More than five T&T archers did not get the opportunity to compete at the main Youth Olympic qualifier, The World Youth Archery Championships, which took place earlier this month in Rosario,...
You are here
Accountants were meant to be numbers people, not detectives. And yet a new study from the International Federation of Accountants (IFAC) shows that the profession is playing a major role in detecting and reducing corruption.
The Organisation of Economic Co-operation and Development (OECD) estimates that corruption accounts for five per cent of world GDP, and Fayez Choudhury, IFAC CEO, calls it “an economic cancer that disproportionately impacts those least able to absorb its malignancy.” The study, he says, shows that the accountancy profession—acting in the public interest—is an important part of the cure.
“It confirms that the profession is a crucial part of strong national governance architectures that confront corruption, in partnership with good government and strong businesses,” he says. “And, vitally, the study shows professional ethics, education and oversight—at the core of the global accountancy profession—are key to our positive impact in tackling corruption.”
Choudhury believes that the study, called The Accountancy Profession, Playing a Positive Role in Tackling Corruption, conducted by the Centre for Economics and Business Research, is the first to draw a link between the number of accountants in the workforce and better outcomes in Transparency International’s global Corruption Perceptions Index.
The study examined the profession’s impact in nations with stronger governance structures and found the correlation significantly greater in G20 countries and member nations of the financial action task force, the international anti-money laundering and terrorism financing initiative.
There is also a strong correlation between adoption of the global accountancy profession’s ethical, education, and investigation and discipline requirements, and more favourable scores on international measures of corruption.
The IFAC report coincides with the release of Transparency International’s latest region-specific Global Corruption Barometer. This year’s edition looks at the responses of nearly 22,000 people in 16 countries and territories in Asia Pacific (previous editions cover other regions). It found that just over one in four of the people surveyed have paid a bribe to access public services.
In China, nearly three-quarters of respondents said that they thought corruption had increased over the last three years, despite government efforts to stamp it out.
The role of accountants in combating fraud is not a new phenomenon.
Choudhury says that more than a century ago, the judge in a fraud case in England, in exonerating an accountant of involvement, ruled that an accountant is a watchdog, not a bloodhound.
“So the role of the accountant is not primarily to detect fraud; it’s to ensure that there are good systems of control, which reduce the prospects of fraud, but there can be no guarantees,” Choudhury says.
What’s changed is that society has more awareness of, and less tolerance for, corruption. This is due partly to an increasing distrust of governments and large corporates, but also the sheer scale of fraud in the modern world.
“The World Economic Forum estimates the global cost of corruption to be US$2.6 trillion annually,” Choudhury says. The African Union puts the figure at 25% for African states, and the OECD estimates that five per cent to 10 per cent of the annual budget of the US Medicare and Medicaid healthcare programmes is wasted as a result of corruption.
‘Those are the kind of numbers that capture the public imagination and are on policymakers’ radar. This awareness has driven more concerted action than there has been in the past.”
The IFAC study sees part of the solution as being the greater global adoption of high-quality international standards on financial reporting, auditing and ethics in both private and public sectors. But it also highlights how professional accountants can contribute positive action both individually and collectively.
‘The study identifies that a strong, active and engaged accountancy profession does operate in a national context where corruption is reduced,’ Choudhury says. ‘To me, that demonstrates the relevance and importance of the profession in the broader context of social good.”
Therefore, as a career choice, he adds, accountancy should be attractive to young people, who research suggests are increasingly looking to enter professions that they believe allow them to serve the greater good. However, in a world where the business environment and regulation becomes ever more complex, accountants need to equip themselves to adapt to these changes.
“At its core, accountancy is about transparency, trust, integrity and accountability,” he says.
“If the numbers are right, consistently presented, and comparable in terms of what you’re trying to measure, then that is the absolute foundation of transparency.”
Transparency, he adds, is not only a requirement for detecting and preventing corruption, but also key to being able to hold accountable the people who are entrusted with decision-making, based on the financial information presented to them.
“Accountants need to be constantly reminded that ethical behaviour is at the core of our profession. Most professional development programmes stress this,” he says.
Choudhury also calls on accountants to prepare for the changes that technology is bringing.
“For accountants to serve their clients, themselves and their employers in the financial arena, that involves technology development: how you collect data, how you process it, how you store it, how you use it,” he says. “And if you’re an auditor, the whole audit landscape is shifting. Work we once did to maintain a company’s accounts is now highly automated, so you have to move up the value chain and be responsive to those changes.”
Reputable CPD curricula are designed to capture these emerging needs, he adds.
On a broader scale, the IFAC study highlights how the global accountancy profession is united in its commitment to tackling corruption. At the March 2016 OECD anti-bribery ministerial meeting, the then IFAC president Olivia Kirtley highlighted an increasingly complex and interconnected world that requires strong collaboration and commitment from the private, public and regulatory communities to fight bribery and corruption.
“Bringing an end to the notion that ‘silence is always safer’ requires greater focus on strong governance and compliance structures, environments that are encouraging for self-reporting, and protections that apply to everyone working with any organisation or for any profession,” she said.
Peta Tomlinson, journalist, writing for ACCA’s Accounting & Business magazine