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Covid-19 poses new ethical challenges for professional accountants


27 Oct 2020



ACCA (the Association of Chartered Certified Accountants) annually celebrates ethics in the month of October leading up to Global Ethics Day and beyond. Ethics is at the heart of the organisation and ACCA and its members are proud to uphold and promote the highest ethical standards.

The Covid-19 pandemic has led to the most challenging environment any of us have experienced in modern times. And while businesses recover, professional accountants are faced with new and intense ethical dilemmas, which require them to exercise all their professional expertise and moral judgement.

ACCA has launched its white paper ‘Ethics in a Covid-19 world’ exploring the role of ethics against the backdrop of the pandemic. This is part of ACCA’s focus on how we can, globally, rethink business for a sustainable recovery.

The paper[1] reveals one in five respondents has directly or indirectly, via a work colleague, encountered a situation where as a result of Covid-19, ethics were at risk of compromise.  Among those who had experienced such compromise, a quarter of issues related to the use of technology.

It also highlights a number of examples in which the pandemic has increased the risk of ethical compromise, including.

  • Time-constrained decision making: Decisions are being made too quickly, without adequate consideration of risks and their implications; or decisions are being made before adequate information is made available. If there have been staff redundancies, decisions may be made by those lacking the training and experience to do so; this issue involves both capacity and capability. So, work done is not subjected to the usual standards of evaluation. Given we are almost a year into the pandemic, there is also a risk such practices could become embedded as business-as-usual unless challenged and changed.
  • Remote working: The employer must consider what is the appropriate level of tools, such as staff tracking, and balancing such controls with workers’ privacy. With software tools, organisations can track how much time an employee is online, whether they are typing or idle, their location or even obtaining visual confirmation for certain roles, using the employee’s webcam. Any such monitoring needs to consider the employee’s knowledge and consent, and to be proportionate to the objective to be achieved. There is equally an obligation on the employee to ensure that they are honest in their dealings and do not, for example, misrepresent either their working hours to their employers or their billable hours to clients.
  • Reducing staff size: Any exercise in downsizing the organisation needs to apply an ethical approach when determining which employees are to be made redundant, put on furlough or given other options. The familiarity factor can be a threat here when making such decisions. And where employers are claiming funds for staff being furloughed, there could be ethical questions to consider if employees continue working on projects through informal support or working elsewhere.
  • Assurance services: Maintaining independence is key here, particularly for small to medium-sized practices, where the relationship can stretch into friendship at a personal level, or where the firm is viewed as a trusted friend for broader advice in difficult times. Threats can manifest themselves in various ways. For example, there may be a pressure to reduce fees, take late/instalment-based payments or other forms of implicit loans or waivers. This could translate into an intimidation threat that can affect competence and due care if the same work is to be carried out with fewer resources.
  • Increase in fraud: Covid-19 has caused a rise in various forms of fraud. Cybersecurity concerns have been a significant priority and include identity theft, sale of fake goods online, hacking into networks and systems at a corporate level, etc. And this is before considering more traditional contenders that are also on the rise, such as insurance fraud. The idea of safeguards may not have envisaged specific interventions needed to tackle these risks, for example, the risk of data theft through mass homeworking by almost 100% of staff. Periodic fraud-risk assessments are needed in order to ensure actions are refreshed.
  • Ethics across the supply chain: Generally, suppliers are in a position of dependence on their customers and have less power in the relationship. And where the customer is a large company with a network of smaller independent suppliers this power imbalance can be even more pronounced. COVID-19 has imposed severe cash-flow problems and smaller suppliers are even more vulnerable than larger ones. Against this backdrop, it is important to recognise the possibility of intimidation threat, for example if a professional accountant at an SME supplier is pressured to sign off on incomplete or misleading information that is needed to retain their significant customer.

The report author, Narayanan Vaidyanathan, ACCA’s head of business futures says: ‘For accountancy and finance professionals, ethics has always been at the core of the profession but in times of pressure, it is all the more important. Ethics isn’t a new agenda for accountants, but Covid-19 certainly has created new challenges, which can create the risk of compromise to ethical behaviour.

‘While everyone is responsible for ethics, leaders have a key role to play because tone from the top really matters. Organisations look to their leaders to demonstrate authentically ethical, values-based leadership and transparency – doing so creates a cascading positive effect through the organisation.’


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