Trainees have identified a limited focus on ethics guidance and mentoring, as well as a lack of ethical leadership and training, particularly in the smaller and medium-sized audit firms.
The accounting profession in South Africa is receiving a lot of negative attention due to the unethical conduct of a handful of its members. This has resulted in a renewed attention on ethics and ethical behaviour within the profession, including a need to understand how ethics is covered in accounting university courses, how professional firms deal with ethics during the training period, and understanding the extent to which ethics covered both at university level and during the training period prepare SAICA trainee accountants to deal with ethical dilemmas.
Trainees’ experiences associated with ethics and ethical conduct were the topic of a study conducted in 2018 by surveying SAICA trainee accountants. The study focused on identifying whether trainees receive ethical training and what that comprises and determining whether ethics training equips them to deal with ethical dilemmas in the workplace. 1 344 trainee accountants responded to the survey, which represents 12,6% of all SAICA trainees registered at time of the study (total number of 10 668).
When reviewing the responses to the survey questions, the first impressions are positive, confirming that almost all trainees have received ethics education in their university studies and that ethics is covered in university studies in a number of ways, namely stand-alone or integrated (with auditing or other courses). Many trainees indicated an awareness of the SAICA Code of Professional Conduct for Chartered Accountants and the Independent Regulatory Board for Auditors’ (IRBA) Code of Professional Conduct for Registered Auditors. They further specified that the majority of firms and organisations have ethics policies and procedures in place. Most receive ethics training and for half of the organisations it is an annual requirement.
However, one-fifth of respondents are employed in organisations where ethics training is not provided or not available. These are mainly mid-tier and small firms. The majority of the respondents’ organisations have mechanisms in place to elevate ethics issues. However, some 6,5% of the respondents indicated that their organisation does not have such mechanisms in place.
Further analysis of free-form observations provided by respondents flagged some negative comments and areas for concern. Three themes have been observed in the comments by respondents and are highlighted below.
Ethics education during university studies
Some respondents are concerned that the ethics course content at university is too theoretical and not practical enough. The course content is also described by some respondents as too basic and not covering the impact of unethical behaviour, as illustrated in these comments:
‘Focus on ethics is superficial. It was not adequate, more needs to be done. The level of studies that addresses ethics has been quite basic and felt like a waste of time. Very little emphasis was placed on ethical training. It comprised less than 2% of the total course content, it was insufficient and not detailed enough.’
‘It was provided in various formats but wasn’t integrated with other subjects as far as application goes. For example, we considered a few examples in theory but did not grapple with some different angles or practical real-life issues, especially in the workplace.’
There seems to be too much emphasis on auditing and insufficient integration with other disciplines such as management accounting, strategy and risk analysis, financial accounting and taxation.
Ethics should not only be taught as a stand-alone course. Academics should reflect on integrating practical application of ethical principles when addressing the theoretical components. Both are important and an appropriate balance is necessary. Introducing the theory initially in a stand-alone course is appropriate (with the underlying theories of ethics and ethical behaviour found within the philosophy discipline). However, ethics education should also include examples of practical applications that are enhanced when ethics is integrated with other disciplines.
Ethics versus keeping the client happy
Trainees indicated that they face tensions in the workplace in terms of balancing ethical considerations, completing audit work in a timely manner and keeping the client happy. These are some relevant observations:
‘I feel the focus is on satisfying client requirements rather than doing the right thing.’
‘It is a small firm and too close for comfort. The consequences can be quite quick and losing a contract will make it difficult because finding one is hard.’
‘It is one thing to deal with it but another thing if no action is taken by management or partners.’
‘Partners are unethical and often they would have the final say on the final product even though they are fully aware of the ethical dilemmas raised during the engagement.’
An ethical climate should be demonstrated at all levels and in all activities of the firm. Guidance, training and mentoring during the training period is paramount for the development of an ethical profession. In addition to adhering to the firm’s own ethics policies, appointing an ethics partner and regular ethics training, continuous self-awareness and discussion of ethical situations and conflicts are required during the training period. To that end, senior managers and partners should participate in ethics discussions and training and set the ‘tone from the top’.
Ethics versus job security
Trainees are concerned about job security and the threat of intimidation when facing ethical dilemmas in the workspace. Trainees are more likely to experience ethical dilemmas when they take on more senior responsibilities.
‘It is often difficult to face these dilemmas as job security and other intimidation threats exist. The governing bodies should assess that even though the respected bodies may find a replacement firm etc there is a time frame where you will be jobless.’
‘There’s a lot of positional power in processes and structures and creates intimidation and inferiority.’
‘There is no person at work I feel comfortable studying or discussing ethical dilemmas with.’
‘If the manager/partner wants to put through fictitious entries to decrease tax, I don’t know how to handle the situation without being fired.’
‘With clients we are well equipped − but internally within the firm you do what you are told and don’t have a big say.’
Some of these comments are genuinely concerning, especially where the trainee is employed at an auditing firm. Trainees expressed concerns that they may not have the level of experience or confidence when placed in a scenario where pressure is placed on them by partners or the client. A trainee mentoring programme that draws on external chartered accountants − possibly as part of continuing professional development (CPD) − may address issues associated with ethical dilemmas and intimidation that a trainee may experience within his/her firm.
Trainees are at the starting point of their professional careers and are impressionable. Trainees’ actions at work, such as arriving late at a client, completing tasks without due care, and over-reliance on auditing procedures without applying professional scepticism, are some examples of unacceptable conduct and behaviour that should be reported and investigated and, where appropriate, have consequences.
Being aware of ethics, codes, and policies and receiving annual training does not necessarily mean that trainees are able to act ethically and make critical ethical decisions when confronted with real-world scenarios. Trainees are often uncertain how to act when confronted by an ethical dilemma or who to approach for assistance and guidance.
SAICA has an ethics hotline that provides trainees with impartial and confidential advice when they are uncertain or feel compromised when dealing with ethical issues in the workplace.
AUTHOR | Professor Ilse Lubbe CA(SA), Associate Professor, University of Cape Town