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Restoring Public Trust and Credibility in Accounting

Numerous factors have recently contributed to the public's skepticism of big business. While not new, this mistrust has grown exponentially following the global financial crisis of 2008 and the recession that followed. Various corporate scandals have degraded public opinion of financial institutions. The recent increase in cybersecurity breaches, data misuse and related privacy concerns have also played a role in eroding trust.

Pittsburg State University's online Master of Business Administration (MBA) in Accounting program emphasizes ethics and corporate responsibility in the context of modern society. This emphasis can help emerging leaders in accounting and business management restore the profession's credibility.

What Are the Signs of Degrading Public Trust in Accounting?

The growing mistrust of financial institutions is evidenced by politics, public outcry and the widespread call for corporate responsibility. While the public lambastes those who gain the most from fraudulent financial activities – executive officers and stakeholders, for instance – accountants and the accounting profession experience public scrutiny, too.

While accountants are part of a financial institution and are therefore held partially responsible for the negative impact of corporate greed, auditing has lost credibility as a whole. As citizens grow increasingly skeptical of financial information output by corporations and the wealthy individuals who operate them, accountants and other financial officials must work harder to restore trust.

Why Is the Accounting Profession Facing Blame?

Accountants are the gatekeepers of the transparency for financial information from public and private institutions. They are also trusted corporate advisors, providing the information that influences many business decisions. Accordingly, as organizations partake in irresponsible or unethical behavior, accountants are seen as complicit in or complacent about fraudulent activities.

Is This Blame Legitimate?

The role of the accounting profession in financial misconduct may have grounds or not, depending on the situation. There are plenty of instances where accountants are complicit in financial crime — whether the misconduct is overt, a passive complacency or an acute exploitation of loopholes in regulations and anti-money laundering laws. In these cases, accountants may be rightfully seen as professional enablers or catalysts for unethical corporate activities.

A corporation's criminal activity may not be applicable to an entire industry or profession, but professional enablers — using advanced accounting and regulatory knowledge to take advantage of legal frameworks — can be damaging to the public's trust of a profession.

How Can the Accounting Profession Restore Trust?

Finance is arguably one of the most important aspects of a business, but building public trust regarding the accounting profession is based on transparency, legitimacy and rigorous codes of conduct and ethics. Professional associations such as the American Institute of CPAs (AICPA), the International Federation of Accountants (IFAC) and IFAC's International Ethics Standards Board for Accountants (IESBA) have exhaustive codes of ethics and conduct that stress values, integrity, anti-corruption and, increasingly, independence in the profession. In fact, studies have shown that higher percentages of professional accountants in a population correlate to less corruption.

Shaping positive public opinions about the accounting industry will rely largely on the widespread adoption of, and adherence to, these ethics-based codes, as well as more collaboration with law enforcement agencies. Many other accounting associations are releasing manifestos encouraging the accounting profession to play a proactive role in fighting corruption and financial crime. Many organizations are pushing for a reformation in global accounting standards and regulation as well as a shift away from a "compliance-based" culture to one that values ethical regulation.

Educational institutions play a crucial role in instilling honesty and integrity in the workforce's professionals, too. A combination of these large, small and instructional efforts will serve to reinforce the profession's values and rebuild public trust of the field.

Learn more about Pittsburg State University's MBA in Accounting online program.


Sources:

AICPA.org

IFAC: Maintaining the Public's Trust

IFAC: The Accountancy Profession — Playing a Positive Role in Tackling Corruption

IFAC: The International Code of Ethics for Professional Accountants: Key Areas of Focus for SMEs and SMPs

International Ethics Standards Board for Accountants

International Federation of Accountants

 


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