CCAB ethical dilemmas case studies: Professional Accountants in the Not-for-Profit Sector
ICAS is one of the five members of the CCAB along with the ICAEW, ACCA, CIPFA and Chartered Accountants Ireland. The CCAB provides a forum for the five member bodies to work together collectively in the public interest on matters affecting the profession and the wider economy.
The CCAB has published a series of ethical dilemmas case studies. The case studies illustrate how the Codes of Ethics of the CCAB bodies can be applied by professional accountants working in business; the not-for-profit sector; the public sector; public practice; and as Non-Executive Directors.
Based on an article written by Rick Tazzini FCPFA, the article below is one of a series of articles which discusses the case studies and focuses particularly on the ethical dilemmas case studies for professional accountants in the not-for-profit sector.
Ethical dilemmas case studies for Professional Accountants in the Not-for-Profit Sector
All members (and registered students) of the CCAB bodies are required to comply with their Institute’s Code of Ethics; first and foremost, always acting in the public interest. The code provides a conceptual framework with five fundamental principles; integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
Accountants should constantly be alert to the risks to the fundamental principles. They should identify, evaluate and address threats that might arise from self-interest, self-review, advocacy, familiarity and intimidation.
The technical requirements are laid out in each professional accounting body’s code of ethics.
The CCAB Ethics Group has published a revised and updated range of ethical dilemma Case Studies for Professional Accountants working across a range of sectors; Business, Not for Profit, Public Sector, Public Practice and as Non-executive directors.
The case studies are designed to bring the tricky topic of ethics to life. They do not cover every possible scenario, but outline key principles and processes that could be considered when attempting to identify, evaluate and address ethical threats in line with the professional body’s code of ethics.
There are half a dozen such studies in the charity and not for profit sector, covering such topics as:
- Disclosure of malpractice – unauthorised payments,
- School governor – fair tender policy,
- Disclosure of malpractice – grant claim,
- Undisclosed employee benefits,
- Persuading others to tell the truth
- Performance information.
In 2021, the CCAB conducted an Ethics survey across its members (ICAEW, ACCA, CIPFA, ICAS and Chartered Accountants Ireland). The survey found that 27% of respondents indicated that they had been put under pressure or felt under pressure to act in a professionally unethical way.
The CCAB survey results echo the CIPFA/Public Finance survey in 2018, where 57% felt they had been put under pressure, 36% carried out the unethical task, either partially or fully, and just under half of those surveyed had read the Code.
Ethical failings in corporate scandals have been a familiar theme. Public service and charitable sectors have had their share of financial governance failings. Many of those failings highlighted the importance of integrity and objectivity in financial statements which are the first two of the five fundamental principles of ethics for an accountant.
However, displaying integrity and objectivity at all times may be difficult,especially if there is a financial incentive or personal risk for senior management or the accountant if financial results are inflated or overstated. And, perhaps within these sectors, finance professionals may also be at risk of being heavily invested in helping to improve services and beneficiaries that that may overlook potential threats to their professional independence.
Professional accountants also have the added responsibility to act in the public interest in relation to compliance with laws and regulations ensuring that the firm acts ethically and to not put others under undue pressure. Applying the “reasonable and informed third party” test can guide professional accountants to act ethically.
The first port of call when an ethical dilemma is identified is to raise your concern to the appropriate person. This might be your line manager or someone more senior in the organisation, bearing in mind your confidentiality obligations. In some cases, the dilemma can be successfully resolved internally. Unfortunately, not all ethical issues can be resolved internally and as we have seen the 2021 CCAB survey, an accountant may have to discuss with the audit committee, Board, auditor or their professional body. Ultimately they may need to consider leaving the organisation and potentially whistleblowing to ensure that the accountant fulfils their ethical obligations.
Each professional accounting body’s website will offer support and guidance.
The CCAB ethical dilemma case studies can be found here.
Rick Tazzini FCPFA in an interim Finance Director and Consultant
