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Whistle-blowing and the professional accountant

“A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. The IESBA Code of Ethics for Professional Accountants [International Ethics Standards Board for Accountants] [the Code] provides ethical requirements and guidance to help professional accountants [PAs] to meet this responsibility.”

International Ethics Standards Board for Accountants (IESBA)

The professional accountant, in his/her conduct of work, complies with the fundamental principle of confidentiality. This means treating as restricted whatever information he/she may acquire as a result of the professional and business relationships. Disclosure of any such information to third parties require proper and specific authorization from the concerned entity, unless there is a legal or professional obligation or right to disclose.

While the guidepost on confidentiality is straightforward, actual observance thereof can often put the professional accountant in a stressful and/or difficult situation. He/she has a prima facie ethical responsibility not to turn a blind eye to any observed or known instance of noncompliance with laws and regulations or suspected illegal act committed or about to be committed by the client or the employer, or by those charged with governance, management or employees of the client or the employer.

Cognizant of the realities of the challenges confronting the professional accountant, the IESBA has been conducting a series of global roundtables and it started in Asia Pacific, with Hong Kong as its venue on May 20. It was a successful event, with close to 55 senior-level individuals participating. They represented a wide cross-section of stakeholder groups, including regulators and public authorities, preparers/professional accountants in business, standard setters, member bodies of the International Federation of Accountants (IFAC), and accounting firms (both large and small). Ten jurisdictions were represented: Australia, China (mainland), Hong Kong SAR, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore and Taiwan.

The discussions were robust and lively, with a high level of participation from the delegates. In sum, the roundtable discussions featured appropriate briefings and two cases deliberated on during the workshops of break out groups. The roundtable was observed by the chairman and a member of the International Ethics Standards Board or IESBA Consultative Advisory Group.

As an observer, I noted that the summary reports from the break out groups surfaced a common thinking that the professional accountant who comes across suspected illegal acts or commission of illegal acts by the client or the employer, or by those charged with governance, management or employees of the client or the employer, despite the concomitant risks that he/she may be confronting, should report such information to the appropriate authority/ies or parties. It was noted though that the participants differ in their identification of the levels of authority/ies or parties to report to. Overall, it was very comforting to know that the commonality of thinking is consistent with the basic principles of confidentiality and disclosure.

As I was observing the roundtable discussions and remembering the long saga of Napoles, Luy and the many lists, I could not help but wonder if any satisfactory conclusion (as far as the common and greater good is concerned) would unfold on the resolution of the Priority Development Fund  Assistance and Malampaya scams. If professional accountants were involved, the case could not have become what it is now. Disclosure could have been done at the outset of the planning of the bogus foundations and misuse of public funds. Unfortunately, the main character, Janet Napoles and the whistleblowers, led by Napoles’s own relative Benhur Luy, are not professional accountants. If some of those who participated in the processing and approval of the transactions were professional accountants, I wonder what happened to their sense of professional ethics. Maybe, they were absent when the topic was taken up in school or they forgot about it?


Dr. Conchita L. Manabat is the president of Development Center for Finance and is a member of the Consultative Advisory Group for the International Ethics Standards Board, for Accountants and the International Auditing and Assurance Standards Board, representing the Asian Financial Executives Institutes. She is a past chairman of the International Association of Financial Executives Institutes, where she now serves as chairman of the Advisory Council.





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