Professor Barry J Cooper FCCA is President of the Association of Chartered Certified Accountants (ACCA). He is also head of the School of Accounting, Economics and Finance at Deakin University, Melbourne, Australia.
For a profession that prides itself on its integrity, objectivity and credibility, the finding of an ACCA study that the public views accountants as middling at best when it comes to trustworthiness is quite a blow. In a context of public austerity, there is a danger that accountants may be identified as little more than go-to people for wealthy individuals and businesses seeking to avoid paying their “fair” share of tax.
It is a matter of frustration that we are not always appreciated for the work we do. Part of the problem is that when things go right – as indeed they usually do – very few people notice. But when things go wrong, they can go wrong spectacularly and very publicly.
A lot of people may not know the different responsibilities of accountants. We can have people in the regulatory function, in the treasury field, in liquidation – but the public just think we are auditors or bookkeepers. Image-building is important; we can show that even in accountancy we have different professions that can bring in different ideas and contribute in different ways.
– Ms Jennifer Tan, CFO, Hutchison Telecommunications Hong Kong
That is one of the reasons why there is such a gap between how accountants see themselves and how others see them. One of the most telling statistics in the ACCA report Closing the value gap: understanding the accountancy profession in the 21st century is that three-quarters of accountants believe that the general public consider them to be trustworthy yet only 55% of members of the public agree.
So where do we really stand in the public’s estimation? As part of our research we asked members of the public to rank accountants as one of 13 professions. The result was worryingly mid-table – well out of range of a trophy although not in the relegation zone. Our consolation prize is that, as far as the public are concerned, we are not as bad as politicians, lawyers or journalists.
When your sole source of income is an employee salary, it’s incredibly difficult to maintain the highest ethical standards and resign from your employment because of something that you are asked to do. The wider world will know nothing of the hundreds of times that an auditor has resigned from an audit client because they just don’t like what they see.
– Mr Jim Sylph, Executive Director, Professional Standards, International Federation of Accountants
We cannot blame this on the financial crisis – only 13% of people said their degree of trust in accountants had fallen over the past five years. Rather, it is a view that has developed quietly over time, beginning with the longstanding, stereotypical bean-counter image and steadily overlaid with the remnants of public failures such as Enron and WorldCom.
We should all be worried about this. Trust and value go hand in hand. Unless we are trusted to provide value to the public through our work as accountants, we will lose our legitimacy – as will the public companies and markets that depend on the validation the profession provides. Nowhere is the risk greater than in audit. We have already seen fees squeezed dangerously, as whispered doubts over value become steadily louder.
The issues that we have to address are numerous, but connected. One is a basic lack of understanding about what it is that accountants do. Richard Sexton, PwC’s head of reputation and policy, for example, makes the point in the report that audit is seen as insurance rather than assurance.
It’s important for us to come out of the shadows and better explain what we do, how we do it and the value we generate. There will be some challenging conversations. But it’s important that you’re confident enough to talk about what you do, why you do it and why it’s important. Much of the observation about what accountants and auditors do is based on incomplete information.
– Mr Richard Sexton, Executive Board Member for Reputation and Policy, PwC
Another and potentially more serious problem is the conflict between professional integrity and commercial interests. Just over half of the people questioned for the research said they felt accountants work for the benefit of companies or themselves, rather than in the public interest. Even more worryingly, four out of five accountants blame their own profession for tax avoidance by individuals and companies. If we don’t trust ourselves, how can we expect the public to trust us?
When it comes to trust, it is all about the public’s perceptions. Regulators cannot legislate for ethical behaviour; it has to be in the DNA of every accountant. Events such as the implosion of Arthur Andersen in 2002 make it clear that ethical behaviour is non-negotiable. While it has taken, and will continue to take, years to build up complete public trust in the profession, the alternative is unthinkable.
For the profession to maintain its value it’s important to be seen to be objective and credible. That doesn’t mean you shouldn’t also be a good business consultant and add value that way, but I think the primary value we add is through our objectivity. There are clearly people who hire accountants to put a veneer of credibility on things that are not very credible. I don’t think that serves us well.
– Mr Robert Herz, Former Chairman, US Financial Accounting Standards Board
So what can be done? The report makes several recommendations, many of which are centred around the need for accountants as a profession to explain more clearly and more frequently what it is we do and why we do it. This is particularly necessary for auditing, and we need to be very clear about what audit is not as well as what it is.
We also need to be sure that we are seen to be doing our work well and objectively. The report makes the point that accountancy is not certainty, which means that trust is directly related to the level of transparency and openness around the figures.
Above all, accountants can help restore public respect in the business world by taking the lead in encouraging ethical and socially responsible behaviour. We know we have worth; now it’s time to prove it. #
‘Closing the value gap: understanding the accountancy profession
in the 21st century’ can be found at www.accaglobal.com/21
This article first appeared in ACCA’s Accountancy
Futures journal (www.accaglobal.com/futuresjournal).