What professional bodies do to minimise misconduct and crime
30 March 2021
What professional bodies do to minimise misconduct and crime
Authored by: Shahied Daniels, Chief Executive at the South African Institute of Professional Accountants (SAIPA)
The primary responsibility of every accountant is to serve the public interest first. But, as asked by the Roman poet Juvenal, “Who will guard the guards themselves?” Who ensures accountants remain accountable?
This is the function of professional accountancy organisations (PAOs), like the South African Institute of Professional Accountants (SAIPA). And it is the reason every accountant should be a member of such an association.
Obligations of the PAO
The history of accountancy can be traced back more than 7,000 years to Mesopotamia. It started with humble occupations, such as shepherds, who were required to return the same number of animals put in their care and give account of any gains or losses.
As business became more complex, the demand for accountability and faithful representation grew. The modern PAO exists not only to serve its members’ needs but to strengthen these two essential pillars in the public interest as well.
They are bound by a self-regulatory mandate to ensure their affiliates comply not just with standards and regulations but legislation as well. So PAOs are likewise accountable to the public to minimise the commission of financial crimes by their members.
All PAOs fall under the oversight of one or other global standards-setting body. In SAIPA’s case, this is the International Federation of Accountants (IFAC). As an IFAC member, we are obliged to conform to its operating model for PAOs, which includes a strict disciplinary process.
In fact, SAIPA has four distinct practices to ensure its members adhere to its high standards for professional excellence and ethical conduct.
First, everyone who applies for SAIPA membership must submit to a Professional Evaluation (PE) that tests both their technical competence and ethical appreciation. This ensures each candidate meets the minimum standard of competency required to deliver work at a level of proficiency demanded by society. Anyone unable to pass the PE or meet the Recognition of Prior Learning (RPL) requirements will not be admitted as a member of the Institute.
Second, we have an institutional Code of Conduct. This is modelled around the International Code of Ethics for Accountants, itself published by the International Ethics Standards Board for Accountants (IESBA). Every year, our members must make a pledge to remind them that their adherence to this Code is obligatory. The pledge can be compared to the Hippocratic Oath taken by doctors, with members solemnly swearing to live by its guiding principles. That ritual is followed by a one-hour session that reviews their professional obligations and the consequences of violating them.
Third, SAIPA’s investigative and disciplinary process is of the highest order. It employs legal expertise to address claims of wrongdoing while handling cases in a fair and equitable manner. An accountant found guilty of misconduct will be disciplined according to the severity of their transgression. This can range from having their membership revoked to a simple fine or warning.
Fourth, our continuing professional development (CPD) programmes demand that our members pursue lifelong learning to maintain their competence. SAIPA has made ethics a compulsory CPD topic to ensure this quality is deeply embedded within our community. In addition, CPD capacitates members to remain relevant in a changing environment marked by 4IR and increasing regulation of the profession. Finally, CPD ensures members carry out their duties appropriately in client, employment, and other relationships.
Although implementation varies, other PAOs typically follow a similar model.
There are several mechanisms available to the public to ensure they are dealing with a reputable accountant.
The first is to only engage practitioners who are affiliated with a recognised PAO and confirm that they are in good standing with that body. Unregulated accountants present a real threat because they are not answerable to a regulator, are not bound to a code of ethics, and are not forced to adhere to recognised accounting standards. They are also legally restricted from providing certain services.
Official designations, like SAIPA’s Professional Accountant (SA), are registered under the National Qualifications Framework (NQF). So PAOs have the responsibility of informing the South African Qualifications Authority (SAQA) if a member’s title has been revoked. SAQA will then remove that person from its own database for that qualification. Anyone can check with SAQA that their accountant holds the title they say they do.
Newer processes, like SAIPA’s e-certificate system, employ online technologies to make validating an accountant’s good standing much easier. One need only click on the practitioner’s email badge or scan its accompanying QR code to be taken to a tamper-proof digital membership certificate online. In the case of a banished accountant, the certificate will clearly state that the holder is no longer linked with that body.
As a last resort, the name of a member found guilty of repeated misconduct, to the degree that they are expelled from the Institute, will be published. Further, their expulsion from one professional body will be binding across all PAOs. Concerned parties can therefore contact any of these associations to confirm that their accountant is not listed as a banned offender.
These steps afford the public a reasonable level of protection against accountants deemed not worthy to practice.
With education and training, PAOs facilitate professional and ethical conduct. By their investigative and disciplinary processes, they confront individual cases of apparent malpractice. Through cooperative efforts, they deny membership to serious offenders, severely hampering their ability to practice. And they ensure that the means exist to identify and avoid expelled members.
However, these initiatives can be significantly amplified by the participation of the person in the street. Members of the public are often the first to come into contact with financial crimes, questionable practices and professional misconduct.
It is therefore imperative that organisations have reliable whistleblowing processes in place. This provides the security people need to report wrongdoing without the fear of retaliation. SAIPA offers an independent whistleblowing system as part of its investigative function. It can also receive tips indirectly through its network of industry partners.
Public assistance can have a massive impact on identifying perpetrators and ensuring they face justice.
While PAOs are not legally empowered to punish financial crimes, they are duty-bound to promote integrity in their ranks and minimise wrongdoing. They also have at their disposal considerable power over the ability of wayward members to continue practising uninhibited.
At the same time, members of the public need to support their efforts. Ultimately, accountancy belongs to everyone and it is everyone’s responsibility to restore it to a position of trust within our global society.
By passing blame we will achieve nothing. By working together, we will make a measurable and lasting difference.