Technology has changed our world beyond all recognition. A fundamental transformation of the workplace has taken place as automation and digitization replace jobs, processes and tasks. A study conducted by ACCA found digitization is driving significant change in the skills that accountants need if they are to remain relevant in the workplace. The same study identified ethical behavior as one of the key skills required by professional accountants for continued success, suggesting that ethical behavior will become ever more important in future. This therefore begs the question, has our understanding of ethical behavior kept pace with the digitized world and will the five fundamental ethical principles set out by the International Ethics Standards Board for Accountants (IESBA) namely integrity, objectivity, professional competence and due care, confidentiality, and professional behavior remain relevant as we enter the new age? This is the question that the ACCA report, Ethics and trust in a digital age, attempted to address. It revisits what it means for the professional accountant to be ethical in a technology driven world. Using the results of a survey of more than 10,000 accountants and students across 158 countries, as well as roundtable discussions with senior practitioners, the report builds a clear picture of how ethical behavior is valued and applied by professional accountants every day, as well as the challenges they face in practice. The report found that despite technology introducing new ways of working, most accountants around the world still consider ethical behavior to be a very important attribute. Some 90% of those questioned agreed that ethical behavior helps build trust in the digital age, while 95% of senior executives said that an accountant’s ethical behavior helps the organization build trust with both internal and external stakeholders.

Ethical dilemmas

The researchers asked respondents about their experience in dealing with ethical pressures at work. One in five (19%) said they had personally felt pressured to compromise their ethical principles in the previous 12 months. Nearly a quarter (24%) reported that they had seen behavior within their own organization that compromised their ethics policy and standards, while 19% had seen instances of compromise within a client company. Among the C-suite executives questioned, 43% said they believe from their experience that accountants act ethically always, but 47% said they had seen accountants acting unethically from time to time. Of those accountants who had been pressured to compromise their ethical principles, half said the fundamental principle compromised was integrity; 44% said professional behavior; 42% said the principle of objectivity was at risk. Dealing with stakeholders in government or the regulator was cited most often as the principal source of ethical pressure felt by respondents in both business and practice. Most disturbing is the fact that 41% of respondents surveyed did not report the unethical conduct. The report says that the failure of a substantial minority of accountants to not report unethical conduct suggests the need to explore whether there is sufficient support and encouragement to ensure that professional accountants feel able to report inappropriate ethical behavior always. However, the context of each individual organization is important as reporting behaviors may flow more naturally where the corporate culture is more open and supportive of ethical conduct; in other words, forcing through a policy of speaking up may not always be the most effective method. Less than half the accountants questioned in the ACCA study said they would be in favor of a formal speak-up policy.

The overall impact of digitization

To explore how digitization changes ethical dilemmas and decisions that accountants come across in their working lives, the ACCA report considered modern ethical scenarios across six digital elements:

  • cybersecurity
  • platform-based business models
  • big data and analytics
  • crypto currencies and distributed ledgers
  • automation, artificial intelligence (AI) and machine learning
  • procurement of technology solutions.

The IESBA fundamental principle most often seen at risk of being compromised in the digital age is professional competence and due care. This may reflect the extent to which ethical situations in the digital age can present new information not encountered before. When asked if accountants need to be better prepared to deal with ethical behavior in the digital workplace, 53% of C-suite executives surveyed said some improvement to their skills will be needed. They argued that while many accountants have a generic understanding of issues such as cyber risk, they may not have fully grasped how the organization’s digital operations will evolve and the ethical issues this may pose in future.

Ethical behavior starts with the individual accountant

So, what are the responsibilities of individual accountants in encouraging and upholding ethical behavior at work? It seems that most accountants (more than three-quarters) believe that upholding their own professional code of conduct is the priority i.e. the approach that ‘ethics begins with me’. Two-thirds of respondents said that embedding ethical standards in day-to-day operations was the best way to contribute to the organization’s ability to uphold ethics. Only about half of the respondents said that embedding ethics into the strategy of a business or the business plan was the best way to contribute. Thus, the ACCA report suggested the need to combine a procedural or tactical understanding with a wider view of something that may become particularly important when looking ahead to new or previously unforeseen situations in the digital context. It is particularly important to understand the underlying strategy and purpose when it comes to new procedures that do not have years of testing and understanding behind them, such as when platform-based operations are adopted. According to the ACCA report taking a strategic view can help to minimize unintended consequences.

Strong leadership was cited as the most important area where support is needed to promote ethical behavior in organizations. This is essential, as ethical behavior depends on the tone at the top. It is also important because, as automation of the workplace progresses, good ethical judgment will become even more important for senior decision-makers to ensure that innovation is supported in a way that does not compromise the right way of doing things. Overall, the message of the ACCA report is that while accountants have the basic tools and skills to make the sound ethical decisions that are so valued by employers and business, the digital age will continue to throw up new challenges. Ultimately, the ACCA report concludes, ethics is about human behavior as technology merely changes the context within which an ethical decision must be made. Even so, professional accountants still need to develop a rounded skillset that complements their technical capability with the ethical element at its heart.

IESBA’s five principles still provide the foundation for behaving ethically and instilling trust in a digital age. Professional accountants need to learn new information relatively quickly and apply their judgment to this information, often in situations they may not have anticipated before. It will be important to have an open mind recognizing the value of what has been learnt so far, but also understanding that this knowledge must be placed in the context of new situations as they evolve.

Potential challenges posed by the threat of unethical behavior

The ACCA report simulates several examples of ethical dilemmas in a digitized workplace. One scenario is of a ransomware attack, where an organization finds that all its data has been deleted, and that hackers are demanding a payment of 0.5 bitcoins to return the data which was not backed up internally. There is a challenge here to an accountant’s ethical principle of objectivity, as the threat that the data will be misused or destroyed might override their professional judgment; the right thing to do in this context however, may in fact be to reject the ransom. Furthermore, if the customer data is also covered by contractual confidentiality clauses, exposing it to unauthorized parties may breach the accountant’s fundamental ethical duty of confidentiality. For an internal auditor, the case further raises issues of professional competence and due care i.e. are they aware of developments in cyber-attacks that could lead the organization’s data to being compromised as well as integrity issues, if patches were available to secure the system but were not installed, why were they ignored in the first place?

Dr. Shafi Mohamad PhD MBA FCCA

The Continued Relevance of Ethical Behavior in a Digitized World
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