It’s time for accountants to stand up and be counted
Speaking in the wake of the Financial Reporting Council having imposed a record fine of £21 million on KPMG for its audits of Carillion, the government contractor that collapsed in 2018, Bruce Cartwright, Chartered Accountants Worldwide board member and CEO of the Institute of Chartered Accountants of Scotland (ICAS), said that the outstanding issue that resonates presently throughout the accountancy profession is the need for ethical leadership.
“If, as accountants, we can be trusted by society, we’ve got to drive ethical leadership because professions only have a right to exist if they’re trusted by the societies within which they operate,” he said.
“So, we have to make sure that our behaviour is appropriate and that we call out bad behaviour when we see it.”
Following the acceptance that mistakes were made by those involved directly in the auditing of Carillion, the audit profession has indeed considered how it can improve transparency. But, while a consensus about what action needs to be taken to avoid a repeat of the Carillion failure has been reached, Cartwright expresses frustration at the length of time it is taking government to introduce legislation to drive such reforms.
“To be fair, we’re in a pretty horrible world at the moment, with a cost-of-living crisis and two destructive armed conflicts, and we don’t operate in an ivory tower, but five years down the line we would like to see these recommended changes implemented,” he said.
Another pressing issue facing the profession is sustainability, which Cartwright says there is a collective will to address at an international level.
“There’s an oft-used phrase about ‘saving the planet’ but actually, when I look at sustainability and reporting requirements and what needs to change, we’re not saving the planet, we’re saving the human race from the planet because
frankly, the planet will exist, no matter what happens … it’s the human race that has the issue,” he said.
“Sustainability is a very big agenda for the accountancy profession and a huge opportunity for accountants to stand up and be counted and bring their assurance skills from financial reporting into this arena.
“It’s probably the biggest opportunity the accountancy profession has had in the last two or three decades to make a real difference. It’s not a case of accountants flooding the area with reassuring numbers – it’s not about numbers – but the skillset, the sceptical mindset we bring to the table.”
While he is keen to encourage younger members of the profession to look at the opportunity that the sustainability agenda presents them with, giving a real purpose to their work through the provision of assurance that the information is correct and the numbers add up, Cartwright acknowledges a danger inherent in the speed at which the sustainability agenda is developing which could lead to teething problems.
“The requirements around producing the numbers and the reporting and the standards are evolving very quickly, and mistakes will be made in terms of that assurance, so we all understand what we’re seeking to assure emissions and avoid greenwashing, but the how and the what have still to be worked out and there will be teething problems along the way,” he said.
“But it’s like anything new that’s being explored; we will get better at it and these rules will emerge, and we’ll definitely improve at it, but that’s not a reason not to get on with the job because somebody’s got to show real leadership in this space and, frankly, the accountancy profession has that badge of experience and knows how to assure.
“We should be grasping the sustainability agenda and realising the huge opportunity to do something with real purpose that will benefit society full stop. My daughter is at the start of her accountancy career, and I advise her to look at this area.
because, if you are seeking a purposeful, meaningful role, there’s a whole assurance market there that is currently being developed.”
The other area high on Cartwright’s agenda is technology, which he aligns closely with the talent war and the need to maintain the appeal of the profession to succeeding generations.
“There is a real demand for accountants now and one of the pressing questions is how do you attract that talent?” he said.
“Rather than be afraid of it, the use of artificial intelligence in its widest form can really enhance the role of an accountant because it will process some of the more mundane work and accelerate it – it’s amazing what can be interrogated now – while keeping the focus of the accountant on the value-added knowledge and the interpretation of the information, and that makes the job even more exciting and interesting.”
But, returning to his point about the need for ethical leadership within the profession, Cartwright does caution that we need to consider the source of AI, how the systems have been designed and built and what role ethics have played in that process because the use of algorithms within AI mean that it has the capacity to multiply the impact of whatever it has been designed to do.
“I do get some older members of my profession asking why I keep harping on about ethical leadership when it’s a given,” he said. “But it can’t be assumed to be a given. We might like to think it’s a given, but it has to be reinforced and said repeatedly.
“The future of assurance and sustainability present a real opportunity for the accountancy profession to step up with a common purpose and deliver. As accountants, if we expect society to trust us and define us as professional people, we have to show ethical leadership. It’s non-negotiable.”
As far as Mr Cartwright is concerned, it’s time for accountants to stand up and be counted.
A Question of Trust
During ongoing economic uncertainty, chartered accountants have emerged as beacons of trust according to the latest Edelman Trust Barometer.
Indeed, chartered accountancy is the only profession – aside from nurses – that has seen an uplift in trust this year, while all other financial professions have seen a decline.
The report shows that business leaders are now calling on chartered accountants, as trusted advisors, to be more than financial experts. They are seeking guidance on financial resilience and want to see chartered accountants play a leading role in ethics and data integrity, to navigate advancements in AI and technology and to drive progress on net-zero transition.
It claims that in the era of data-driven decision-making, chartered accountants are uniquely positioned as data guardians.
According to the Edelman findings, chartered accountants must continue to prioritise compliance with regulations and confidentiality and showcase their expertise in data security and privacy.
With automation and technology advancements reshaping industries, including accounting, future-ready chartered accountants are expected to be tech-savvy navigators, guiding businesses through the digital transformation.
And purpose has become more important in driving trust in chartered accountants, particularly speaking out on social and environmental issues. Indeed, net-zero transition considerations are no longer peripheral; they are central to business strategies.
Chartered accountants must be equipped with the knowledge and resources to engage in purpose-led conversations that link net-zero transition initiatives to an organisation’s overall strategy.
Bruce Cartwright said: “There has never been a greater need for a trusted voice in business. We live in an age of conflicting news sources, fake news and fast-changing technological advancements that are changing the way businesses operate.
“This report demonstrates that people look to chartered accountants for reassurance, guidance, and advice during uncertainty.
“Ethical leadership has, and always will be, at the heart of everything we do at ICAS.”