Discussion
Professional ethics should lead accountants to whistle blow any dodgy accounting or otherwise activities.
I'm FCA through ICAEW and I know they have a free to use professional ethics and compliance hotline.
Auditors are there to find unusual accounting activity of a material nature. Their remit doesn't extend to non financial 'dodgy' stuff. I once audited a haulage firm where a disgruntled employee told me that the mainly Polish drivers were told that when their tachographs reached their time limit they should just remove the card and continue with their work!! I raised this to the audit manager and all I got was "doesn't surprise me" but they did nothing more with it. Being my first few months in my first professional job I did everything I felt I could at the time.
Since being in industry and in a more senior role I'm very conscious to raise queries on anything usual in nature or practice.
Can you be more specific about what sort of 'dodgy' things you're on about?
I'm FCA through ICAEW and I know they have a free to use professional ethics and compliance hotline.
Auditors are there to find unusual accounting activity of a material nature. Their remit doesn't extend to non financial 'dodgy' stuff. I once audited a haulage firm where a disgruntled employee told me that the mainly Polish drivers were told that when their tachographs reached their time limit they should just remove the card and continue with their work!! I raised this to the audit manager and all I got was "doesn't surprise me" but they did nothing more with it. Being my first few months in my first professional job I did everything I felt I could at the time.
Since being in industry and in a more senior role I'm very conscious to raise queries on anything usual in nature or practice.
Can you be more specific about what sort of 'dodgy' things you're on about?
All accountants have to be registered under the Money Laundering Regulations - either with their own body - ICAEW, ACCA etc or HMRC if they are not part of an accountancy body.
Under the Regs they have to report their knowledge or suspicions of Money Laundering (defined widely))
It is an offence for someone who knows or suspects that MLTF has taken place (or has reasonable grounds) not to report their concerns.
As an accountant there is some difference as to what 'suspect' means though!
Not reporting can end up with an accountant being imprisoned - without a job etc.
Good overview is https://www.ccab.org.uk/wp-content/uploads/2020/10...
Under the Regs they have to report their knowledge or suspicions of Money Laundering (defined widely))
It is an offence for someone who knows or suspects that MLTF has taken place (or has reasonable grounds) not to report their concerns.
As an accountant there is some difference as to what 'suspect' means though!
Not reporting can end up with an accountant being imprisoned - without a job etc.
Good overview is https://www.ccab.org.uk/wp-content/uploads/2020/10...
The Accountants Auditing the SNP seemed to want to state they couldn’t be expected to find everything
https://www.heraldscotland.com/politics/19539640.s...
https://www.heraldscotland.com/politics/19539640.s...
QuattroDave said:
I'm FCA through ICAEW and I know they have a free to use professional ethics and compliance hotline.
...
Since being in industry and in a more senior role I'm very conscious to raise queries on anything usual in nature or practice.
Same here on both counts....
Since being in industry and in a more senior role I'm very conscious to raise queries on anything usual in nature or practice.
AML is the key one that all practicing accountants have to comply with (and those of us in industry should be very alert for too).
Tax fraud is one where the good (tax) accountants know where the grey area stops and the crime begins!
Beyond that as Dave says it's more a matter of professional ethics, which is sadly no longer as common as it should be.
Countdown said:
konark said:
Kpmg couldnt find the black hole in carrillions accounts never mind dodgy dealing.
Black holes are very hard to find.Yes I'm ex PwC, yes I know exactly what auditors look for and could if I wanted to hide most problems in a business. No I don't do that as it doesn't sit with my personal morals and professional ethics. Instead I use my knowledge to have explanations for unusual items for the auditors to review and decide whether adjustments are needed to the accounts or not. Others may not have the same personal standards and would suggest for Carillion et al they have a few senior people of questionable ethics.
One of my very first clients used to be an auditor in the same office and used to 'plant' three of four errors in her accounts each year to see if those auditing her were as good as she was when she was an auditor. Very odd behaviour but then you often get people with superiority complexes in senior finance roles.
The saying goes: if you owe someone £10k and can't pay you've got a problem: if you owe someone £10m and can't pay, they've got a problem.
There's a similar problem I think with senior finance managers and audit: if an organisation has built up such a problem, how do they challenge it without being seen as culpable?
So there's a massive incentive to "look on the bright side" (optimism bias) and hope the next year things will change.
I've been close to this, and it isn't pleasant.
There's only one answer of course: decide if you want to be employed, or employable.
There's a similar problem I think with senior finance managers and audit: if an organisation has built up such a problem, how do they challenge it without being seen as culpable?
So there's a massive incentive to "look on the bright side" (optimism bias) and hope the next year things will change.
I've been close to this, and it isn't pleasant.
