The Accountancy Profession: Fighting Fraud and Corruption

 

Open Letter to His Holiness Pope Francis
Following the World Congress of Accountants 2014, His Holiness Pope Francis addressed the accountancy profession on being a positive force in the fight against fraud and corruption. As my IFAC presidency comes to a close, I today wrote to His Holiness about our subsequent efforts to intently and vigorously respond to his message.

 

Open Letter to His Holiness Pope Francis

Your Holiness,

Almost two years ago, you graciously invited professional accountants who attended the 2014 World Congress of Accountants in Rome to a private audience with you in Vatican City. It was my pleasure, as President of the International Federation of Accountants (IFAC), to have the opportunity to speak and introduce to you the leaders of the accounting profession from all over the world.

With my term as IFAC President drawing to an end, I wanted to write and tell you about our subsequent efforts to intently and vigorously respond to your message regarding how the global accountancy profession should do more to be a positive force in the fight against fraud and corruption. Your message had a tremendous impact.

You noted that difficult economic times increase the risk of moral hazard by saying:

There is a stronger temptation to defend one’s interest without concern for the common good, without paying much heed to justice and legality. For this reason everyone, especially those who practice a profession which deals with the proper functioning of a country’s economic life, is asked to play a positive, constructive role in performing their daily work.

We received—and appreciated—your challenge for the accountancy profession to do more. IFAC, along with our more than 175 members in more than 130 countries, has worked diligently for many years to help combat both the opportunity and the cost of fraud and corruption. The professional accountants represented by our member organizations are in a unique position to make a positive contribution to this fight because of the scope of their work throughout the global economy. They work in public and private sector organizations, in small- and medium-sized practices, in larger global networks that provide audit and tax services, and in academia—conducting research and helping to educate our next generation talent.

I am pleased to report that following our meeting with you, IFAC has focused on intensifying the profession’s activities in several ways that we believe will have a lasting impact in reducing both the supply and demand sides of fraud and corruption. These efforts have been concentrated across three key fronts.

Capacity Building. The first critical effort has been to accelerate our long-term vision of increasing professional accountancy capacity in developing countries. A strong profession within nations is essential to facilitating transparency and accountability, building trust, and supporting sustainable economies. We know that the analytical and forensic skills of professional accountants, along with knowledge of how to implement strong internal control processes, can make a real difference in combatting corruption activities and temptations, and in increasing the flow of resources to support economic growth.

In this effort, IFAC sought out and developed new strategic partners and relationships, including the United Kingdom’s Department for International Development (DFID), World Bank, International Monetary Fund, and other development banks. As a result of these new partnerships, I am delighted to report that great progress has been made in identifying needs and growing national accounting capabilities by pairing expertise and project leadership from experienced professional accounting organizations with local passion for a stronger profession. Currently, these new projects are yielding promising results in Ghana, Kyrgyzstan, Nigeria, Rwanda, Uganda, and Zimbabwe, among others.

Strengthening Governance. The second important front on which the profession has made significant progress is greater participation in—and advocacy for—stronger governance across all organizations. As you know, it is critical to have effective checks and balances in place to oversee and enforce anti-bribery and anti-corruption policies.

I have enclosed for you a copy of our formal 2016 G-20 call for action. Its title—Trust and Integrity—signifies the role good governance can and must play at the heart of the global economy. It makes specific recommendations on how G-20 nations can do more to build sustainable, inclusive growth.

In addition, we worked with the Organisation for Economic Co-operation and Development (OECD) to support its Governance Code revision issued in 2015, which included new guidelines on codes of conduct and strengthening internal audit functions. We also participated in the OECD’s Ministerial Meeting on Anti-Bribery and Corruption earlier this year, which brought together attorneys general and justice ministers from over 40 countries. During that meeting, we highlighted recent changes made to the International Code of Ethics for Professional Accountants, which all professional accountants are required to uphold.

These amendments provide an enhanced framework to assist accountants when they are confronted by challenging situations—including potentially fraudulent and corrupt activities. We also called for greater consistency and enforcement of whistleblower protections across the world—those who want to do the right thing and report wrongdoing must be able to do so without fear of retaliation.

Public Sector Accounting. The third key area in which our efforts have intensified to combat fraud and corruption is in our forceful campaigning for governments to develop more transparent and complete information, including use of International Public Sector Accounting Standards (IPSAS).

Given the vast sums of money that flow through the public sector each year, it is vital that the world’s governments adopt accounting practices that deliver transparency and accountability, and provide complete and accurate information on which to make wise spending decisions. Within this initiative, IFAC established Accountability. Now.—a coalition of global organizations working together to actively encourage and facilitate the adoption and implementation of public sector accrual-based accounting and budgeting, and IPSAS. Over the last two years, we have held major Accountability. Now. events in Africa, the Middle East, and the Caribbean, in which we have interacted with hundreds of senior public sector decision makers.

We applaud the Vatican’s initiative under your leadership to adopt IPSAS. While your office has acknowledged the complexity of this journey, you are illustrating the importance of building a strong foundation for future benefits. These include facilitating better decision making, stronger and more sustainable services, greater transparency, reduced risk of fraud and corruption, and increased accountability to all key constituencies and stakeholders.

Finally, while I write to report on our increased efforts and progress in the fight against fraud and corruption over the past two years, we recognize it is not possible to win this battle alone. As you said, everyone must play a positive, constructive role. There is real need to join forces with other organizations to both make meaningful progress, and yield faster results. Combatting this problem will require intense, coordinated action across all civil society institutions: public, private, not-for-profit, and—indeed—spiritual.

In this regard, and recalling your highlighting our mutual desire to serve the common good in your message to us, we believe your voice could be particularly impactful in advocating for two important reforms in particular. We hope you will join us in calling for:

More rigorous, transparent accounting by all governments worldwide; and
Coordinated international action to implement stronger whistleblower protections for all citizens.
Additionally, we welcome any advice or guiding principles that you think could be useful to deepen our shared interest in defeating this global problem.

Serving the public interest is at the very heart of IFAC’s mission—and combatting fraud and corruption is clearly a public interest issue where our profession can provide valuable skills and expertise. The almost 3 million accountants represented by IFAC’s member organizations can be a global force for good in this fight. We pledge that we will continue to work diligently on this critical effort, and strive to exceed the expectations inherent in your challenge to us.

On behalf of the global accountancy profession, thank you for your courage and leadership in the fight to rid society of fraud and corruption that harms so many, and for all your personal efforts to inspire what is possible to enable a better quality of life and hope for future generations.

Yours sincerely,

 

Olivia F. Kirtley, CPA, CGMA

President
International Federation of Accountants

Join our conversation to #BuildTrust and learn about the accountancy profession’s efforts to fight fraud and corruption, strengthening organizations, and advancing economies.

 
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