CPD Bites

What Jermaine should do

There is no right answer, exactly, but Jermaine could informally advise his manager that there are grounds for suspicion of trivial gift receipts by the directors. Although this is an incomplete solution, it establishes as a "known" the fact of the continuity of the problem of gift-taking, despite the existence of ethics policies within Duck Ltd. However, this has the risk for Jermaine of triggering some potentially heavy-handed investigation and jeopardising his progress within the company.

Now take a look at the six fundamental principles of the International Code of Ethics for Professional Accountants that Jermaine could refer to, to guide his decision, and which the directors of Duck Ltd should certainly revisit.

Integrity

The principle of integrity is stated to be honesty in all dealings, whether these are with clients, revenue authorities or any other interested persons. Integrity requires that nothing is done, knowingly or carelessly, which could mislead by commission or omission.

Self-interest (as a junior accountant) may give a strong incentive for Jermaine to ignore what is a coincidental discovery, but should he turn a blind eye to the directors' breaches of Duck Ltd's ethics policy and their contracts?

Objectivity

Objectivity is a quality of behaviour that results in judgements based on understood professional criteria, which are made without influence, conflicts of interest or bias.

To what extent is Jermaine balancing his inclination to expose the directors' "wrongdoing" with a reticence to avoid embarrassing himself by appearing as overly zealous in policing laws/ethical standards that aren't illegal?

Professional competence and due care

If you agree to act as an accountant for a client, both parties need to be very clear on the terms of your appointment and the limitations imposed on it. You must act in accordance with professional standards and maintain the appropriate knowledge and skill to ensure your clients gain a competent professional service.

Confidentiality

Confidentiality relates to knowing when information can and cannot be disclosed. The concept of confidentiality has legal significance and is another core principle affecting the relationship between the tax adviser and client. In summary, a tax adviser has a professional duty to keep their client's affairs confidential and cannot disclose details of them unless they are legally constrained to do so.

By addressing the directors' behaviour, would Jermaine be betraying the confidence of the director at Swan Ltd, who wasn't aware they'd get anybody into trouble?

Professional behaviour

To what extent can you reconcile duties of confidentiality in respect of individual clients, with expectations of wider public service, including the upholding of compliance with contracts?

Accountants must comply with relevant laws and regulations and avoid behaving in a way that might discredit the profession. Professional behaviour covers the fact that advisers must not disgrace the profession, as well as the requirement for respectful behaviour in professional dealings with colleagues, officials and competitors.