A recording of the 11 May 2023 event, “Championing Ethical Leadership Amid Competing Pressures”, is now available here. Run by The Economist Impact in association with the Global Accounting Alliance, of which Chartered Accountants Ireland is a member, the event included contributions from: Emily O’Reilly, European Ombudsman, European Union Audrey Morin, Group Compliance Director, Schneider Electric Amanda Belcher, Senior Vice President, Edelman Global Advisory Elia Yi Armstrong, Director, Ethics Office, United Nations, and Barry Melancon, Chair, Global Accounting Alliance Some key takeaways include: For organisations that want to be successful for all stakeholders, doing the right thing means having integrity, being aware of what must be done (in accordance with regulations, etc.) and what should be done, and balancing differing stakeholder expectations. Awareness of ethical issues is increasing, and while the ability to do the right thing is not generation-specific, some participants suggested that the younger generations are more active in questioning behaviour and decisions. Developing a code of ethics and ensuring it is embedded across the organisation and integrated into decision-making is essential for building trust. Some contributors provided insights on how their organisations have developed codes, one referring to it as their “Trust Charter”. Insights from global standard-setters and regulators in driving ethical behaviours and how private sector entities can interact to further progress initiatives in this area. The panel provided good advice for global organisations dealing with competing, or inconsistent, regulatory frameworks to ‘think through’ their fundamental values and allow these to guide decision-making. A discussion on the degree to which Milton Friedman’s statement “the business of business is business” resonates today. While the principles of business remain similar, the purpose and objectives of business have evolved. Insights on how to increase the effectiveness of organisational ethics and compliance programmes including: ethics training (bespoke to the organisation); confidential ethics helplines; robust protected disclosure policies and procedures; supply chain and partnership controls; and embedding an organisational culture of psychological safety that allows for frank discussion without risk of repercussion. A note of caution was shared about the risks of highlighting an organisation’s ethics strategy in marketing campaigns before properly embedding it within the culture. Watch the event in full here.

The Consultative Committee of Accountancy Bodies (CCAB), which includes Chartered Accountants Ireland, launched new resources on ethics and a series of webcast interviews with professionals with diverse business experience at a fully booked webinar on Thursday 15 June 2023. The webinar, “Resilience Under Pressure”, presented highlights from a CCAB survey which revealed significant pressures to act unethically experienced by professional accountants. It also included a panel discussion, moderated by Iain Lowson, Chair of the CCAB Ethics Group, that explored a range of issues raised by the audience with Professor Pat Barker, Sam Ennis, Head of Tax in financial services, Sue Allan, CFO at Willerby Group, Carol Colley, deputy Chief Executive and City Treasurer at Manchester City Council, and Ann Buttery, Head of Ethics, Policy Leadership at ICAS, who also presented guidance for professional accountants on speaking-up. Professor Pat Barker also contributed to the webcast interview series with Barry Doyle, Deputy President Chartered Accountants Ireland, Níall Fitzgerald, Head of Ethics and Governance at Chartered Accountants Ireland, Dominic Hall, Group Head of Ethical Business Conduct at BAE Systems Plc, Malcolm Bacchus, Interim Finance Director, and Professor Chris Cowton, Associate Director at the Institute of Business Ethics. Examples of the issues discussed, including questions raised by the audience, include: The most common sources of pressure to act unethically for professional accountants; The impact of such pressures on professional and personal life; The most common unethical behaviours experienced by professional accountants; The role of regulation and personal responsibilities in driving ethical behaviours; Advice on addressing common issues such as toxic leaders, sharp practices or managing ethical conflicts; Making ethical decisions and promoting an ethical culture; The ethical challenges posed by technology, including artificial intelligence, and the ethics of sustainability. Watch a recording of the webinar and access other resources on the CCAB Website    

Níall Fitzgerald, Head of Ethics and Governance, shares his insights from the 11th Organisation for Economic Co-operation and Development (OECD) Anti-Corruption and Integrity Forum (the ‘Forum’), which was held in Paris on 24–25 May 2023. The theme of the forum was “Action to impact, working together to strengthen integrity and fight corruption” and the issues addressed impact a range of policy areas and disciplines practised by professional accountants, including governance, responsible business conduct, taxation, investor and public confidence, reporting, risk management and compliance, and many others. Discussions took place on the stage and on the fringes amongst delegates and speakers where anti-corruption and integrity strategies, measures and implementation experiences across public and private sectors were openly shared.  Some of my key takeaways from the forum include: The evolving anti-corruption and integrity challenges: The opening remarks highlighted the evolving anti-corruption and integrity challenges of our time, including geopolitical instability and threats to democracy such as undue foreign influence and kleptocracy, the increasing polarisation of society and erosion of public trust because of disinformation, leadership failures and division, and the disconnect between anti-corruption commitments made and the measures that get implemented. Until recently the dialogue around corruption focused mainly on bribery, but now we face many forms of it from grand corruption on a global scale being executed in a strategic and co-ordinated way to other more common and smaller opportunistic frauds. The accountancy profession: Professional accountants play a significant role in detecting and preventing corruption, creating robust risk-based compliance systems, and improving the relationship between transparency and integrity through reporting and assurance. Some contributors cautioned that such actions can quickly become ineffective if not kept up to date with the fast-evolving ways and means of committing fraud. There were also some concerns that outdated systems or those with ineffective oversight can become enablers by allowing corruption to flourish undetected beneath a veneer of compliance. However, reporting and transparency are seen as key to promoting integrity. A memorable quote in this regard was “To achieve trust we need to reveal truth and transparency”! Technology for good, technology for bad: Many insights were shared on how technology is used to combat fraud and corruption, including what tools, if any, could be used and in what circumstances to use them. Digitalisation, artificial intelligence and data analytics were described as enablers and detractors in the detection and prevention of corruption and safeguarding the integrity of data. There was a lot of discussion about