“A hallmark of the accountancy profession is its obligation to act in the public interest.”
—The International Federation of Accountants
The Public Interest Oversight Board (PIOB)* conducted the Public Interest Workshop held in New York on September 11, 2014, with some 43 participants, consisting of chairmen and members of the consultative advisory groups of international standards setting bodies of the accounting profession, members of the PIOB, the key officers of the International Federation of Accountants and the key officers of international financial regulators.
Among the topics taken up included what the accounting profession is doing to serve public interest, and how to improve on it. Excerpting from the concluding report on the workshop and, in sum, the deliberations surfaced common concerns—“in the long run, the importance of education to instill the principle of protection of the public interest in auditors and accountants; in the short run, the need to increase the awareness within the accounting profession of its public-interest dimensions through stricter exercise of professional skepticism, improved tone at the top, or through other elements in the financial reporting supply chain; and the need for better communications to try to close the expectation gap.”
Basically, there was nothing new in the said common concerns expressed during the workshop. Primary concern for public interest and professional skepticism (both in state of mind and attitude) are part of the auditor’s and accountant’s DNA. The basic course on auditing theory, which includes the Code of Ethics, emphasizes these two fundamental items that render the professional accountant what he or she is. However, the practice of the profession has evolved over time and the influence of technology, as well as the competitive landscape, of the practice of the profession may have influenced how the professional practice of accountancy has become.
As the global economy became borderless, seamless delivery of accounting/auditing services has evolved. The business model of accounting services under the international practices parallels that of multinational companies. The practice of the profession is a business by itself, and business people aim for profits. In the client’s business affairs, professional fees affect the bottom line. Some sectors opine that amid this reality, the commitment to public interest and professional skepticism may, at times, take the back seat or, worse, be compromised.
Delivery of computer-aided accounting and audit processes is perceived as competitive edge in the industry, and may be mistakenly attributed as marks of excellence. While the state-of-the-art processes expedite the completion of the tasks/processes, the adherence to ethical values and sound professional opinions are fundamentally the professional’s conduct and output. No computer-aided processes can substitute for professional conduct.
The two concerns have posed challenges to the profession. Before any scandal come to fore, preventive measures are in order. If emerging issues are mere perceptions, it may be high time that the profession be proactive in improving perceptions regarding the auditor’s/accountant’s state of mind and attitude on public interest and professional skepticism. On the other hand, if what has been observed mirrors reality, then strong advocacy and prompt actions on the restoration of the profession’s raison d’être are imperative.
*Set up in February 2005, the Public Interest Oversight Board (PIOB) is the global independent oversight body that seeks to improve the quality and public interest focus of the international standards formulated by the Standard Setting Boards (International Auditing and Assurance Standards Board, International Accounting Education Standards Board and International Ethics Standards Board for Accountants). The PIOB also oversees the respective Consultative Advisory Groups of the IAASB, IAESB and IESBA, and International Federation of Accountant’s Compliance Advisory Panel.
****
Dr. Conchita L. Manabat is the president of the Development Center for Finance and a trustee of the Finex Research and Development Foundation. A past chairman of the International Association of Financial Executives Institutes, she now serves as the chairman of the Advisory Council of the said organization. She is also a member of the Consultative Advisory Groups of the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants. She can be reached at clm@clmanabat.com.
****
The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of Finex. Free Enterprise is a rotating column of members of the Financial Executives Institute of the Philippines appearing every Wednesday and Friday.