prabhuAccountants are bound by a code of ethics based on five fundamental principles: integrity, objectivity, competency, confidentiality and duty of care. Due to the complex nature of the work involved, there is a frequent risk of ethical breaches, whether intentional or not. Below, we’ll discuss four of the most common mistakes and how they can be avoided.
Sharing confidential information
Financial information is highly sensitive and often considered confidential by companies and individuals. Check carefully through any documents you sign before beginning work to establish what is private and cannot be shared. Even an accidental leak of confidential details could lead to legal action being taken against you.
If you’re asked to disclose information to a third party, ensure you have the authority and permission to do so. This will mitigate the risk of revealing classified details.
Establishing a conflict of interest
Remaining objective is a requirement of being a professional accountant. Be careful to avoid establishing situations where there is – or appears to be – a conflict of interest so there can be no question regarding your neutrality.
Working with multiple companies or clients in the same industry could lead to a conflict of interest because you’ll be promoting the interests of competitors. This could compromise your ability to provide impartial advice and could lead to unintentional bias. Before agreeing to represent a new client, check that you’re not already working with associated parties.
Take care to keep your personal relationships separate from your work. Avoid helping friends with their accounts unless they agree to a professional contract and be wary of accepting gifts as these could be construed as bribes.
Inadequate disclosure of information
Clear and comprehensive communication is a key part of the relationship between accountant and client. You are obliged to work with integrity, upholding high standards of correctness and being transparent with your findings.
Failing to provide insight into your calculations and reports or deliberately keeping information concealed could land you in hot water. A client could hold you responsible if a monetary loss occurs due to omission. This kind of risk is why accountant’s insurance can play an important role in a freelancer’s professional setup.
Manipulating financial statements
Whatever the reason, manipulating financial statements so that the data shown is incorrect is a serious ethical breach. You must comply with the laws of your regulatory body at all times and accurately represent your client’s financial health to the best of your ability.
Look out for red flags in your communication with clients, such as ‘lost data’ or discrepancies within the data provided. Be direct in raising any identified issues that could risk your integrity.
Remember that you have the right to complain about a limited company if you suspect fraud. You have a duty of care to the client but it is more important to act with honesty – on a moral basis and to protect your reputation.