blockchain and tools that perform data analytics, text scraping, risk and data mining, network analysis and automated functions (e.g. bots). Fundamentally, it is not the tool that may be good or bad, rather how it is used, the integrity of its coding and how the output is interpreted. It is not good practice to invest in sophisticated tools without addressing the basic need of ensuring the integrity of the underlying data (e.g. that the data is relevant, reliable, organised and complete) or consider how the results will be interpreted. Contributors shared experiences that warned of the importance of testing for false positives generated by data analytic tools, the need to accurately define the problem to be addressed before deciding what, if any, tool is required, to focus on the weaknesses as well as the strengths during the selection of  tools during the procurement process (you don’t want to find out too late what it can’t do), and to perform a rigorous risk assessment in advance of implementing a tool. When it comes to assessing the risks and benefits of employing technology, the Devil is not just in the detail, but also in the coding!  Culture matters most: Corruption is essentially driven by human behaviour but enabled by many tools, schemes and systems. Humans are considered to have achieved many great feats, including finding water on Mars, and developing artificial intelligence, but we have still not managed to eradicate corruption. Industry leaders and regulators discussed their responses to combat corruption, including examples of measures taken to create a culture of integrity. Some key highlights from discussions around culture include: If organisations want to be trusted, then they must make integrity part of the strategy The right tone from the top is required, including leaders who are open and feel safe talking about corruption; acknowledging the complexities and that addressing corruption requires a multifaceted approach across the organisation Embedding responsibility for an organisation’s anti-corruption strategy across all areas of the business, ensuring it is not seen solely as a compliance function’s responsibility Include anti-corruption and integrity as factors to be considered in decision-making across the organisation, whether significant investment decisions, procurement choices or making sales A multi-stakeholder approach is essential for any integrity strategy. The main product of relationship building is trust and starting a dialogue is the early stages of developing this. Stronger collaboration: The importance of collaboration between the public and private sectors is essential to effectively combat corruption. This collaboration is evident at many levels for professional accountants, for example compliance with anti-money laundering and terrorist financing requirements. Discussions also emphasised how collaboration within both these sectors is as important for combatting corruption as for promoting integrity. This can include greater co-operation between government agencies in the public sector and competitors working together in the private sector to develop common best practice or deliver initiatives that tackle industry- or sector-specific corruption and promote greater integrity and trust.  Prevention is better than cure: Delegates heard some harrowing accounts of the human, societal and financial costs of corruption. The stakes are also considerably higher for organisations and the risks of corruption are strategic, operational and reputational. The governance required needs to be proportionate and relevant to the needs and resource flows of the organisation in the context of financial, social and human capital. Risk assessment is an important mechanism for an anti-corruption strategy, and there was an emphasis on reviewing and drawing conclusions from observing what people do, not just what they report. Many forum participants were forthcoming, sharing lessons learned from previous crises, including the COVID-19 pandemic and the 2008 financial crash. The case was convincing that prevention is better, and cheaper, than cure. Recovering, rebuilding and reforming with integrity in Ukraine: Government representatives of Ukraine, Deputy Speaker Oleksandr Korniyenko and Deputy Minister Serhiy Derkach, discussed plans to rebuild their country and how they are going to do so by driving corruption out of the system. They see this as essential for earning the trusty of a traumatised nation and ensuring that Ukraine is built back better than before is the least the people deserve. There was an open invitation for compliance experts and advisors to help Ukraine in this endeavour by providing anti-bribery and corruption training and assisting with the development of robust compliance systems. In addition, I spoke with several industry leaders and experts at the forum and members can expect to hear more from us on other topical issues such as beneficial ownership transparency, combatting corruption in the supply chain, support for the proposal to recognise “zero corruption” as the 18th sustainable development goal, and, in the sphere of sustainability reporting, the current practices and developments in anti-corruption reporting. These additional resources will be made available on the Chartered Accountants Ireland Ethics Resource Centre and/or the Governance Resource Centre in due course.  Members can access further details and recordings of some of the sessions from the forum on the OECD website.   A useful list of resources referred to at the forum include: OECD Public Integrity Indicators: A benchmark government measure to combat corruption and promote integrity, comparing government commitments to actions. Ireland and the United Kingdom are included in the data. Transparency International Corruption Perceptions Index (CPI): A scoring based on the results of a series of corruption surveys and assessments measuring the perceived level of public sector corruption across approximately 180 countries. OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions: Establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective. It is the first and only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction. Ireland and the United Kingdom are signatory countries. Understanding Anti-Corruption Reporting: Published by the International Federation of Accountants (IFAC) and Transparency International UK, this report reviews anti-corruption corporate reporting by the largest publicly traded companies and highlights the urgent need for enhanced quality, reliability and comparability in this crucial area. It also raises a series of policy questions around jurisdictional differences, comparability, governance and the completeness and reliability of the information provided.  Stepping up the Game, Digital Technologies for the Promotion of the Fight Against Corruption – a Business Perspective: This OECD report provides an overview of various digital tools and how they are applied in practice and examples of how companies are deploying digital technology in corporate compliance and anti-corruption efforts. The Blue Dot Network: A voluntary certification scheme based on quality infrastructure standards as set out in the G20 Principles for Quality Infrastructure Investment, the G7 Charlevoix Commitment on Innovative Financing for Development, the Equator Principles and guidelines such as the OECD Guidelines for Multinational Enterprises.                                   

