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January 20, 2015

The future of the accounting profession – it’s all a matter of trust

Accountants are the foundation of business interactions but also key players in many other aspects of people’s lives. Society expect us, writes Alex Malley, to not simply do what is right but to ensure that our clients and employers also do what is right.

As we enter 2015, I can’t help but reflect on where we have come over recent years as a profession and what will be the defining factor that will determine our collective future. The answer I come to is that it is all a matter of trust.

Trust can be hard to measure but it is society’s trust in the accounting profession and how the profession facilitates trust in the marketplace and in society, which will shape us.

The accounting profession, like other professions, relies primarily on two key characteristics: expertise and responsibility. As accountants we have to know what we should do, how to do it and why we do it. We also have to possess the strength and courage to do it, even at the expense of self-interest. We have to be able to make the right diagnoses and offer the right advice and solutions. Most importantly, we have to use our expertise responsibly. We have to understand, accept and fulfil our duties and we need to remember that it is not only those who pay our bills or provide our salary that we owe our duty to.

As a profession we make a number of promises to our clients, regulators and society in general. Some of the promises we make are in our code of ethics, others are in our logos and mission statements. Even identifying and describing ourselves as a professional accountant and a member of a professional accounting body is itself a promise that we will use our expertise responsibly. Our ability to keep our promises has and is going to continue to define the trust society places in us. Without that trust we cannot sustain our professional status. Trust cannot be built on some mystical quality we have. It is built on our collective and individual actions, which are continually broadcast to society.

Competencies and skills alone, while absolutely critical, cannot make a professional accountant. Professional values, attitudes and character that are reflected in behaviour are paramount.

Our profession is fundamental in sustaining the trust placed in the marketplace and in society in general. We are the foundation of business interactions but we are also key players in many other aspects of people’s lives such as education, health and welfare. We underlie human activity in a way that enables other professions to contribute to the economy and society more broadly. This is a great honour but it also creates a great responsibility.

In surveys on the most trusted professions, accountants are generally placed somewhere in the middle, not as trusted as nurses and doctors but well above politicians. Unlike some other professions, such as medicine, our reputation is not only based on our actions and the actions of other members of the profession but also on the actions of our clients and employers. People expect us to not simply do what is right but to ensure that our clients and employers also do what is right. In cases of corporate misbehaviour for example many do not just attribute responsibility to the entity and its management but to our profession as well.

We provide the underpinning to evolving corporate governance practices and disclosure and while much is being done to improve what entities are doing and how they communicate it, we need to do more and to do it better. Developments in auditing and reporting focus on better disclosures and more transparency. Integrated and sustainability reporting, as well as developments in auditor reports are shifting the goal posts towards more holistic and relevant disclosures about value creation and destruction, as well as looking beyond short term risks.

Meeting these ongoing challenges may require a fundamental shift to our mental models and standards frameworks. We need to imagine new and better ways to enable value creation and its communication.

If we can look at our individual actions and behaviours with integrity as the cornerstone of our decision-making I believe that our profession will continue to evolve and effectively meet the challenges of 2015 and beyond.

Alex Malley’s previous articleIntegrating assurance is about both ‘who’ and ‘how’

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