April 2, 2025 l Business Mirror
One may recall celebrated cases of accounting scandals in the past like Enron, Lehman Brothers, WorldCom, and Wirecard. Those scandals translated to billions of dollars lost that caused the collapse of companies, imprisonment of executives, reputational damages to accounting firms and more. The episodes were driven by greed or the pressures of achieving ambitious goals like growth, profits, etc.
Despite well-published consequences and commitments to transparency, improvement in professional behavior and governance, scandals continue to happen.
Among the key groups of players in such unfortunate incidents are the professional accountants. The International Ethics Standards Board for Accountants (Iesba) recognizes the efforts by accounting firms to strengthen their ethical culture and enhance governance. It believes it should do its part to address whatever gaps there may be. With public interest foremost in mind, the Iesba included in their “2024-2027 Strategy and Work Plan” the firm’s culture and governance.
A working group was created to develop a culture and governance framework that promotes and reinforces a high standard of ethical behavior by a firm’s leadership, other partners, and staff across all of the firm’s services; thereby helping the firm develop a reputation as a highly ethical firm, mitigate the risks of unethical behavior and strengthen public trust and confidence in all of its services.
The following guideposts are to be observed in the new standard:
1. Principle-based for no one-size fits all;
2. Applicable to the whole firm from leadership, partners and staff to cover all professional services; and,
3. Scalable.
To have a broad perspective, a series of global roundtables to consult the public were conducted in New York, Australia and Belgium. To follow are similar events in Africa and Latin America. For our side of the world, the public consultation will be held in Kuala Lumpur, Malaysia on April 28, 2025.
The International Association of Financial Executives Institutes (Iafei) will be represented in the public consultation and will be represented by its Chairman Tsutomu Mannari and the Chairman of IAFEI Advisory Council Dr. Conchita Manabat. The whole day event will take place at the Securities Commission of Malaysia offices.
May the well-meaning project of the international standards setting body successfully leads to enhanced accounting firm culture and governance.
***The views expressed herein are her own and do not necessarily reflect the opinion of her office as well as FINEX. For comments, email clmanabat@gmail.com. Photo is from Pinterest.