IAESB - Revised standard on professional values, ethics and attitudes

The International Accounting Education Standards Board (IAESB) of the International Federation of Accountants (IFAC) has released for public exposure a proposed revision of International Education Standard (IES) 4, Initial Professional Development-Professional Values, Ethics and Attitudes. IES 4, part of the IAESB’s project to improve the clarity of its standards, is aimed at educational organizations, employers, regulators, government authorities and other stakeholders who support the development of professional accountants.

Drafted in 2004, IES 4 prescribes the values, ethics and attitudes that professional accountants should acquire during the education program leading to qualification. A revised draft of IES 4 was exposed for public comment in May 2011 and, although respondents’ comments were generally supportive, further clarification was requested to explain the requirements on learning outcomes, assessment and reflective activity (the recurring process of reviewing experiences with a view to improve future actions). As a result, the IAESB has made substantial changes to the content of IES 4.

In addition to addressing these issues, the proposed revised IES 4 requires IFAC member bodies to regularly review and update their professional accounting education programs, including formal education and workplace training. Updating the knowledge content of professional accounting education programs and the content of workplace training on a regular basis improves the likelihood of learning outcomes being relevant and developing appropriate competence.

In a continuing effort to improve the clarity of its standards, the IAESB has undertaken a project to redraft all eight of its IESs in accordance with its new clarity drafting conventions. IES 7, Continuing Professional Development, is the first clarified standard to be released since the project began in December 2010. Under the current timetable, the IAESB anticipates that all IESs will have been revised and redrafted, or redrafted only, by the third quarter of 2013. The IAESB invites all stakeholders to comment on its proposals at www.iaesb.org. Comments are requested by October 11, 2012.

Promoting Professionalism: Lessons from the Medical and Legal Professions

Recent research has observed that: “The accounting, medical and legal professions share characteristics common to peer-reviewed professions. These professions also share challenges to professionalism. All three have been criticized for declining professionalism and for choosing commercial success over serving the public interest. Although the medical and legal professions have taken steps to promote a higher level of professional conduct by their members, the accounting profession has not launched initiatives to promote professionalism.”

 

That research discusses the initiatives instigated by the legal and medical professions using the five elements of a professionalism framework. Specifically, the framework highlights the importance of growth in personal conscience, demands compliance with the ethics of duty, inspires realization of aspirational goals, requires accountability of peer professionals, and emphasizes devotion to serving the public good. It recommends that members of the accounting profession use the five elements of the professionalism framework to define, demonstrate and assess professionalism. In addition, it concludes that promoting professionalism is a means for restoring professional identity for individual accountants as well as a means for fulfilling the accounting profession's contract with society.

 

For more information, refer to Promoting Professionalism: Lessons from the Medical and Legal Professions by Laurie Swinney and Bruce Elder in Research on Professional Responsibility and Ethics in Accounting, Emerald Group Publishing Limited, Volume 16, 2012, pp. 93-128. Also, see previous postings on the accounting profession and professionalism.

Developing a framework for “Professionalism”

Australia was the first country outside of the United States to adopt the Certified Financial Planner (CFP) certification model for practitioner excellence. In 2007, the Financial Planning Association of Australia introduced a structured professionalism framework to demonstrate the profession’s commitment to best practice. The publication, A framework for financial planning professionalism, states that professionalism is based on three pillars: professional membership, professional conduct and professional accountability.

The three pillars are illustrated in the following professional framework exhibit. Professional membership is about ensuring that only the right people can become members. Professional conduct is about ensuring members adhere to the high standards set for the profession and that they are supported in following professional ideals. Professional accountability is about protecting the reputation of all members by putting in place an independent, peer-driven disciplinary mechanism.

The framework publication also states: “Our community comprises of our clients, the media, consumer groups and advocates as well as the broader community in which we all live. As a profession, we have obligations and responsibilities to build good relations with the whole community – to be productive and contributing members who make a positive difference to society.”

Furthermore, “A quality professional framework that is supported by the profession and the regulators will underpin these vital goals. Trust will flow on from a robust framework that is supported by members and regulators and shown to have ‘teeth’. The profession’s disciplinary process must be transparent, fair and deliver penalties that match the expectations of the regulators and the community and reinforce best practice behaviours within the profession.”

“The bottom line is that increased community respect will drive the profession’s ‘value proposition’ which will translate into a number of positive outcomes for your business and for you. Some of these outcomes will include increased client stability, growth and profitability.” For more information, also refer to the FPA Code of Professional Practice issued in July 2011.

A research perspective on “Professionalism”

The academic research literature suggests that an understanding of “profession” and “professionalism” cannot ignore a post-professionalism perspective. Professions and the notion of professionalism are undergoing rapid change in a new global information age which necessitates new theories and explanations.

