Briefing at a Glance

  • The Association of Chartered Certified Accountants (ACCA) says that as technology accelerates global business expansion, regional differences in law and culture are becoming more apparent, and most accountants believe ethical challenges are becoming more complex.
  • ACCA released global survey results on Monday: nearly a quarter (24%) of accountants have faced pressure to act unethically in the past three years, and 55% of finance executives have witnessed unethical behavior in their careers.
  • "These insights highlight the need for strong ethical leadership and culture within organizations, as well as continuous learning and development to support professional accountants in navigating these challenges," said Sarah Lane, ACCA's head of ethics and assurance, in a statement.

In-Depth Insights

In recent years, U.S. accounting firms have come under increased scrutiny. Its regulator, the Public Company Accounting Oversight Board (PCAOB), reported in August that the number of reports with deficiencies at audit firms continues to rise.

The PCAOB, reviewing its 2023 inspections of 2022 financial reports, noted that the audit firms most prone to errors "are strongly influencing the overall deficiency rate."

The PCAOB said that nearly half (46%) of the audit engagements it reviewed were found to have Type 1.A deficiencies, meaning the audit firm failed to obtain sufficient evidence to support its opinion on a company's financial statements or internal controls over financial reporting. The PCAOB did not cite ethical lapses as a source of accounting deficiencies.

The PCAOB has recently faced criticism over high deficiency rates, with Massachusetts Democratic Senator Elizabeth Warren and Rhode Island Democratic Senator Sheldon Whitehouse criticizing the regulator for failing to reverse the trend of poor audit quality.

"The findings in the PCAOB's August analysis reveal a near-total failure, suggesting that investors and the public are essentially facing a coin flip when it comes to whether they should believe and trust the results of public company audits," Warren and Whitehouse said in an October 9 letter to PCAOB Chair Erica Williams.

The lawmakers also said: "The new findings about the frequency of audit deficiencies raise fresh questions about the accuracy and usefulness of public company audits, as well as the PCAOB's ability to fulfill its statutory role as the auditor of auditors."

ACCA, citing its survey, said 40% of accountants reported that due to weaknesses in company leadership and culture, they most often face ethical challenges and threats to sound accounting.

ACCA said 64% of respondents believe that ethical dilemmas have become harder to resolve over the past three years.

ACCA noted that 30% of accountants see the growing importance of sustainability as an ethical pressure point, including "operating sustainably, reducing environmental impact, reporting honestly on sustainability practices, and balancing profitability with sustainability."

More than a quarter of respondents (26%) said technology poses ethical challenges, including "ensuring AI is used in decision-making without bias, transparently, and accountably." ACCA surveyed 1,165 finance executives from 135 countries.

ACCA said respondents pointed to various unethical behaviors, including tax avoidance, pressure to manipulate financial statements, bribery, conflicts of interest, reluctance to challenge authority, and weak governance and accountability.