ETHICS IN PROFESSIONAL FIELDS OF PRACTICE … not by what caused the crisis but by your actions and...

ETHICS IN PROFESSIONAL FIELDS OF PRACTICE

THE TAX PRACTITIONERWEBINAR 1. 11 August 2017

Presented by Megan Grindell

AGENDAAGENDA

PRESENTATION 1 - THE THINKING…

ETHICS AS THE FOUNDATION

‘RULES’ OF PROFESSIONAL ETHICS

THE TAX PRACTITIONER AS AN ETHICAL DECISION MAKER

QUESTIONS AND SUBJECT PREPARATION FOR THE SECOND WEBINAR PRESENTATION

PRESENTATION 2 - THE DOING …RECAP OF PRESENTATION 1

ETHICAL CULTURE IN THE TAX PROFESSION

CODES OF PROFESSIONAL CONDUCT

ETHICAL COMPLAINTS / ILLUSTRATIONS

CORRUPTION AND THE TAX PRACTITIONER

DILEMMAS

WRAP-UP

…. THE UNCOMFORTABLE SILENCE

Fairfax International vs SAC (Steven Cohen)

Billionaire hedge fund manager Steven Cohen fumbles when directly questioned about ‘shorting’ ………

http://www.pbs.org/wgbh/frontline/article/exclusive-watch-billionaire-steven-

cohen-stumble-over-insider-trading-rules/

“If you take an ethical approach towards life,

you’re usually ahead of the rules”

John Loeb, the senior partner of Investment Bank Loeb, Rhoades & Co

– in 1968

ETHICS AS THE FOUNDATION

APPLYING ‘BUSINESS ETHICS’ IN PROFESSIONAL FIELDS

Defining business ethics

Ethics as a growing and evolving focus

Workplace ethics in professional fields of practice

King IVTM and Ethical Leadership

Recent trends in Ethics and Compliance

Morality, Ethics and Legality

Rule vs Principles

DEFINING ‘BUSINESS’ ETHICS

Ethics is concerned with what is right and wrong.

“The branch of philosophy which is the systematic study of reflective choice of the standards of

right and wrong by which it is to be guided, and of the goods towards which it may ultimately be

directed” Philip Wheelwright (A critical introduction to Ethics)

Considering what is good and right for the self and other.

“In the context of the business, ethics refers to ethical values applied to decision-making,

conduct and the relationship between the organisation, its stakeholders and the broader

society”

Ethics includes, but is not limited to, the prevention of fraud and corruption.King IVTM

….ultimately whether viewed philosophically or

practically,

Ethics is …

a choice with consequence

ETHICS AS A GROWING AND EVOLVING FOCUS

A core principle of crisis mitigation is that you’ll be

judged not by what caused the crisis but by your

actions and decisions responding to it ……..

• “US Charges Volkswagen executive with fraud over emissions scandal” January 2017

• MTN wins esteemed World Branding Awards – 2016

• FORD – suffering huge reputational damage due to handling of the Kuga

dilemma

BUSINESS ETHICS IN PROFESSIONAL FIELDS OF PRACTICE

The mark of a profession is that it has unique ethical risks ….

What is the appropriate behavior for tax practitioners?What are tax practitioners supposed to do?

What are their responsibilities?

What does the public expect of tax practitioners?


“To preserve the integrity of his reports, the accountant must

insist upon absolute independence of judgment and action. The

necessity of preserving this position of independence indicates

certain standards of conduct.

If the confidence of the public in the integrity of accountant

reports is shaken, their value is gone”


Because of its essential role in tracking complicated financial

relationships in today’s world, accounting has developed into a

‘service profession’

There are general ethical responsibilities that accrue to

professionals and specific responsibilities that arise from being a

professional accountant / tax practitioner.

Because of public expectation -

Provide great benefit if applied (assurance)

But can also do great harm.



“An auditor’s responsibilities are clear. If however, consulting brings

in more profit than auditing does, there will be even more pressure

to do even more consulting. Some might say, if that results in ‘soft

auditing’, so be it.

It’s simply human nature to follow pursuits that enhance our income

stream. But how can we reconcile giving into such pressure with

accounting ethics?

Accounting Ethics, Ronald Duska, 2nd edition 2012

KING IVTM AND THE FOCUS ON ETHICAL LEADERSHIP

Prominence of Ethics in King IVTM released on 1 Nov ‘16

Consists of 16 x principles: 3 of 16 specifically focuses on Ethics

1. Ethical leadership (the governing body should lead ethically and effectively)

• Ethics tone should be set at the top

• Character of people involved in governance (collectively and individually)

• Cardinal values now includes integrity & competence (ICRAFT)

2. Ethical culture (the governing body should govern the ethics of the organization in a way that

supports the establishment of an ethical culture)

• Move from management of ethics to ensure ethical culture is established

3. Corporate citizenship (governing body should ensure that the organization is, and is seen to be; a

responsible corporate citizen).

• Triple context of the economic, social and natural environment

Extending recommendations (SOEC) –applicable to all organisations, broader mandate and composition

Relevance … (prescribed officer)



Comply or else (SOX /

government)

Comply or explain (King II)

Apply or explain (King III)

Apply and explain (King IV)

‘… compliance is there to

reinforce culture and it also

demonstrates why those who

advocate a paper compliance

program are wrong. It is the

doing compliance, not simply

having it on paper, that makes it

all work.’ Tom Fox – 10 Feb ‘17


DEFINITION OF CULTURE:It is the “pattern of responses discovered, develop or invented during the

group’s history of handling problems which arise from the interaction of its

members, and between them and their environment.

These responses are considered the correct way to perceive, feel, think and

act, and are passed on to new members through immersion and teaching.