On 18 May 2023, the Institute responded to the International Ethics Standards Board (IESBA) invitation for comments on their “Proposed Revisions to the Code Addressing Tax Planning and Related Services”. The proposals to amend the Code of Ethics for Professional Accountants are based on recommendations following extensive stakeholder engagement and review by the IESBA since 2019. The review was in response to increased public attention on the topic of tax avoidance, revelations arising from the “Paradise Papers” and the “Pandora Papers”, and global focus on the legality of tax mitigation schemes. The proposals define ‘Tax Planning and Related Activities’ as “a broad range of services designed to assist a client, whether an individual or an entity, in structuring the client’s affairs in a tax-efficient manner”. The IESBA builds upon the principles-based framework of the Code of Ethics and outlines the responsibilities of all professional accountants in respect of these services. Further requirements and guidance are included for Professional Accountants in Public Practice (PAPPs) and Professional Accountants in Business (PAIBs). The key IESBA proposals include: Outlining professional accountants’ public interest role in relation to tax planning services; Requirements in respect of any anti-avoidance legislation court or tax authority rulings, and addressing non-compliance with laws and regulations; Requirements for establishing a credible basis for tax planning advice and carrying out a ‘stand back test’ that considers “the reputational, commercial and wider economic consequences that could arise from the way stakeholders might view” the tax planning arrangement; Examples of ethical threats that can arise from providing tax planning advice, including potential steps professional accountants can take to either eliminate or safeguard against these; Requirements for communicating with clients or employers, including steps to take in the event of disagreement in respect of tax planning; and Requirements in relation to obtaining second opinions, referring or recommending third-party tax planning solutions or advisors. Some of the key points in the Institute’s response to the IESBA proposals focused on: The current size of the Code of Ethics and the opportunity to embed some of the proposals into existing requirements of the Code, including the Conceptual Framework; Concerns regarding the broad definition of ’tax planning’ and the necessity to include ‘related services’, which are typically more closely associated with routine compliance, such as the filing of tax returns and representing clients on compliance issues using tax authorities’ dispute-resolution mechanisms; Requesting further guidance on ‘credible basis’ and ‘stand-back’ tests, and positioning of these as part of the Conceptual Framework alongside other professional judgement requirements. Highlighting the important role of professional accountants in reducing the risk of unexpected tax costs for all taxpayers and ensuring higher compliance rates and collection of tax by assisting clients and employing organisations navigate complex local and global tax requirements; To consider the primacy and responsibility of local tax authorities in the enforcement of tax compliance, the policing of appropriate tax planning and their independent mechanisms to be first arbitrator in making a ruling rather than a court of law or a professional body; Highlighting the issue of competitiveness in the accountancy profession, the capacity of the profession to police and enforce new standards, and the need for a level playing field that ensures tax advisors who are not professional accountants are also accountable to high standards of ethical behaviour; and Providing suggestions in areas such as identifying threats and implementing adequate safeguards, the consideration of multiple uncertainties, and further considerations of the context and role of Professional Accountants in Business in respect of tax planning. The Chartered Accountants Ireland response to the IESBA is available here. The IESBA proposals are available on their website here. Níall Fitzgerald, Head of Ethics and Governance, Chartered Accountants Ireland  

The International Ethics Standards Board for Accountants (IESBA) has released final revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) to further increase the Code’s robustness and expand its relevance in a world being fundamentally reshaped by rapid technological advancements and accelerating digitalization. These technology-related revisions will guide the ethical mindset and behavior of professional accountants in both business and public practice as they take advantage of the opportunities created by technology and adapt to new technology. Developed to remain relevant and applicable in the ever-evolving landscape of technology transformation, the revisions apply to the use of any technology, including to the extent possible, future technologies.  The revisions, which were informed by extensive fact-finding and stakeholder outreach: Strengthen the Code in guiding the mindset and behavior of professional accountants when they use technology. Provide enhanced guidance fit for the digital age in relation to the fundamental principles of confidentiality, and professional competence and due care, as well as in dealing with circumstances of complexity. Strengthen and clarify the International Independence Standards (IIS) by addressing the circumstances in which firms and network firms may or may not provide a technology-related non-assurance service to an audit or assurance client. The revisions to the IIS will be effective for audits and reviews of financial statements for periods beginning on or after December 15, 2024. The other revisions to the ethics provisions of the Code will be effective as of December 15, 2024. Early adoption is permitted.

