Accountants handle some of the most sensitive and crucial information in the company. Finances are the lifeblood of any business, and it’s the accountant’s job to keep those finances circulating efficiently. So, when an accountant fails in their duty, those effects resonate throughout the entire company. Oftentimes, these accountants fail in their duty due to a lack of accountability and integrity.
Leaders must foster a culture that cultivates these two qualities. Ethical leadership is key to ensuring accountants are aware of the weight of their position. After all, accountants hold a lot of power, and they need to understand their responsibilities. Today, let’s discuss how leaders should teach accountants the value of accountability and integrate it into their everyday workflow.
Why Accountability Matters in Accountancy
Accountability is crucial in accountancy because it ensures that accountants will be held responsible for their actions, good or ill. Some people mistake accountants as dedicated to making the company look as good in finances as possible, and that’s just not true. Accountants have the responsibility to produce precise financial statements that reflect the true financial position of an organization.
For example, even if a company must hit some financial quota, the accountants must never mess with the numbers. Even if there are short-term benefits from these actions, they remain illegal and eventually destroy the company’s ethical foundations. Accountability also encourages people to value finances for more than just net gain.
When accountants are accountable, they are more diligent in their work, reducing the risk of errors and preventing unethical practices such as fraud. Accountability also builds trust among stakeholders, including investors, regulators, and the public. All these parties rely on accurate financial information to make informed decisions.
How Integrity Ensures Accountability
Integrity is the quality that ensures accountants hold themselves accountable. As for how integrity differs from accountability, integrity refers to a person’s ability to uphold themselves to certain professional standards. It is essential in accountancy because it drives professionals to act honestly and ethically in all situations.
When accountants consistently demonstrate integrity, they are more likely to be transparent and truthful in their reporting. For example, an accountant with integrity would be forward with any issues with finances. Even if their boss doesn’t want to hear bad news, accountants must be able to deliver it honestly, and then offer potential solutions.
The Best Methods for Responsible Accountancy
Understanding the definitions of integrity and accountability is one thing, but it’s another to apply it in practice. These methods help leaders ensure accountants become the best they can be through financial expertise and ethical know-how.
Establish Clear Ethical Guidelines
Organizations should have a well-defined code of ethics that outlines expected behaviours and the consequences of unethical actions. This code should be communicated clearly to all accountants, ensuring they understand the standards they are expected to uphold. All new hires in accounting should undergo a short PSA meeting about these guidelines, instead of just reading about it on a PDF.
For instance, during this meeting, new hires would engage in discussions about hypothetical situations where ethical judgment is required, helping them grasp the real-world implications of the guidelines. Regular updates and reminders about these guidelines will reinforce their importance and ensure they are integrated into daily practices.
Provide Ongoing Training
Continuous education is essential for maintaining high ethical standards in accountancy. Regular training programs will help accountants stay informed about the latest ethical standards, legal requirements, and best practices in the profession. These programs should include real-world scenarios to help accountants understand how to apply ethical principles in their work.
The training session could present a scenario where an accountant discovers a discrepancy in the financial records that could lead to significant financial loss if reported. The lessons should guide participants through the decision-making process, emphasizing the importance of integrity and the steps to take in reporting the issue internally. This hands-on approach helps accountants better understand how to navigate complex ethical situations they might encounter in their work.
Implement Strong Internal Controls
Strong internal controls are critical for ensuring accuracy and accountability in financial reporting. These controls include regular audits, oversight of financial transactions, and clear reporting structures. Streamlining business accounting with innovative tools ensures accountants work smoothly, and thus, have a better time keeping track of their actions.
In addition to audits, oversight of financial transactions is another essential control. Implementing a system where no single accountant has control over all aspects of a financial transaction significantly reduces the risk of fraud. This might involve separating the duties of those who authorize payments, those who process them, and those who review them.
Foster a Transparent Environment
Creating a culture of transparency within the organization is key to promoting accountability. Organizations should provide safe and accessible channels for employees to report unethical behaviour without fear of reprisal. Encouraging open communication and addressing issues promptly helps maintain ethical standards.
Addressing issues promptly when they arise is another critical aspect of maintaining ethical standards. If an unethical action is reported, the organization should investigate it thoroughly and take action, whether that means correcting the error, disciplining the responsible parties, or revising internal policies.
Final Thoughts
Accountants have a lot of responsibility, and they will have to face it in the most tenuous times of a company’s history. To ensure their and the company’s professional future, these accountants must showcase accountability and integrity. That means applying these lessons in practice, ensuring that actions speak louder than words.