I commented in somewhat similar fashion to the item noted below on ethics on AccountingWEB yesterday, and the following comment came back:
Values? What values? Is Richard implying there should be some sort of individual subjective test? If so I'd love to know how that gets articulated.
I've never met a client yet that didn't feel good about paying less tax or an accountant that didn't think twice (more likely relieved) the client was happy.
If on the other hand a practitioner has misgivings about a particular scheme, then that should be enough to prompt seeking a second opinion.
I have to say I was perplexed by this at first, until I realised that the challenge was to the use of language (which is subjective) and not to the principles (which are objective) that I'm seeking to explore. I always brought values into play in my tax advice. So for example, my rules included the following: (and still do):
1) no offshore
2) no trusts for tax benefit alone
3) no artificial steps put into transaction for the sake of securing a tax advantage
It doesn't matter if what is proposed is legal. I don't do them. If the client wants them they have a choice - they can go elsewhere. My values are always more important than theirs.
That's what I mean by values - and this nonsense that accountants aren't allowed them is the denial of the professional nature of our job. That professional nature means there is no obligation on an accountant to do anything for a client they do not wish to do. This is a commercial relationship. The accountant is in command. They can always so no. The only price is a fee - and in my experience there will always be a better one to replace that lost for an accountant who is willing to stand up for what they believe in.
So the whole of tax work is value laden. Any pretence to the contrary is quite simply untrue, often told, and a simple excuse to cover unethical (even if legal) tax practice.
Over the last couple of weeks I have, as a result of this discussion and that on profit demonstrated a logic that suggests that neither a tax practitioner or a taxpayer (and especially a business) can argue that their decisions on tax are 'value free'. I'd like to thank Mark Lee and Dennis Howlett for contributions (of agreement and disagreement) which have encouraged me.
This thinking will move on now into how Codes of Conduct can be developed in both areas.
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Nothing is value-neutral, ethics, values and professional behaviour are part of the objective and subjective eclectic of conducting our work. I think the role of positivism in research and work is to heavily relied upon by British academics.
Below is a short article I wrote for Attac Jersey.
Ethics, what Ethics!
Part of the responsibility of any professional business or organisation is that they conduct themselves and behave in an ethical manor. According to the website of Ernst & Young, they stand for “people who demonstrate integrity, respect and teaming”1. The world’s Big-Four accountancy firms (PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young) audit the accounts of most of the world’s largest multi-national and trans-national corporations. The global income of the Big-Four in 2003-04 was US$55 Billion. This is bigger than all but 52 nation states gross national products (GDP)2. In the UK, the Big-Four audit 343 of the top 350 Financial Times Stock Exchange (FTSE) companies2.
There is nothing inherently wrong with this apart from the fact that the same accountancy firms also actively sell aggressive tax avoidance packages to the same clients whose accounts they audit. In America, the Securities and Exchange Commission (SEC) found that Ernst & Young have an utter disdain for the SECs rules and regulations on auditor independence leading to reckless, negligent and unprofessional behaviour3. In addition, United States (US) Senator Joe Lieberman stated to a US Senate Committee that “ranks of lawyers, accountants and financial consultants have abused the law and their own professional ethics simply for the sake of huge sums of money to be made helping their clients evade taxes”4.
In 2004 the UK treasury was thought to be investigating a number of the Big-Four firms for selling aggressive tax avoidance schemes to 30 companies resulting in more than £1 Billion of lost tax revenue2. Most of us remember the collapse of the Bank of Credit and Commerce International (BCCI) that resulted in the loss of 14,000 jobs and US$1.85 Billion in deposits. The US Senate said that BCCI’s British auditors were party to a “cover up”5.
The creation of the Limited Liability Partnerships (LLPs) allows individual partners of accountancy firms to protect themselves from malpractice from any other partner in the same firm2. The UK legislation on LLPs was forced through the back door of Jersey where two of the Big-Four ((Price Waterhouse (now Price waterhouseCoopers) and Ernst & Young)) played a major part in drafting the LLP legislation6. The LLP is not required to maintain adequate insurance cover to meet any legal claim against itself or its partners. In addition, there would be no recourse against the assets of the partners not involved in the alleged negligent decision7.
It seems bizarre that the Big-Four can audit the accounts of multi-national and trans-national companies whilst selling the same companies aggressive tax avoidance schemes, and seem to be able to avoid full liability through LLP’s if any of these companies fall into bankruptcy or investigation by national financial services regulators and governments. Tax havens play a central part in the tax avoidance industry and the Big-Four are active in all the major tax havens, including those blacklisted by the Organisation for Economic Co-operation and Development8.
It would seem that ethics is a misplaced concept for the Big-Four accountancy firms.
Chris Steel
Treasurer Attac jersey
Footnotes:
1 http://www.ey.com/global/content.nsf/UK/About_EY_-_Values.
2 Cousins, J., Mitchell, A. and Sikka, P (2004) Race to the Bottom: the case of the Accountancy Firms, Essex, Association for Accountancy & Business Affairs.
3 United States of America before the Securities & Exchange Commission “in the matter of Ernst & Young LLP”, Initial Decision Release No.249 Administrative Proceeding File No.3-10933”, 16 April 2004.
4 Lieberman, J. in evidence to the Senate Committee on Governmental Affairs, 18 November 2003.
5 US Senate Committee on Foreign Relations (1992). The BCCI Affair: A Report to the Committee on Foreign Relations by Senator John Kerry and Senator Hank Brown, Washington DC, USGPO.
6 Accountancy Age, 14 December 1995, p.1 and 3.
7 http://visar.csustan.edu/aaba/LLP60ct2000.html.
8 The Observer, 13 July 2003.