Culture determines what is acceptable or unacceptable, important or

unimportant, right or wrong, workable or unworkable.”

Thank You for Being Late, Thomas Friedman

KING IVTM

Culture – how things are really done around here, not how it is said to be done


TOP 10 TRENDS IN ETHICS AND COMPLIANCE (NAVEX GLOBAL)

2016

1. The Rise of the Millennial Mindset 2. Transitioning to a more Global Center of Gravity for Ethics and Compliance 3. Board Expectations for Ethics & Compliance Oversight - becoming more

specific, uniform and comprehensive4. Politics invades the workplace 5. The World of sport scandals, and how it impacts our E&C discussions 6. Working with HR – time to try again7. Renewed focus on boosting whistleblower rights and squashing retaliation 8. Getting serious about Anti-Corruption efforts and 3rd party risk management 9. Cynicism, Fatigue and Compliance pushback – a problem we can no longer ignore10. Expanding the scope of E&C: Is this the year for pushing boundaries and increasing

authority?

2017

1. Delivering a return on Compliance (ROC)2. Thriving in a Five Generation Workplace

3. Putting the “e” in Ethics and Compliance

4. Sorting through the Alphabet Soup of Global Standards

5. Being more than just People Who Say “No”

6. Meeting society’s expectations for social responsibility7. Latest trends in helplines and whistleblowing protection

8. Compliance role in mitigating cyber mayhem

9. Ethics and Compliance crises management plans

10. Compliance officer liability

TOP 10 TRENDS IN ETHICS AND COMPLIANCE (NAVEX GLOBAL)

THE DISTINCTION BETWEEN MORALITY, ETHICS AND LEGALITY

Morality – underlying codes of right and wrong

(relative, not absolute)

Ethics is the appropriateness of a decision in light of

morality

Legality conformity to legal statute

Ideology and philosophy however are not always helpful in guiding

individual immediate decision making. Moral philosophy is often seen as

intellectual and impractical.

FBI – Apple encryption dispute

“The United States government has demanded that Apple take an unprecedented step

which threatens the security of our customers. We oppose this order, which has

implications far beyond the legal case at hand. This moment calls for public discussion,

and we want our customers and people around the country to understand what is at

stake.”

Tim Cook CEO Apple

“Apple holds steadfast, refuses to help feds access seized iPhone in NY drug

case”

“virtually limitless expansion of the government's legal authority to surreptitiously intrude

on personal privacy."

THE DISTINCTION BETWEEN MORALITY, ETHICS AND LEGALITY


Rules ….and Responsibility Beyond Rules

Compliance vs Ethics

Personal vs Business Ethics

DEFINING / APPLYING THE CONCEPT OF PROFESSIONALISM

Professionals and those working in acknowledged

professions, exercise specialist knowledge and skill

Professional Ethics* - How the use of this knowledge should

be governed when providing a service to the public (*Ruth Chadwick (1998). Professional Ethics. In E. Craig (Ed.), Routledge Encyclopaedia of Philosophy. London:

Routledge. Retrieved October 20, 2006)


CHARACTERISTICS OF A PROFESSION1. A specialized body of knowledge

2. A recognized formal education process for acquiring the requisite specialised knowledge

3. A standard of professional qualifications governing admission to the profession

4. A standard of conduct governing the relationship of the practitioner with clients, colleagues and the public

5. A recognition of status

6. An acceptance of social responsibility inherent in an occupation endowed with public interest

7. An organization devoted to the social obligations of the group.

*The Commission on Standards of Education and Experience for Certified Public Accountants


CHARACTERISTICS OF A PROFESSION

A standard of conduct governing the relationship of the practitioner with clients, colleagues and the public

Four characteristics of being professional

The professional is involved in a vocation useful and noble enough to inspire love and

enthusiasm on the part of the practitioner

The professional’s vocation in its practice requires expert knowledge

In applying that knowledge the practitioner should abandon the strictly selfish

commercial view and ever keep in mind the advantage of the client.The practitioner should possess a spirit of loyalty to fellow practitioners, of helpfulness to the common cause they all profess, and should not allow any unprofessional acts to bring shame upon the entire profession.



1. WHAT ARE THE OBLIGATIONS / ROLE?

2. WHAT IS AN 'ETHICAL' DECISION MAKER’?

“The credibility of the profession is tied to yours”


1. WHAT IS AN 'ETHICAL' DECISION MAKER’?

Ethical Decision Making: ‘refers to the process of evaluating and choosing among

alternatives in a manner consistent with ethical principles. In making ethical decisions,

it is necessary to perceive and eliminate unethical options and select the best ethical

alternative’

Ethical decisions / process involves / requires -

o Commitment: The desire to do the right thing regardless of the cost

o Consciousness: The awareness to act consistently and apply moral convictions to daily behaviour

o Competency: The ability to collect and evaluate information, develop alternatives, and foresee potential consequences and risks


2. WHAT ARE THE OBLIGATIONS OF THE ROLE?

Good decision making must be both ethical and effective:Ethical decisions generate and sustain trust; demonstrate respect,

responsibility, fairness and caring; and are consistent with good

citizenship.

Effective decisions are effective if they accomplish what we want

accomplished and if they advance our purposes

IN SUMMARY ……

“If you don't stick to your values when they're being tested, they're not values: they're hobbies.”

Jon Stewart

ETHICAL DILEMMAS, COMPLAINTS AND

ILLUSTRATIONS

Please email to

[email protected]

To address at the 2nd presentation scheduled

for Friday 25 August 2017

Megan GrindellSenior Manager

Mobile: 082 339 0745Tel: +27 12 664 5568Fax: +27 12 664 0307

e-mail: [email protected]

ETHICS IN PROFESSIONAL FIELDS OF PRACTICE … not by what caused the crisis but by your actions and...

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