Conal Kennedy, Head of Practice Consulting, writes: In Practice Consulting, we often take calls and emails from members about difficulties and challenges that arise in practice. One of the most common queries surrounds the rights and obligations of the various parties when there is a change of professional adviser. When a client decides to move from one accounting firm to another, both parties should cooperate to make the transition as smooth as possible. However, complications and difficulties can arise when one of the parties has a grievance. Sometimes, the relationship between the firm and the client may have lasted many years, and its ending can come as an unpleasant surprise to the existing accountant, the worse so if they have not been fully paid for all work done. On the other hand, the new accountant may be very pleased to gain a new client, and may be surprised in their turn by difficulties posed by the incumbent. In some rare instances, incoming accountants do not do all that is required of them under the Code of Ethics, particularly around professional enquiries. In Practice Consulting, we receive communications from members on both sides of the fence. We provide information and guidance to the member, bearing in mind of course that there are two sides to every issue. Let’s look at a typical scenario and discuss some of the issues and possible misconceptions, with the details anonymised but addressing problems that are common enough. As always, we need to concentrate on the key matters in a generalised way, so if you are faced with this scenario yourself, please go to the Sections 320 of the Code of Ethics for the full requirements and guidance. In our example, a firm has made contact with Practice Consulting, explaining that they have recently taken on a new client. The client is a limited company, who needs a non-audit accounts preparation assignment and tax compliance work carried out. The firm has sent the professional enquiry letter to the previous accountant. However, the outgoing accountant has written back to the firm and the client to say that they have not been paid for a certain piece of work, and are withholding clearance and keeping possession of all records until they have been paid in full. What are the rights and obligations of the parties? In the first instance, there is no such thing as “professional clearance” as such. No accounting firm can prevent another accounting firm from working for a client, and therefore no firm can give or withhold clearance. The incoming accountant is obliged to carry out professional enquiries to determine if there is any professional reason why they should not take up the appointment. This is the purpose of the “any professional reason” letter, to which the outgoing accountant should respond, with the approval of the client. The new agent should make their best efforts to obtain responses to the letter, including re-sending the letter by registered mail, if necessary. However, if they do not receive a response following reasonable efforts, and their other enquiries are sufficient to indicate that there is no valid reason not to take up the assignment, then they may proceed. In this instance, the existing accountant would appear to be attempting to take a lien, meaning a right to retain possession over certain documents that they have in their possession until they have been paid. Whilst this right still exists, it is really only applicable in quite narrow circumstances. Firstly, the outgoing accountant is obliged to co-operate with the successor to ensure that the client’s interests are not prejudiced, including the client’s obligation to comply with its legal obligations if there is no other means to do so. This may in effect mean the that the incumbent accountant is obliged to forward any missing information to ensure that tax compliance and filing obligations are met, or other interests are protected, and therefore the right of lien may be largely irrelevant in respect of the core accounting records of the entity. Secondly, in the case of an incorporated client, insofar as any of the documents held by the outgoing accountant constitute the accounting records of the company, then company law requires that these should be returned to the directors of the company. The fact that the outgoing accountant has not been paid does not affect either of the obligations mentioned above. Insofar as the accountant proposes to take a lien, this only applies to documents that have been worked on and for which the accountant has not been paid. In the case above, it would appear that the outgoing accountant is obliged to hand over the key accounting records that it holds, and to separately seek payment of the outstanding fees. The outgoing accountant should also respond to the professional enquiry letter. When we discuss the above rights and obligations with members who contact us, the members occasionally observe that the advantage appears to be with the incoming accountant. In fact, the Code of Ethics cannot override the obligation of the client to comply with legislation, or give the existing accountant rights that contradict company law. The message that members should draw is that their rights to refuse cooperation in the event of non-payment are quite limited, and they should organise their credit control policies accordingly. Many firms have a policy of limiting their exposure to large outstanding fees through direct debit and staged payment arrangements with clients. In the case of audit clients, the incoming auditor has certain rights to access information held by the outgoing auditor. The circumstances in which these rights apply differ slightly between ROI and UK, but are a legal right of the incoming auditor, and the application of them differs somewhat from the ethical obligations discussed above. If you have questions in connection with this issue or other practice related issues or dilemmas, please contact Practice Consulting and we will endeavour to give you the information and guidance that you need.

