As South Africans come to terms with state capture and everything it means for our economy and public life, the importance of ethics is receiving recognition. We can all see that even the best laws can be circumvented or broken – and that legal processes are slow and expensive.
By Shahied Daniels, CEO of the South African Institute of Professional Accountants (SAIPA)
By contrast to law, ethics relates to an individual’s sense of morality, or right and wrong. An ethical person is guided by law, to be sure, but he or she is fundamentally motivated by trying to do what is right. One could say that law is about rules while ethics is concerned with principles.
In the most basic sense, one can trust that an ethical person is not trying to get away with what he or she can but is trying to do the morally correct thing.
Clearly, it is important that everybody is ethical in how they deal with all their affairs, personal and business, but it is critical in the professions. Professionals like accountants, doctors and lawyers deal with extremely sensitive matters, and their advice and actions have life-or-death consequences or spell the difference between financial success or failure.
When it comes to ethics in general, there are different conceptions of what is right and wrong. This problem is more acute when one exists in a multicultural environment such as South Africa.
Another challenge is that deciding specific ethical questions can be surprisingly difficult at times, as most people can confirm from experience.
In response, professional organisations like SAIPA develop ethical codes to guide their members’ actions in their professional lives. These codes offer clients the peace of mind that comes from knowing that the professional they engage with have subscribed to the code and will be held accountable to it.
SAIPA has subscribed to the Code of Ethics for Professional Accountants developed by the International Ethics Standards Board for Accountants. Those holding SAIPA’s certification as Professional Accountants (PA(SA)) thus have a well-structured framework to assist them in making ethical decisions.
It is important to emphasise that ethics is not about following rules, but rather principles. Codes of conduct can help Professional Accountant (SA)s work out how principles should be applied, but they do not specify certain actions.
King IV, the latest iteration of South Africa’s governance code, follows the same approach by focusing on outcomes and not rules.
Audi alteram partem—the requirement to be fair
For a professional body like SAIPA, holding its members accountable to an ethical code is critical in building public confidence in the profession generally, and the Professional Accountant (SA) designation in particular. That means holding members accountable to the code.
Here it is important to stress that SAIPA and other professional bodies must be rigorously fair when it comes to holding members accountable. The key principle here is audi alteram partes, the Latin maxim that means “listen to the other side”. This is a foundation of any fair legal system and should never be ignored in the interests of expediency. SAIPA thus has a carefully thought-out process to allow members to respond to complaints, sift the evidence, and decide whether sanction is needed, and what form it should take. As in law, there is also an appeal process when a member feels that an incorrect decision has been taken.
The gold standard refers to the practice of backing paper currencies with gold, a practice that has fallen somewhat out of favour in today’s financial systems. However, the phrase remains as a vivid metaphor for the concept that true worth is underpinned by something solid.
Digital technologies are ushering in the Fourth Industrial Revolution, which in turn is automating many accounting processes. But in this often confusing and fast-moving digital environment, trust has become almost a currency—and trust is founded not only a profession’s record but the knowledge that he or she is bound by an enforceable ethical code. Ethics, and the trust they engender, have always been the foundation of a successful professional career, and that is one thing that is not going to change.