Post-professionalism is characterized by loss of exclusivity, increased segmentation through specialization of knowledge and the growth of technology. As a result, the services previously delivered exclusively by members of formal professions can now be delivered by general professionals or even non-professionals. The 1980s and 1990s witnessed a proliferation of studies of professionals, professions and processes of professionalization. Professional closure is often discussed in relation to education practices and struggles between the state and professional associations about regulations over practice rights and, similarly, professional regulation is typically viewed as involving struggles over accounting and auditing laws and standards.

A recent research study offers an innovative approach to the research on “professionalism” for a specific profession, that of the Certified Financial Planner (CFP). The study uses a framework which distinguishes between the ‘what’ and ‘how’ aspects. The ‘what’ aspect of the experience is the direct object of experiencing the professionalism of financial planners; the ‘how’ aspect is the act of experiencing the phenomenon. The indirect object that is the intention behind the act is not the focus of this study (see Figure 1 below).

This study considers the CFP certification requirements in Australia, Hong Kong and the United States. These requirements establish a framework for professionalism, but they are not the only influences. CFP professionals are also influenced by their work through the behaviour and standards of their employer and by government licensing and regulation. This paper describes the variations in how CFP professionals experience professionalism in each country.

The significance of this study is that identifies the elements of professionalism that CFP’s experience as being part of the professionalism of financial planners. Much of the existing research on the professions and professionalism focuses on historical perspectives and on identifying the characteristics that distinguish a profession and a professional from a sociological viewpoint.

In summary, the purpose of this paper is to present the preliminary findings of conceptions of professionalism of CFP’s from each of the three countries independently. The major finding of the research is that CFP professionals experience professionalism in ways that reflects the factors that influence their professionalism. Professionalism is experienced as putting the client’s interest first, being knowledgeable as evidenced by professional credentials, following a planning process and being guided by regulation and standards.

For more information, see the research paper “What and how financial planners experience professionalism: a phenomenographic study (preliminary findings)” by: Associate Professor Ken Bruce (CEO/Campus Director, CQU Institute of Higher Learning); Dr Abdullahi Ahmed (Senior Lecturer in Finance, School of Commerce & Law, CQUniversity, Rockhampton, Australia); and Dr Helen Huntly (Professor, Dean, School of Education, CQUniversity, Bundaberg, Australia).

Creating a sustainable ethical operating environment

With the importance of ethics and non-financial reporting rising on the global agenda, accounting professionals are in a unique position to make an important contribution to creating a sustainable ethical operating environment. In this regard, the AICPA and CIMA have developed a number of resources to assist professional accountants in guiding their organizations to long-term sustainability and success. These resources shed light on the challenges many business clients face, and so apply to professional accountants in a firm setting as well.

The ethical resources include the following:

(1) The report Managing responsible business – a global survey on business ethics explores the importance placed on business ethics, ethical performance and ethical management within organizations, and the specific role played and challenges faced by accounting professionals. The survey findings show that there are pressure points and ethical gaps within organizations and highlights the role accountants can take in reducing those gaps.

(2) Accountants add value by supporting and driving the right decisions in all areas of a business. They help colleagues understand income, costs, risks and opportunities. Focusing on an organization’s future prospects, in addition to understanding and learning from past performance, accountants know how the different parts of a business come together. Responding to ethical dilemmas: CGMA ethics resources provides links to resources to help accounting professionals navigate ethical dilemmas and respond in a manner that upholds their career success.

(3) The CGMA case study: Navigating ethical issues highlights issues related to non-disclosure at the corporate level that come to the attention of non-executive financial managers and controllers. This case study features the role of corporate controller for a large public company, making decisions that will affect the future of the controller and many others. The facts of this hypothetical case cover integrity and objectivity, confidentiality, internal accounting controls, and procedures for investigating and reporting irregularities.

(4) The Ethical reflection checklist was designed to provide organizations and individuals with an overview of how well ethical practices are embedded in the business. Firms can leverage this checklist with their clients to open the discussion on business ethics in the workplace. Questions cover areas such as ethical statements and codes of conduct, training, collection of ethical data and reporting of ethical issues, and support when faced with ethical dilemmas.

With the backing of a strong ethical culture, all accountants can be highly effective in playing a key role—drawing on both their training and understanding of professional ethics, as well as their skills in obtaining, analyzing and acting upon management information—to guide their organizations, or those of their clients, to long-term sustainability. Explore these and the many other resources available on cgma.org. Also, read the article “Fostering a More Ethical Business Culture” at AICPA Insights online.