As people across the world condemn the attack by Russia on Ukraine, they also want to show their support through donations and using their influence for humanitarian intervention. Professional accountants will find themselves in positions of influence with many stakeholders including clients, employers, employees, and local communities.  Níall Fitzgerald, Head of Ethics and Governance outlines some practical considerations for accountants and business leaders in this context:    Fundraising for humanitarian or other reliefs People and organisations are looking to help the millions of Ukrainians displaced by the invasion by donating directly or running fundraiser events. Be aware of fraud risk and recommend controls that ensure the safeguard of any monies raised and that they are used for the purpose for which they were raised. Ensure the necessary licences are obtained for any public fundraising activity. Be clear on the purpose for the funds and how they will be channelled to the beneficiaries. Ensure compliance with national charity law and check that charitable donations are only made to a properly registered charity in your jurisdiction. Social media Understandably, many people and corporates are sharing their views on Russia's  invasion of Ukraine via social media. The distinction between when a view is a personal view or that of the organisation where a person works is not always clear. If you are an officer of a company, e.g. a director, chief executive, or the public relations officer, and you are commenting on a matter related to your area of responsibility, then it is very difficult to separate your view from the corporate view. For this reason, many organisations will have clear corporate social media policies in place and that is the first reference point if in doubt. However, before reacting to a colleague's personal post, it is important to also consider their right to hold and express an opinion. There can be a cultural aspect to this within an organisation, especially where respect, tolerance, diversity and inclusion, and psychological safety are highly valued. The specific circumstances of the person expressing the view might also be taken into account, for example their emotional proximity to the issue.  Developing corporate positions Many organisations are using their influence for good by publicly denouncing the invasion of Ukraine, with some going further to withdraw from investments and business operations in Russia, and any dealings with Russian state-owned entities. These decisions are not always the most straightforward to implement. Legal and other expert advice should be sought to consider how an organisation can address contractual obligations, restructure, and relocate operations. Many Russian citizens are against the actions of the Russian Government, and Russian employees, contractors, etc., should receive fair treatment and not be discriminated against. Reporting progress and being transparent on these positions, including any setbacks, is very important as corporates will be held to account by stakeholders and members of the public to honour their commitments. Careful thought should be given before making any wide-sweeping statements. The global economy, with its complex interconnected markets, creates practical difficulties when seeking to divest of everything connected to Russia.   Whistleblowing and speaking up Clearly defined and well-communicated whistleblowing and speaking-up policies and procedures can increase an organisation’s awareness of any weaknesses in it’s internal controls and practices relating to sanctions, anti-money and anti-bribery and corruption compliance. Communicating to employees the organisation’s position in relation to this crisis and reminding them about whistleblowing and speaking-up policies and procedures, promotes a safe environment in which individuals feel comfortable to raise any concerns about the organisation’s actions, or inactions. Corporate reporting While the scale of the impact of this crisis on organisations will differ, it will dwarfed by the impact on millions of Ukrainians. Organisations have important social obligations and responsibilities to corporate stakeholders. Accountants should ensure transparency and accountability in corporate reporting by highlighting the impact of the crisis on the organisation’s operations, asset valuations and exposure to liabilities. Examples of the sources of this impact include: supply-chain disruption; the cost of ceasing operations in Russia or the conflict/invasion zones; rising commodity prices; inaccessibility of certain markets due to trade or travel restrictions; difficulty maintaining required levels of capital reserves; and loss of key customers. Accountants will have a central role in collecting, measuring, and reporting the necessary information and ensuring it is reported in accordance with legal and regulatory requirements and relevant reporting frameworks. They should also understand the limitations to their expertise and call for the involvement of experts where necessary. Directors and senior management will need to consider expert advice when making highly judgemental decisions on values and estimates and in determining the future implications for the organisation.    Boundaries between personal life and professional life Negative emotions, such as anger and fear, increase the risk of self-defeating behaviours. The developing situation in Ukraine will understandably evoke such emotions in many. In this context, it is useful to refer to guidance issued by the CCAB bodies, in July 2021, to help accountants consider and distinguish if their personal behaviour could be viewed as conduct that might discredit the profession. While the facts and circumstances of every situation will differ, the CCAB guidance provides some examples of such behaviours, including the use of seriously offensive or threatening language causing distress, or threatening behaviour, towards a client or a member of the public outside of the work environment.  This non-exhaustive list of considerations may need to be reconsidered as the crisis in Ukraine develops. In many situations, increasing ethical awareness or the ability to address an ethical dilemma requires reflection. Professional accountants may find it useful to refer to, or circulate to professional accountancy staff, the Chartered Accountants Ireland Ethics Quick Reference Guide available from our Ethics Resource Centre. This article was adapted for members overseas from an article written by Níall Fitzgerald on the Institute’s Ethics Resource Centre.

Members of Chartered Accountants Ireland are annually required to confirm that they are aware of their “obligations as set out in the Code of Ethics for members”. Accounting firms are required to indicate in their annual return whether they have “taken steps to ensure that all Principals, Employees and Subcontractors fully comply with the Institute’s Code of Ethics for Members”. A glance at the Regulation section of Accountancy Ireland reveals that non-compliance with the Code of Ethics is a frequent finding leading to disciplinary action against an individual member or firm. So how do you ensure you and all in the firm are familiar with the obligations as set out in the Code of Ethics? While reading the Code of Ethics is a good starting point, the current version is a long read at 202 pages, 261 if you include the obligations applying to insolvency practitioners. Recent research and engagement with accounting professionals on ethics has consistently identified training and illustrative case studies as the preferred supports for increasing familiarisation with the Code of Ethics. Professional accountants have expressed a preference for real-life examples and case studies which allow them to consider ethical dilemmas in a practical way, relevant to their own experience. The recent publication of five sets of ethical dilemmas case studies by the Consultative Committee of Accounting Bodies (CCAB), of which Chartered Accountants Ireland is a member, is a welcome response to this need. The case studies, which are applicable in both UK and Ireland, illustrate how the Code of Ethics can be applied by members working in business, not-for-profits, the public sector, public practice, and as non-executive