Challenges remain to raise public finance ethical standards across the globe

12 Aug 19

While some progress has been made on improving international ethical standards across the public finance sector there is still much to do, says CIPFA chief executive Rob Whiteman. 

 

 

Ethics can mean different things to different people. Divergence in the understanding and appreciation of ethics can be particularly visible across cultures, which sometimes define ethical behaviour differently from one to the next. 

Ethics and integrity are important principles across all lines of work, but for those working in public accounting they’re crucial. Regardless of country or region, citizens rightly expect their taxes to be managed prudently and transparently. As public finance professionals, it’s important to consider how prevalent unethical behaviour is in the public realm internationally and the challenges this presents, but also how dishonest activity is being challenged.

In the UK we are not immune to the problem.

According to last year’s CIPFA ethics survey, nearly 60% of public finance professionals in the UK have experienced pressure to act unethically at least once in their career. Of those who felt pressure, 8% carried out an unethical action and 28% did so at least partially. Further to this, a survey by the Chartered Accountants Ireland Education Trust (CAIET) showed that among more than 2,100 respondents, 94% had observed or encountered unethical behaviour. According to the study, many accountants that faced pressure also felt under threat, with some being told they would be passed over for a promotion, see their post deleted or face disciplinary action. 

CIPFA has taken strides to address global ethical standards in public finance and is committed to confronting unethical accounting actions, irrespective of borders. In November 2018, CIPFA was the first UK professional body to adopt the code from the International Ethics Standards Board for Accountants as a statement of professional practice. CIPFA has also increased its involvement in international financial management projects to combat fraud, corruption and the mismanagement of funds, with more than 25 projects completed or ongoing in more than 20 countries. 


'While real progress has been made at organisational level, substantial challenges still exist with improving global ethics in public finance. A recent study sponsored by the CAIET showed that only 45% of surveyed respondents had ever consulted the Code of Ethics.'


A primary international issue continues to be the absence of effective public administration systems in many countries. In practical terms, this administration gap leaves public finance professionals without guidance, support and training on ethical accounting practices. CIPFA has supported the government of Zimbabwe with the adoption of accrual accounting practices in an effort to improve ethical accounting issues in Africa.

In Tajikistan, efforts are underway in partnership with the World Bank’s International Development Association and the government of Tajikistan to improve efficiency in the national government’s public financial management, ensure compliance with international audit standards and develop a financial management information system. 

While real progress has been made at organisational level, substantial challenges still exist with improving global ethics in public finance. A recent study sponsored by the CAIET showed that only 45% of surveyed respondents had ever consulted the Code of Ethics.

These findings paint a very real and bleak image of individual responsibility and ethical standards in public finance – even more so when considering what the implications might be on a global scale. 

Codifying ethical requirements and implementing accounting safeguards can only be as effective as the professionals putting the tools into practice. Ultimately, the responsibility lies with the individual to ensure ethical standards are upheld. Culture and personal values are key to addressing issues around ethical accounting standards.

The progress made has been significant, but there’s much more to do to ensure public finance professionals are properly qualified and empowered to resist the pressures and temptations to act unethically. So I find it encouraging to see how invested many governments and financial management professionals are in bolstering a culture of ethics in their national governments.

So while there’s more to do, we have cause for optimism. Together, we can move towards an ethical, standards-based future that delivers for citizens all over the world. Let’s make it happen.  

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