How the Ethics Challenges Facing Accountants will Change Post Covid 19

Abstract

Businesses of all sizes and types have suffered from the adverse effects of the ongoing Covid-19 global pandemic, and the world is still facing a fundamental existential threat. Nevertheless, efficacious vaccines have been developed and increasing numbers of consumers are recognizing the need to be vaccinated against this deadly disease to the point where many observers can see the light at the end of the pandemic tunnel. Although no one can predict the future with absolute precision, an article written by the Working Group formed by the International Ethics Standards Board for Accountants (IESBA) and national ethics standard setters (NSS) from Australia, Canada, China, South Africa, the UK and the US provides a timely extrapolation of current economic trajectories to describe several ethics challenges that accountants can be reasonably expected to encounter in the years to come. The purpose of this paper is to provide a critical analysis of the “Five Ethics Challenges that will Intensify as the Pandemic Wanes,” including its strengths and weaknesses as well as a discussion of opinions about the significance, accuracy and clarity of the article and how it relates to the class.

Article Brief: “Five Ethics Challenges that will Intensify as the Pandemic Wanes” (May 10, 2021)

To their credit, the Working Group formed by the International Ethics Standards Board for Accountants (IESBA) and national ethics standard setters (NSS) from Australia, Canada, China, South Africa, the UK and the US (hereinafter “Working Group”) provide a timely overview and discussion concerning the various ethical considerations that will emerge during the post-Covid-19 pandemic era and the authors concede that these “extraordinary circumstances” can reasonably be expected to persist for several years to come. Although not exactly visionary, all of the intensified ethical challenges that are identified by the Working Group and discussed below represent important issues that accountants must consider as they move forward in an uncertain economic climate. An analysis of the article’s respective strengths and weaknesses is followed by a discussion of opinions about the significance, accuracy and clarity of the article and how it relates to the class.

Article strengths

Some of the more prescient observations that were made by the Working Group include the fact that some business entities will likely stay afloat only so long as government support programs are in place, and these entities will eventually fail unless and until they identify viable strategies to successfully pivot or otherwise remain competitive. Moreover, the Working Group also cautions that accountants can expect to work with organizations that are in vastly different stages of recovery due in large part to the uneven availability of vaccines as well as the reluctance of many business practitioners to receive them.

Indeed, the very first ethics challenge identified by the Working Group concerns the “Pressures from an Uneven Economic Recovery: Accountants Must Be Agile Yet Resolutely Committed to the Code of Ethics.” This ethics challenge was perhaps the most salient of the six offered by the Working Group. For instance, the article points out that, “We all face a new reality ahead. The pandemic created myriad opportunities for unethical behavior. The uneven recovery might breed more of these opportunities.” In support of this assertion, the Working Group cites the example of prior assumptions and estimations that were based on the highly dynamic pandemic-based situation which may not longer be accurate.

In addition, the Working Group also acknowledges that addressing all of the ethical challenges that are expected to intensify in the coming years will require a “renewed focus on the dynamics that exist in the relationship between professional accountants and entities as they face extraordinary circumstances.” In this regard, the second ethics challenge identified by the Working Group, “Demands for Greater Support and Efficiency” mean that “Auditors of Financial Statements Must Carefully Consider Independence and Familiarity Issues.” This challenge in particular was explained in more detail with substantive arguments compared to the other four and these are discussed further below.

Article weaknesses

This article is clearly written with its accountancy audience in mind, and is replete with glowing descriptions of the valiant accountants that continue to go to work every day. In this regard, the Working Group introduces its article, without any supporting evidence, that, “For more than a year, the world has been duly tested by the challenges resulting from the Covid-19 pandemic. In response, professional accountants have shown tremendous resilience.” Notwithstanding this unsupported pat on the back, most observers would likely agree that anyone who continues to even show up for work each day in a potentially toxic workplace setting can be regarded as heroic but the Working Group’s hyperbole does not stop there. For example, the Working Group also observes that, “Agility will be a critical skillset in navigating the uncertain months and even years ahead. Importantly, while remaining nimble, professional accountants must continue to adhere to the Code, including applying its conceptual framework in these atypical situations.” Even accountants who are willing to dance and weave in their efforts to remain both agile and nimble, the Working Group does not clearly explain how this can be accomplished and only stresses that it is needed.

Finally, all five of the ethics challenges that were identified by the Working Group were already relevant in varying degrees prior to the onset of the Covid-19 pandemic. For instance, ethics challenge number 3 concerns the “Risks Regarding Rapid Digitalization” so “Accountants Must Be Alert to Cyber Crimes.” This no-brainer is followed by two other intuitive ethics challenges that focus on the need to avoid burnout and mental health issues (again emphasizing the need for resiliency without offering any related advice) as well as the need to “look to the future” in order to become better prepared today.