There's only one answer of course: decide if you want to be employed, or employable.
Ian Geary said:
The saying goes: if you owe someone £10k and can't pay you've got a problem: if you owe someone £10m and can't pay, they've got a problem.
There's a similar problem I think with senior finance managers and audit: if an organisation has built up such a problem, how do they challenge it without being seen as culpable?
So there's a massive incentive to "look on the bright side" (optimism bias) and hope the next year things will change.
I've been close to this, and it isn't pleasant.
There's only one answer of course: decide if you want to be employed, or employable.
I think this is absolutely right. Although I’m certain that there are (a small number relatively of) criminal enterprises and there are a small number of instances of senior teams wilfully cooking the books, many (most?) corporate “frauds” evolve incrementally over time, usually in the face of inadequate management oversight rather than crooked oversight per se. There's a similar problem I think with senior finance managers and audit: if an organisation has built up such a problem, how do they challenge it without being seen as culpable?
So there's a massive incentive to "look on the bright side" (optimism bias) and hope the next year things will change.
I've been close to this, and it isn't pleasant.
There's only one answer of course: decide if you want to be employed, or employable.
I’m sure most audit teams have heard a variation on “why are you raising this now- you didn’t last year” etc.
I’d like to see a U.K. whistleblower regime similar to the one in the US, where, broadly, whistleblowers take a share of any fines levied. We thought that would lead to an explosion of vexatious reports but in reality it has been an effective mechanism for keeping the system (largely) honest.
QuattroDave said:
One of my very first clients used to be an auditor in the same office and used to 'plant' three of four errors in her accounts each year to see if those auditing her were as good as she was when she was an auditor. Very odd behaviour but then you often get people with superiority complexes in senior finance roles.
If I caught one of my team doing that there’d be hell to pay. Not only, very technically, is that interfering with the company’s obligation to maintain adequate records and the auditor’s statutory right to information it’s also perfectly reasonable grounds for the auditor to class the audit as high risk and adjust their work and fees accordingly. I’m all for robust discussions with audit but deliberately messing them around is stupid. QuattroDave said:
The fundament flaw in auditing is many auditors eventually move into industry and take with them the knowledge of what auditors look for and as such are well equipped to hide any accounting dodgy dealings should they wish to. It all comes back to my professional ethics point.
Yes I'm ex PwC, yes I know exactly what auditors look for and could if I wanted to hide most problems in a business. No I don't do that as it doesn't sit with my personal morals and professional ethics. Instead I use my knowledge to have explanations for unusual items for the auditors to review and decide whether adjustments are needed to the accounts or not. Others may not have the same personal standards and would suggest for Carillion et al they have a few senior people of questionable ethics.
One of my very first clients used to be an auditor in the same office and used to 'plant' three of four errors in her accounts each year to see if those auditing her were as good as she was when she was an auditor. Very odd behaviour but then you often get people with superiority complexes in senior finance roles.
You wouldn’t be able to hide anything material without requiring luck to get away with itYes I'm ex PwC, yes I know exactly what auditors look for and could if I wanted to hide most problems in a business. No I don't do that as it doesn't sit with my personal morals and professional ethics. Instead I use my knowledge to have explanations for unusual items for the auditors to review and decide whether adjustments are needed to the accounts or not. Others may not have the same personal standards and would suggest for Carillion et al they have a few senior people of questionable ethics.
One of my very first clients used to be an auditor in the same office and used to 'plant' three of four errors in her accounts each year to see if those auditing her were as good as she was when she was an auditor. Very odd behaviour but then you often get people with superiority complexes in senior finance roles.
QuattroDave said:
One of my very first clients used to be an auditor in the same office and used to 'plant' three of four errors in her accounts each year to see if those auditing her were as good as she was when she was an auditor. Very odd behaviour but then you often get people with superiority complexes in senior finance roles.
That seems odd to me. If they were small errors then the Auditors wouldn't be expected to identify them because they do a sample-based check. However if they were significant (material) errors it would call into question the competence of the person preparing the Accounts and (assuming she brought the errors to their attention before the Accounts were signed off) result in them doing much more detailed testing and charging her for the work.Countdown said:
QuattroDave said:
One of my very first clients used to be an auditor in the same office and used to 'plant' three of four errors in her accounts each year to see if those auditing her were as good as she was when she was an auditor. Very odd behaviour but then you often get people with superiority complexes in senior finance roles.
That seems odd to me. If they were small errors then the Auditors wouldn't be expected to identify them because they do a sample-based check. However if they were significant (material) errors it would call into question the competence of the person preparing the Accounts and (assuming she brought the errors to their attention before the Accounts were signed off) result in them doing much more detailed testing and charging her for the work.Weird enough for me to remember it 16 years later!
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