Accounting ethics – Dos and don’ts and why it matters

Business - 05/10/2023

Accounting ethics refer to the principles, values, and standards that guide the behaviour and decision-making of accounting professionals and businesses. While maintaining good ethics is essential to pretty much every field and industry, those that deal with sensitive data and manage money must adhere to even stricter standards. 

Not only are accounting ethics integral to ensuring that your business operates within the law, they’re also imperative to gaining and retaining the trust of clients, co-workers and business partners. Why? Because when you’re dealing with accounts, you’re handling sensitive client information, and if you don’t manage that data properly, it will affect your reputation and, eventually, your bottom line…

To make sure you’re on the right track, we’ve outlined the major dos and don’ts when it comes to accounting ethics, so that you can do your best for your clients, and your business.

Do:

Practise complete client confidentiality. 

Treat your clients’ finances and sensitive details with the utmost confidentiality. They’re trusting you to keep that information safe, so you should only disclose it to other professionals if necessary, and with your client’s permission. 

Confidentiality is the cornerstone of trust in the client-bookkeeper relationship, but financial professionals also have a legal obligation to maintain confidentiality. Not doing so can result in some severe legal consequences, including fines, civil lawsuits, criminal charges, and suspension or revocation of your professional licence. If sensitive client information falls into the wrong hands it can lead to identity theft, fraud, or other damaging consequences, so these legal repercussions are essential to minimising those risks.

It’s important to familiarise yourself with your legal and ethical obligations regarding client confidentiality. This includes understanding relevant laws, such as the General Data Protection Regulation (GDPR), as well as the ethical standards and principles set by professional bodies like the Institute of Chartered Accountants in England and Wales (ICAEW) and the Solicitors Regulation Authority (SRA).

The last thing to consider is that a breach of client confidentiality can lead to bad publicity for both the financial professional and the client. News of such breaches can quickly spread through social media and news outlets, damaging reputations and causing financial harm. The SRA and The Law Society Gazette frequently publish notices about solicitors and legal cashiers who have been disbarred for rule violations, and in extreme cases clients will take legal action for defamation if their sensitive financial information becomes public due to negligence or misconduct.

Make sure you use secure communication channels and always get consent from your client before sharing their data with anyone – even other professionals. You should also implement access logs to track who has viewed your clients’ data, and have an incident response plan in place for when things go wrong. 

Be professional beyond the office.

Professionalism in the context of accounting ethics extends beyond the workplace and covers all aspects of your interactions and behaviours. If you’re at a networking event, for example, or an event where colleagues or clients are in attendance, it’s worth your while to stay professional. 

Whilst this is important for most industries, it’s even more explicit for some. Think about it this way; if you’re drunk and loose-tongued at a party, prospective clients are unlikely to trust you with their accounts or legal matters. 

Professionalism is not only vital for building trust, fostering relationships, and safeguarding client data but also for upholding the reputation of the accounting profession as a whole. Always try to positively contribute to the broader accounting community – doing so may even open doors to career advancement opportunities! 

Be completely transparent.

When it comes to accounts, honesty really is the best (and only) policy. That’s why it’s one of our values here at Numero! We’re straightforward and honest in all of our business relationships because our clients deserve to know exactly which services they’re paying for and why. Being completely honest with clients helps to gain and retain their trust!

But transparency is not just good practice, it’s a fundamental necessity for financial professionals in the UK. There are strict financial reporting and accounting regulations, such as the Companies Act 2006, where failure to comply can result in legal consequences. These regulations apply to anyone involved in the financial reporting and accounting processes of a UK company, regardless of whether they work in-house or as an outsourced professional, so it’s a good idea to get to know them inside and out before you undertake any accounting duties. 

Don’t:

Show bias.

If you’re dealing with a conflict of interest, it mustn’t influence your decisions when it comes to accounts. This means that personal biases, preferences, or affiliations should never influence your financial reporting or decision-making.

Your role is to be objective and possess independent viewpoints. You need to relay the facts without an agenda and present them through an objective lens that is not inclined towards a particular view or ideal. This will allow you to accurately reflect your clients’ financial reality, even if the results are unfavourable or go against your personal beliefs.

If you show bias towards one business or ideology, you’re also going to lose the trust of your clients, and alienate prospective ones. Clients expect their accountants to provide honest and unbiased financial insights and businesses want to work with accountants who are known for their impartiality and integrity. Showing bias may lead to clients seeking services elsewhere!

It’s also important to note that professional organisations like the ICAEW, the Association of Chartered Certified Accountants (ACCA), the Institute of Legal Finance and Management (ILFM), and the The Association of Accounting Technicians (AAT) emphasise the importance of objectivity and impartiality. Violating their standards may lead to professional sanctions.

Overlook the finer details.

When it comes to accounts, the finer details are at the core. Every number matters and making one small mistake can lead to all sorts of negative consequences.

Financial reports, for example, are often used by stakeholders like investors, business partners, lenders, and tax authorities to make important decisions. Errors or omissions can lead to incorrect assessments of a company’s financial health, which could harm its reputation or financial stability.

Financial reporting is also subject to a complex set of regulations and all financial transactions must be recorded in compliance with these rules. Neglecting details or making mistakes can result in regulatory non-compliance and even legal consequences.

Financial professionals at all levels must prioritise precision to help prevent errors, financial losses, and legal compliance issues, and safeguard their clients’ reputation.

Need help with your accounts?

Numero is committed to giving your business the best possible service when it comes to outsourcing your accounts. We treat all of our clients’ financial matters with the utmost care and professionalism.

If you’re interested in working with us, get in touch today to find out what we can do for you!