directors. Each set contains several case studies tailored to reflect ethical dilemmas that can arise in the course of their professional work. They are designed to outline key principles and processes that can be considered when attempting to identify, evaluate and address ethical threats in line with the Code of Ethics. While more than one set of case studies may be relevant to an individual member, members in practice will appreciate the case studies exploring a range of ethical dilemmas tailored for professional accountants in public practice. This set explores the following ethical dilemmas: Case Study 1 explores the dilemma faced by a manager in relation to a very competent junior member of staff whose personal circumstances require her to take regular absences from work. This is having a negative impact on her colleagues, who are vocal about being overworked. Like other case studies in the set, it works through the dilemma in a structured manner, consistent with the conceptual framework outlined in the Code of Ethics, to: consider which of the five fundamental principles (integrity, confidentiality, professional behaviour, objectivity, professional competence and due care) are under threat; consider the relevant facts, which also involves seeking out information rather than solely relying on the information presented prima facie; identify affected parties, including considering the culture and reputation of the firm; determine who should be involved in the resolution and whether to consult with a colleague, external expert, or other trusted advisor; determine a possible course of action and implement, with the advice to document the steps taken in resolving the dilemma in case your ethical judgement is challenged in the future. Case Study 2 presents a dilemma faced by a partner in a three-partner firm. He discovers a client is not recording certain cash sales in their accounts. The case study examines the practical considerations including how to communicate the issue with the client and possible actions to take if the client is not receptive to the news. The commentary includes an outline of a thought process that prioritises the reputation of the firm, the five fundamental principles of the Code of Ethics, and relevant laws and regulations, to decide on the best advice for the client. This case also highlights the importance of considering legal reporting obligations, particularly in relation to anti-money laundering legislation and fraud. Case Study 3 tackles an ethical dilemma facing a sole practitioner who loses a local small business client (Company A) and is subsequently approached to help a local competitor of Company A (Company B) make an offer to buy their former client. This dilemma is compounded by the fact that Company A is struggling financially but this is not common knowledge. Also, the sole practitioner is acting as an alternate/continuity provider for another local sole practitioner, who is convalescing after a medical treatment. Company B is a client of the other practitioner. This case is a good example of how there can be several dimensions to an ethical dilemma, and the benefits of having a structured process in addressing such dilemmas. In Case Study 4, an accountant is advising a medium-sized group on a range of improvements to its operations and systems. After identifying a range of issues and preparing a report estimating the costs, the accountant becomes aware that the director with whom they are liaising has significantly understated these in a separate report to the board. The director does not share the accountant’s report with the board. This case requires consideration of to whom the accountant owes their fiduciary duty, and how they might discharge their duties and effectively manage their professional relationship with the client. Case Study 5 outlines a scenario in which a trainee accountant in a firm has been tasked with completing some complicated work within a very tight deadline in the lead-up to them taking study leave. While there are lessons to be learned for both parties, the case highlights that certain behaviour, which itself may be unethical, may give rise to further unethical behaviour directly impacting the quality of work for clients. In Case Study 6, a three-partner firm has a large audit client to whom it also provides non-audit services. There are substantial fees outstanding from the client and significant going-concern issues arise. Several issues are explored in this case, including that the audit planning section was not appropriately reviewed, that key information was missed, and that there is pressure to provide the bank with a clean audit opinion so it can extend the company’s overdraft facility. This is a situation in which more than one set of ethical obligations require consideration, in this case the Code of Ethics and the Ethical Standards for Auditors. Case Study 7 addresses suspected non-compliance with laws and regulations (NOCLAR), including bribery and cover-up of breaches of environmental laws and regulations, and considers any legal reporting obligations for the firm. The case highlights real issues that can arise, including dealing with pressure from clients to disregard any suspicions of noncompliance, desire to disassociate from illegal or unethical activity, deciding whether to override client confidentiality and report suspicions to the appropriate authorities, and balancing duties to the client with the public interest with safeguarding the reputation of the firm. CCAB’s Ethical Dilemma Case Studies provide an interesting and illuminating way to engage with the Code of Ethics while also increasing awareness of some threats to ethical conduct that can arise in an accountancy firm. Members are encouraged to use, read and apply them, and they can also be used by firms and/or training providers provided they are appropriately referenced. The case studies and other resources that can assist members in considering ethical dilemmas can be found on the Chartered Accountants Ireland Ethics Resource Centre. Níall Fitzgerald FCA Head of Ethics & Governance at Chartered Accountants Ireland

Members of Chartered Accountants Ireland are annually required to confirm that they are aware of their “obligations as set out in the Code of Ethics for members”. A glance at the Regulation section of Accountancy Ireland reveals that non-compliance with the Code of Ethics is a frequent finding leading to disciplinary action against an individual member or a member firm (who are also required to ensure that all working for the firm fully comply with the Institute’s Code of Ethics for Members). So how do you ensure you and all in the firm are familiar with the obligations as set out in the Code of Ethics? While reading the Code of Ethics is a good starting point, the current version runs to 202 pages (261 if you include the obligations applying to insolvency practitioners). Recent research and engagement with accounting professionals on ethics has consistently identified training and illustrative case studies as the preferred supports for increasing familiarisation with the Code of Ethics. Professional accountants have expressed a preference for real-life examples and case studies which allow them to consider ethical dilemmas in a practical way, relevant to their own experience. The recent publication of five sets of ethical dilemmas case studies by the Consultative Committee of Accounting Bodies (CCAB), of which Chartered Accountants Ireland is a member, is a welcome response to this need.  Each set contains either six or seven case studies tailored to reflect ethical dilemmas that can arise in the course of their professional work in Ireland and UK. They are practical and explore common issues that can arise in professional life. They are designed to outline key principles and processes that can be considered when attempting to identify, evaluate and address ethical threats in line with the Code of Ethics. More than one set of case studies may be relevant to an individual member. The following sets are available: Professional accountants in business Professional accountants in public practice Professional accountants working as non-executive directors Professional accountants working in the not-for-profit sector Professional accountants working in the public sector Members are encouraged to use, read, and apply the learnings from these case studies. They can also be used as training material by firms, training providers, schools or colleges and universities provided they are appropriately referenced, and use abides by the publications copyright terms and conditions. The case studies and other resources that can assist members in considering ethical dilemmas can be found on the Chartered Accountants Ireland Ethics Resource Centre. Níall Fitzgerald FCA Head of Ethics and Governance at Chartered Accountants Ireland

