It’s time to make the accounting profession more accountable

The accounting profession has at the heart of its ethical standards the notion of serving the public interest. However, little or no effort is put into holding it to account by politicians who fail to ask the professional bodies and the largest firms in the land how they satisfy that requirement.

No periodic inquiry or hearing is conducted by the Commonwealth Parliament, for example, to quiz the professional accounting bodies or the major accounting firms about how they enforce the public interest in their day-to-day work.

It is left largely to self-regulation, but whether self-regulation is sufficient in the context of the accounting world merits further consideration following evidence given before a New South Wales Parliament committee hearing by a former KPMG partner, Brendan Lyon, about his resignation from the firm when he was pressured to modify to suit a client’s wishes the contents of a consulting report.

Lyon’s evidence is unique insofar as it is a rare appearance before a parliamentary committee by somebody that worked in a professional services firm providing insight into a specific transaction or case study.

It ought to prompt a broader consideration as to why the accounting profession — involved as it is in important regulatory and compliance matters across the board — does not get quizzed more often by parliamentarians.

The inquiry conducted not so long ago by the Parliamentary Joint Committee on Corporations and Financial Services on the regulation of auditing in Australia is an example of a periodic dip of the toe in the subject matter of accounting, but that is not adequate given that the profession has members within it that hold statutory registrations that go beyond the sphere of auditing and assurance.

Consider the fact that the professional accounting bodies have members that are registered tax agents, registered company auditors, auditors of self-managed superannuation funds, liquidators, and holders of financial services licenses or credit licenses — to name several areas in which accounting professionals work.

What do the accounting bodies do in relation to the provision of training as well as ensuring their members fulfill professional development obligations for both the regulators as well as the professional bodies themselves? How do they discipline members their disciplinary committee finds have conducted themselves unethically?

These registrations are established under various laws and it is entirely appropriate for the professional bodies to present themselves to inform a parliamentary committee about the steps they take to regulate and monitor their members in the public interest.

The accounting bodies themselves are recognised in legislation and members of the more prominent bodies are able to sign statutory declarations and other documents if they hold the appropriate membership status.

This recognition is seldom reviewed once granted under law or regulation and the legislators should periodically “check in” to understand what the bodies are doing when it comes to regulating their members and protecting consumers.

It is time for elected representatives to ask the professional bodies and the various firms what they do in the public interest because — if nothing else — it will create a heightened awareness that those that give them recognition under law are set to hold their feet to the fire if they show a sign of being lax.

This article was first published by Crikey.