The Post Office scandal has made me reflect on the value of ethical frameworks. Sometimes they seem overly detailed and verbose, but they provide an excellent framework for looking at what went wrong, highlighting the importance of ethical conduct in the accounting profession. Here are some key ethical considerations.
So here are ten principles, all mentioned in ethical guideline of at least one major accounting body:
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Professional Competence and Due Care:
- Accountants are expected to maintain professional competence and perform their duties with due care. In the case of the Post Office scandal, if accountants lacked the necessary competence to understand and audit the Horizon accounting system, it raises questions about their adherence to this ethical principle.
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Integrity and Objectivity:
- Accountants must uphold the highest standards of integrity and objectivity. The scandal involved accusations against Subpostmasters that were later proven to be wrong. If accountants were aware of flaws in the system but failed to objectively report them, it could be considered a breach of these ethical principles.
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Professional Scepticism:
- Professional scepticism is a cornerstone of ethical accounting practice. Accountants are expected to assess information critically, question assumptions, and remain vigilant for potential fraud or errors. A lack of professional scepticism, must surely be a contributing factor in overlooking red flags in the Horizon system. It is not clear how many similar cases any particular internal auditor handled, but at some point you would have expected someone to ask a question about why something new was happening to so many people.
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Confidentiality:
- Confidentiality is an important ethical principle, that the Post Office seem to have interpreted wrongly. They have failed to cooperate with various investigations, and continue to be less than open in their disclosures. The individuals involved would have been well advised to think about who their stakeholders were, and exactly who they owed a duty of confidentiality to.
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Whistleblowing and Reporting:
- Accountants have a duty to report any unethical or illegal activities. As accountants became aware of problems within the Post Office's financial system, they should have taken appropriate steps to escalate or report the issues.
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Responsibility to the Public Interest:
- Accountants have a responsibility to act in the public interest. In the Post Office scandal, where the consequences affected a broad spectrum of individuals and businesses, accountants should have considered the broader implications of their actions or inactions on the public.
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Compliance with Laws and Regulations:
- Accountants are expected to comply with relevant laws and regulations. If accountants were aware of non-compliance within the Post Office's financial system and did not take corrective action, it raises ethical concerns about their commitment to legal and regulatory standards.
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Professional Development:
- Ethical considerations extend to a commitment to ongoing professional development. If accountants lacked the skills or knowledge to effectively audit the Horizon system, it raises questions about their commitment to staying current in their field.
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Communication and Transparency:
- Ethical accountants prioritize clear communication and transparency. If accountants were aware of issues but failed to communicate them transparently to stakeholders, it could be viewed as a breach of ethical standards.
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Adherence to Organizational Values:
- Accountants should align their actions with the values and principles of their organization. If organizational pressures or conflicts compromised ethical conduct in the Post Office scandal, it underscores the need for accountants to uphold ethical standards even in challenging circumstances.
The Post Office scandal is an extreme example, and most of us will not be faced with such a massive and complex challenge, but this simple application of ethical principles demonstrates the value of the framework designed to help us to act professionally and ethically.