The Consultative Committee of Accountancy Bodies in Ireland (CCAB-I) and in the UK (CCAB) have issued statements to the accountancy profession following recent and ongoing developments in Ukraine. The statements: remind accountants of their legal and professional obligations, including ethical considerations, relating to the sanctions regimes and in managing their duties to clients, employers, and other stakeholders to cope with consequent disruptions; collate links to sanction lists, guidance and government advice in the UK, Ireland and the EU; highlight risks presented by current developments in the context of compliance with anti-money laundering legislation, the potential impact on professional indemnity insurance for members in practice, and the fast-moving nature and complexity of the situation and need to obtain specialist advice; refer to requirements in the Code of Ethics for Professional Accountants of particular relevance when an accountant is confronted with a dilemma or difficult situation concerning compliance with financial and trade sanctions and other restrictions. As people across the world condemn the attack by Russia on Ukraine, they also want to show their support through donations and using their influence for humanitarian intervention. Professional accountants will find themselves in positions of influence with many stakeholders including clients, employers, employees, and local communities.  The following are some considerations for accountants in this context: Fundraising for humanitarian or other reliefs People and organisations are looking to help the millions of Ukrainians displaced by the invasion by donating directly or running fundraiser events. Be aware of fraud risk and recommend controls that ensure the safeguard of any monies raised and that they are used for the purpose for which they were raised. Ensure the necessary licences are obtained for any public fundraising activity. Be clear on the purpose for the funds and how they will be channelled to the beneficiaries. Ensure compliance with charity law and check that charitable donations are only made to a properly registered charity (Register of Charities: Charities Regulator (Republic of Ireland) and The Charity Commission for Northern Ireland).   Social Media Understandably, many people and corporates are sharing their views on Russia's invasion of Ukraine via social media. The distinction between when a view is a personal view or that of the organisation where a person works is not always clear. If you are an officer of a company, e.g. a director, chief executive, or the public relations officer, and you are commenting on a matter related to your area of responsibility, then it is very difficult to separate your view from the corporate view. For this reason, many organisations will have clear corporate social media policies in place and that is the first reference point if in doubt. However, before reacting to a colleague's personal post, it is important to also consider their right to hold and express an opinion. There can be a cultural aspect to this within an organisation, especially where respect, tolerance, diversity and inclusion, and psychological safety are highly valued. The specific circumstances of the person expressing the view might also be taken into account, for example their emotional proximity to the issue.   Developing Corporate Positions Many organisations are using their influence for good by publicly denouncing the invasion of Ukraine, with some going further to withdraw from investments and business operations in Russia, and any dealings with Russian state-owned entities. These decisions are not always the most straightforward to implement. Legal and other expert advice should be sought to consider how an organisation can address contractual obligations, restructure, and relocate operations. Many Russian citizens are against the actions of the Russian Government, and Russian employees, contractors, etc., should receive fair treatment and not be discriminated against. Reporting progress and being transparent on these positions, including any setbacks, is very important as corporates will be held to account by stakeholders and members of the public to honour their commitments. Careful thought should be given before making any wide-sweeping statements. The global economy, with its complex interconnected markets, creates practical difficulties when seeking to divest of everything connected to Russia.   Whistleblowing and Speaking Up Clearly defined and well-communicated whistleblowing and speaking-up policies and procedures can increase an organisation’s awareness of how it may be exposed to the issues highlighted in the CCAB/CCAB–I statements referred to above. Communicating to employees the organisation’s position in relation to this crisis and reminding them about whistleblowing and speaking-up policies and procedures, promotes a safe environment in which individuals feel comfortable to raise any concerns about the organisation’s actions, or inactions.   Corporate Reporting While the scale of the impact of this crisis on organisations will differ, it will be dwarfed by the impact on millions of Ukrainians. Organisations have important social obligations and responsibilities to corporate stakeholders. Accountants should ensure transparency and accountability in corporate reporting by highlighting the impact of the crisis on the organisation’s operations, asset valuations and exposure to liabilities. Examples of the sources of this impact include: supply-chain disruption; the cost of ceasing operations in Russia or the conflict/invasion zones; rising commodity prices; inaccessibility of certain markets due to trade or travel restrictions; difficulty maintaining required levels of capital reserves; and loss of key customers. Accountants will have a central role in collecting, measuring, and reporting the necessary information and ensuring it is reported in accordance with legal and regulatory requirements and relevant reporting frameworks. They should also understand the limitations to their expertise and call for the involvement of experts where necessary. Directors and senior management will need to consider expert advice when making highly judgemental decisions on values and estimates and in determining the future implications for the organisation.   Boundaries between Personal Life and Professional Life Negative emotions, such as anger and fear, increase the risk of self-defeating behaviours. The developing situation in Ukraine will understandably evoke such emotions in many. In this context, it is useful to refer to guidance issued by the CCAB bodies, in July 2021, to help accountants consider and distinguish if their personal behaviour could be viewed as conduct that might discredit the profession. While the facts and circumstances of every situation will differ, the CCAB guidance provides some examples of such behaviours, including the use of seriously offensive or threatening language causing distress, or threatening behaviour, towards a client or a member of the public outside of the work environment. This non-exhaustive list of considerations may need to be reconsidered as the crisis in Ukraine develops. In many situations, increasing ethical awareness or the ability to address an ethical dilemma requires reflection. Professional accountants may find it useful to refer to, or circulate to professional accountancy staff, the Chartered Accountants Ireland Ethics Quick Reference Guide available from our Ethics Resource Centre. Níall Fitzgerald FCA, Head of Ethics and Corporate Governance Update: Chartered Accountants Ireland have created a dedicated page collating key information on sanctions in response to the crisis in Ukraine.

