Ethics is one of the most important aspects of being an accountant. Clients need to trust your professional integrity, and the public needs to have confidence in your standards and principles.
Being a member of AAT is a mark of high standards, high quality training, and professionalism. But there may come a time when you face an ethical dilemma in the course of your work.
This could involve:
- a threat to your professional reputation
- a demand from a client or employer to do something which you consider unethical, unprofessional or even illegal
- or a problem with a client which makes you consider whether you wish to work with them in the future.
To help members maintain standards and provide high levels of professional service at all times, the AAT publishes a Code of Professional Ethics. This sets out guiding principles and gives members of the public the assurance that when using an AAT member’s services, they can expect a professional service.
AAT recognises that sometimes ethical dilemmas can be problematic and difficult to deal with on your own. By being a member of the AAT, you have access to the ethical helpline (details at the end) which enables you to speak to one of our professional standards officers.
They can give you confidential advice on your situation and advise you on your options. They can also direct you towards other organisations which could help or suggest that you take legal advice.
Calls tend to peak around year-end when members are reviewing accounts and receiving emails from clients.
We met with the team behind the AAT ethics helpline to hear about the toughest and most common ethical dilemmas they’re hearing from our members. We also found out how the AAT ethics helpline may be able to help you resolve these issues in case you encounter them yourself.
1. What rights do I have when I’m disengaging from a client?
If you’ve made the decision to stop working with a client, and they haven’t paid you, should you tell the incoming accountant? Are you able to retain documents that belong to the client if they have not settled the invoice?
“These are both issues that could arise in day to day work and we are here to help members navigate the code of professional ethics,” says Adam White, Professional Standards Officer, AAT.
“The first step when a member calls is to ask whether they have reviewed AAT’s Code of Professional Ethics. We want them to consider the issue in light of the five fundamental principles of the code, and then decide which of those principles are in jeopardy.”
“By talking with the member, we get to understand what the dilemma is,” he says.
“Right of Lien – where a client has not paid and the AAT member wants to retain records or certain documents from them – is a subject about which we receive many calls,” says Donna Drew, Professional Standards Officer.
“We look at the issue on a case by case basis, but it may be that we recommend that they seek legal advice.”
2.You’re working at a company and you’re asked to do something which you feel is wrong or illegal
This dilemma frequently involves a person who is employed and has been asked to do something that they consider unethical or illegal, often by a manager or business owner. It might happen in a small company where the managing director or owner has a lot of control. For this reason, it can be very awkward and they might eventually have to leave the company if they’ve tried other options.
“It depends on the situation, but if you are asked to do something unethical or wrong, and you’ve got to the end of the line in terms of raising it within the company, you may have to determine whether you want to continue acting for that client, or working for that employer,” says Adam White. “It can be very difficult for a person who is employed, as they may be sacked or have their employment terminated.
“From the point of view of anti-money laundering, we have a helpline for people who have questions or concerns. Anything that’s related to the proceeds of crime, and that might include the underpayment of tax, could fall under the remit of anti-money laundering.”
Issues often arise in relation to tax, and the Professional Conduct in Relation to Taxation (PCRT) can be used for specific guidance on matters that relate to tax.
This could include tax avoidance schemes, or if a member knows that there is an error or omission in a client’s VAT. It could include also historical issues regarding underpayment of VAT.
Members may need some guidance on how to bring this to the attention of the client, as you have to get the client’s permission to report because of confidentiality issues, Adam White says.
3. Should I work for someone who is being investigated by the police?
Marlene Prentice APCIP, Professional Standards Officer, says she was called by an AAT member who had read in the local newspaper that one of his clients had been called before the Crown Court regarding NHS overclaims for his dental practice.
What should he do and how should he approach the client?
“We advised him that the information was in the public domain so he could let the client know that he had seen the report and he could express his concerns,” she says.
Although some people might think that you have to disengage in such a situation, it’s for members to assess on a case by case basis, she says.
“It’s important to speak with the client and find out all the information. Don’t jump to conclusions. Make a decision weighing up the information you have, and what you need to do to safeguard your position.”
Another member was contacted by a man who was being investigated by the police because he had been growing cannabis from his home. The man claimed it was the first time he had ever done it and he wanted to show the police evidence of his finances, and that he hadn’t had unusual deposits into his bank account which might have been the proceeds of drug crime.
He wanted to find an accountant who would prepare a report for the police .In this situation, the client was entitled to ask an accountant for help.
“We can’t tell members what to do but we can help them make an informed decision,” she says.
4. I work with two directors at a company and they’ve fallen out and are giving me different instructions
Another common issue is warring or divorcing partners in a business.
“Everything may start off amicable, but then the accountant finds themselves caught in the middle when things turn sour,” says Marlene Prentice.
“The question is, from whom should I be taking instructions? You need to make it clear to both parties that instructions need to be clear and not contradictory. You can decide whether to disengage or continue, based on their response.”
She says there’s not a right or wrong answer and that the situation changes depending on the information that you have.
“Generally, we act as a sounding board for the member – often they already know what they need to do but are just looking for some help and guidance.”
“With warring directors, you would need to manage the situation,” says Dharmila Bhanji, Professional Standards Officer. “Email both parties and ask for clear direction. You can call us the minute you feel uncomfortable and we can help you identify what next steps you want to take.”
5. I’m thinking of disengaging from a client because I have ethical concerns
Errors in accounts prepared by previous accountants, or difficult behaviour from owner-managers, can be problems when working with limited companies says Donna Drew, Professional Standards Officer.
“I dealt with one case where a client of an AAT member was refusing to submit their company accounts because they knew they had tax liabilities and they couldn’t afford to pay. In that case, the AAT member had to give them the final opportunity to submit their accounts, and then disengaged.”
Another issue arose when a member was in the process of disengaging from a client. The client asked the accountant to leave all the documentation behind an unlocked side gate.
“The member felt that this was not sufficiently secure and that they might be contravening GDPR and security of data rules if they left the files unattended,” she explains.
Contact the ethics helpline
To discuss any ethical questions you might have, call us on +44 (0)20 7397 3014 or email email@example.com.
The guidance that the Ethics Code provides covers a number of important issues:
- Threats and safeguards – a threat might potentially compromise a member’s compliance with the fundamental principles
- Conflicts of interest – when it would be difficult for a member to be objective in certain circumstances
- Integrity – the obligation to be straightforward and honest
- Objectivity – not to compromise professional or business judgement because of bias, conflict of interest or the undue influence of others
- Professional competence and due care – ensuring that your professional knowledge and skill are maintained at the level required to ensure that clients or employers receive competent professional service. It requires members to act diligently in accordance with technical and professional standards
- Confidentiality – not disclosing information obtained in the course of your work, even in a social setting
- Professional behaviour – adhering to competent and professional standards at all times
Further reading on ethics:
- What history’s least ethical accountants can teach you
- How to judge ethically grey areas
- The five fundamental principles of ethics
- PCRT guidance from AAT
Marianne Curphey is an award-winning financial writer and columnist, and author of the book How Money Works. She worked as City Editor at The Guardian, deputy editor of Guardian online, and has worked for The Times, Telegraph and BBC.