New code to fight fraud‚ corruption in accounting profession

In its quest to fight fraud‚ corruption and money laundering‚ the International Ethics Standards Board for Accountants introduced a new section to their code of ethics in July.

The South African Institute of Professional Accountants (SAIPA) said section 360 in the code of ethics sets out a framework to guide auditors and accountants on what actions to take in the public interest when they become aware of a potential illegal act‚ known as non-compliance with laws and regulations‚ or NOCLAR‚ committed by a client or employer.

The code states that a distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.

Once they become aware of the NOCLAR‚ accountants have to report it to their direct superior.

If they are the most senior person‚ they have to consult with the board of directors or anybody who is involved in corporate governance in the organisation.

The responsible people must be allowed time to rectify‚ remediate or mitigate the consequences of the identified or suspected non-compliance as long as there is no urgency in the matter.

“SAIPA advises accountants to follow the internal route first. If they feel there is insufficient action to rectify the non-compliance‚ they can approach the regional forums and their professional bodies. If there still remains unease they should consult legal counsel‚” SAIPA’S legal‚ ethics and compliance executive Ragiema Thokan-Mahomed.

She said the code acknowledges that a senior professional accountant is expected to apply knowledge‚ professional judgment and expertise.

“However‚ he is not expected to have a level of understanding of laws and regulations beyond that which is required for the professional accountant’s role within the employing organisation.”

She said the newly added section provided accountants with an override to the principle of confidentiality when reporting the non-compliance is in the best interest of the public. Once they have taken appropriate action‚ they must feel comfortable that the noncompliance has been fully dealt with and remember to document everything.