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Unethical Practices Alive and Well in Accounting Profession, Report Finds

Dec 22nd 2015
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Know any sneaks in the office? Someone creating misleading accounts for clients or a manager pressuring an accountant to look the other way about an adjustment? How about sleeping with a client?

Yes? Then you've got plenty of company.

A recent report, Ethics: What is Your Moral Compass? from London-based, indicates that the accounting profession isn't as clean as it should be.

Now pick yourself up off the floor and keep reading.

Researchers asked more than 1,700 accountants worldwide – from newly licensed to auditors, managers, controllers, CFOs, and partners – about ethical standards in their firms: Has someone caved to commercial pressures faced by their clients? Are whistleblowers protected? Does anyone sleep with clients or colleagues? How are suspicions of unethical activity handled?

“Despite the fallout from a spate of high-profile corporate scandals, it would appear that the accountancy profession is still not squeaky clean with all its working practices,” the report states.

Here's a sampling of the report's findings:

  • About half (49 percent) of respondents are aware of a manager or partner pressuring a colleague to ignore an adjustment that should have been made to accounts.
  • Almost half (43 percent) know of a senior staffer who deliberately chose a commercial result for a client or business even though that could be unethical.
  • Roughly a quarter (20 percent) of respondents say 10 to 20 percent of colleagues have helped clients create misleading accounts.
  • Another 10 percent say more than a quarter of the profession is unethical.
  • Five percent say half of the profession lacks integrity when handling client accounts.
  • More than half (55 percent) said offenders who deliberately sign off on misleading accounts should be banned from practicing for life.

Though “many in the profession are only too aware that practices at work are not always pointing to the right side of the moral compass, sadly it appears they do not feel comfortable being a whistleblower – defined as ‘one who exposes any kind of information or activity that is deemed illegal, dishonest, or not correct within an organization that is either private or public,'” the report states.

Indeed, two-thirds of respondents said they would not be protected in reporting a colleague's wrongdoing, and 57 percent said they'd be targeted or fired if they reported a client's wrongdoing.

As for hanky-panky, most (75 percent) respondents said they know of romantic relationships between colleagues, while 13 percent said their firm bans such relationships. More than half (54 percent) wouldn't keep the affair hushed up either, saying it could affect the work environment and productivity.

About two-thirds of respondents said an affair between a client and client-facing employee is unacceptable, but more than a third say it's OK if the employee isn't directly on the client's team.

So what's the upshot?

According to the report, “there is a school of thought that believes accountants tend to focus on the technical issues and lack ethical sensitivity to recognize ethical dilemmas involved with their work, which could ultimately lead to making wrong decisions. Accountants could be trained to identify the moral dimension of seemingly technical issues.”

Firms should craft ethics policies so everyone is aware of when they may be crossing the line, the penalties, and the importance of disclosure, the report states.

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Ed Kless
By ed.kless
Dec 23rd 2015 12:41 EST

And let me add this - How many have ever not told the truth on their timesheets by either a) putting down too many hours to increase the price or make themselves look good to management or b) putting down too few hours so as not to look bad to management?

If my ad hoc research is any indication this number is near 100 percent.

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