The Consultative Committee of Accountancy Bodies (CCAB), which Chartered Accountants Ireland is a member of, have published the results of an ethics survey conducted in July and August 2021. This informal survey was designed to take the ethical temperature of the accountancy profession in the UK and Ireland over the last 3 years and as we emerge from the COVID-19 pandemic. Survey respondents included members of Chartered Accountants Ireland, Institute of Chartered Accountants in England and Wales, Institute of Chartered Accountants in Scotland, Association of Chartered Certified Accountants in Ireland and UK and the Chartered Institute of Public Finance and Accountancy. There was a spread of responses across four sectors including members who work in audit or accountancy firms, public sector, commercial sector and charity/non-profit sector. Details of the results are available on the CCAB website and a summary of the key highlights include: 27 per cent of respondents indicated that in the last three years they had been put under pressure or felt under pressure to act in a professionally unethical way. Some respondents indicated the pressure to act in a professionally unethical way was applied by directors, managers, clients or members of a board or council. 28 per cent of respondents identified the “CFO/FD/CEO/or any other director”, and 27 per cent identified “My line manager or their line manager” as the person who applied the pressure. 18 per cent said it was a “client”, 10 per cent cited “the Board/Cabinet/Council”. 54 per cent of respondents felt under threat in some way with some indicating that the pressure had taken a toll on mental health and economic well-being, including feeling isolated, being dismissed, being briefed against, facing false allegations, loss of client, poor performance reviews and future prospects threatened. 80 per cent spoke up to prevent being put under the pressure. 65 per cent did not carry out the unethical task that they were pressured to do. However, 10 per cent did carry out the task fully and 25 per cent did so partially. Commenting on the results, Níall Fitzgerald, Head of Ethics and Governance for Chartered Accountants Ireland and member of the CCAB Ethics Group who co-ordinated the survey, said: “The results highlight the importance of being aware of likely threats to professional ethics and where they can come from. Unless they are appropriately addressed, the unethical pressures can have a negative impact on the professional’s responsibility to act in the public interest and they can have a very real impact on personal wellbeing of the professional accountant.” “The Chartered Accountants Ireland Ethics Resource Centre contains some useful resources that provide insights on ethical issues that can arise in the role of a professional accountant and guides to assist members in addressing ethical dilemmas.” In the CCAB Press release, Iain Lowson, chair of the CCAB Ethics Group, said: “Ethics is at the heart of being a professional accountant and it’s important to regularly take the ethical temperature of the profession. This informal survey provides a useful snapshot of the current context.” “It’s clear ethical pressures are a real problem for a significant number of accountants and it’s concerning to see so many reports of a negative impact on mental health.” “On the other hand, it is encouraging that so many accountants feel empowered to speak out against unethical pressures and practices and that so many respondents say they promote an ethics-based culture in their organisations.” “Accountants’ professional membership bodies are useful sources of training, advice and support and each will have their own Code of Ethics based on the International Ethics Standards Board for Accountants (IESBA). We would urge any accountants who feel exposed to ethical pressures to approach their professional body for support and to refresh their knowledge of the relevant code.”

In November 2020, the Irish Auditing and Accounting Supervisory Authority (IAASA) issued a revised ethical standard for auditors,  Ethical Standard for Auditors (Ireland) 2020  (https://www.iaasa.ie/Publications/Auditing-standards). The revisions build on existing changes made to the standards in 2017 which implemented the requirements of the EU Audit Regulation and Directive.    The revised Ethical Standard includes a new requirement for audit firms to make reports of breaches of the Ethical Standard to the relevant competent authority and now explicitly prescribes reporting of breaches to those charged with governance. The purpose of the Technical Release (TR 02/2021) Reporting Breaches of Ethical Standard for Auditors (Ireland) 2020 is to alert members to these new requirements and to provide an example of the report that may be submitted to the Recognised Accountancy Body and IAASA. Please note the revised standard is effective from 15 July 2021.