Unlike other general business positions in a company, accountants are bound both by the rules of their organization and by the professional standards of the accounting industry. Accountants have ethical responsibilities to many different parties, both internal and external to the company. Understanding some of the ethical responsibilities of accountants can help you understand what information is appropriate to share with those working in your company's finance function.
Accountants are privy to confidential information regarding their clients and their clients' businesses. Disclosure of this information to unauthorized third parties could put clients at a competitive disadvantage. Accountants are ethically obligated to treat client information as confidential and refrain from unauthorized disclosure. Clients and accountants should realize that there is no accountant-client privilege, as exists between an attorney and a client, and that accountants may be required to disclose business information about a client upon order of a subpoena.
Accountants working in public practice have an ethical duty to be able to objectively render an opinion on a company's financial statements. This requires the accountant to be independent from the company under audit in both "fact and appearance." Independence in fact requires that the accountant does not have any kind of financial interest in the client, and implies that the auditor is absolutely able to conduct the audit without any bias in attitude. Independence in appearance concerns an outsider's observation of the auditor-client relationship. Being independent in appearance requires that a neutral third-party observer would not consider independence to be impaired.
Accountants working in public accounting firms have an ethical obligation to perform their work with due diligence, and to only document and record work that has actually been completed. Documenting audit procedures that have not been completed, known as "ghost-ticking," is ethically wrong and may place an accountant or the accounting firm at risk. In addition, some auditors may feel pressured to meet time budgets by recording fewer hours than they actually worked. This phenomenon, called "eating time," is prohibited by nearly every major accounting firm. Accountants should recall that this practice is tantamount to falsifying records and is ethically questionable, at best.
Accountants working in businesses are often subject to information that the rest of the company is not privy to. For example, payroll accountants may have information about salaries in different departments, revenue accountants may learn of new products before others, and cost accountants may have inside information about profit margins. In some cases, accountants are some of the first to know about potential layoffs. Accountants should remember that they are bound by both their own ethics and professional standards to not disclose this information to anyone. This responsibility extends to disclosure to individuals within the company as well.
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