance, the new standards necessitate that a 5-year cooling off period for engagement partners to be respected, instead.
Engagement-quality control reviewers will need to respect a 3-year cooling off period now, too, whereas other key auditing partners will still be sticking with the 2-year period. New changes could come in future drafts to the international ethics code, of course, but for now accounting professionals shouldn’t assume they can flout cooling off periods without paying the price.
5. Professional skepticism is highlighted
Perhaps more than anything else, the new changes to the international ethics code seem to highlight professional skepticism. Accountants are reminded that they can never be too cautious in their business dealings, as the auditing practice is often fraught with fraud and easy-to-avoid mistakes. Those accountants who are totally up to date on the latest and best practices for ensuring professional skepticism is alive and well in their workspaces likely won’t need to be reminded, but others should understand that the new rules take it very seriously.
The international ethics code has flexed and changed before, and it’s undoubtedly assured to do so again in the future. Accountants should never allow themselves to forget that they can’t take a single day off when it comes to beefing up on their ethical standards, as a failure to closely toe the line could result in serious economic ramifications or even legal punishments. While the ethics code is broadly respected across the industry by reputable accountants, it’s still too often flouted by those will little regard for playing by the rules.
Don’t be intimated by the new international ethics regime; with the newfound changes to the international code, it’s easier and more important than ever before for accountants to stay up to date on the ethical regulations they should be keeping in mind.