m+a Accounting & Consultancy

Australians trust their accountants for good reason​

Peter Lewis from Essential Media might find it baffling that accountants are held in high regard, but the rest of Australia understands the value they add to their businesses and communities, writes Lee White.

The Socialist Party of Great Britain’s recent paper World Without Accountants painted a bleak future for accountants who it said would be made redundant in a socialist society where common ownership and production for use (rather than for market sale) was the norm.

Although the likelihood of Australians abandoning private ownership in the near future is non-existent, critics of the accounting profession view its practitioners as purely driven by self- interest (code for limitless greed). These capitalist acolytes, so the thinking goes, encourage their clients to gouge as much as they can out of an economy overseen by governments and their regulators who are continually playing catch up with mean professionals who find gaps in legislation big enough to drive a bus through.

If only that were so.

Accounting has changed and it’s not just about numbers. Chartered Accountants have certainly witnessed changes to the industry. Since the Italian Luca Pacioli first described the system of double-entry bookkeeping used by Venetian merchants in his Summa de Arithmetica, Geometria, Proportioni et Proportionalita in 1494, the profession continues to evolve.

Following the GFC, the role of accountants changed once again, with many Chartered Accountants now providing business strategic advice as well as the financials. While larger firms have provided such advice for some time, the availability of digital technology now enables even smaller one- and two-person practices to evaluate the piles of data produced by their small- to medium-enterprise clients and provide more predictive analysis.

Why do we trust accountants?

As long as there are legal loopholes there will be accountants. But while their existence comes as no surprise, their social standing does, writes Peter Lewis.

Little wonder client conversations with accountants almost invariably touch on personal aspirations, hopes and fears. In a complex world, it can be re-assuring to have an accountant in your corner.

Accountants don’t make tax laws: Parliament does. Perhaps that is why a third of Australians in response to this week’s Essential Report blame the Federal Government for failing to stop multinationals from avoiding paying tax in Australia.

Organisations like Chartered Accountants Australia and New Zealand continually provide their views to legislators and regulators to help make our tax system better. It is far from perfect. But as accountants repeatedly see the impact of both good and bad laws on their individual and corporate clients, they are well placed to provide solutions, as they are doing with the Government’s latest tax review.

Running finances and record-keeping might be a core function of accountants, but so is compliance. Regulation of any kind inevitably brings compliance and accountants are just one example of a profession which helps the community deal with the resulting complexity, and understand what is and is not permissible behaviour.

Accountants also turn the spotlight on themselves to ensure their behaviour is acceptable. In a New York Times article, Greg Smith, the former executive director and head of Goldman Sachs’s US equity derivatives business in Europe, the Middle East and Africa, said that he had resigned from the firm because its culture had changed so much over his time there that it had become a place where profits trump all other considerations; what was good for the firm and made the most money was the dominant value.

That is not a view shared by ethical practitioners and we work tirelessly to stress the importance of “doing the right thing”.

Our publication Why Business Ethics Matters To Your Bottom Line suggested that Australian business leaders and regulators needed to shift their current focus away from employee ethics training as the solution to unethical practices and towards a new orientation that focuses on building the sort of institutional integrity that supports employees in making ethical choices. This is quite a different perspective from Peter Lewis’ view that “at the centre of the accountant’s world is the mindset: give back as little as you can, find a way to keep it to yourself, and give me a cut of the action”.

We have our own ethical requirements on tax and other areas which are actively monitored and enforced. Chartered Accountants who are tax agents must also abide by a Code of Conduct administered by the Tax Practitioners Board. In terms of both tax compliance and planning, we work closely with the ATO and we are regarded by that organisation as a crucial partner in an effective tax system.

Accountants rate highly on the trust index because they are highly trained, provide practical wisdom, and commit themselves to helping clients achieve their goals. Many give back to the communities in which they serve, and their skills are invaluable to many worthy causes. We would be surprised if Peter Lewis – as a director – hasn’t yet experienced the value that accountants add.

For many people who use accountants, particularly those in the business community and entrepreneurs, accountants are not only socially acceptable, they are critical to their long-term success in an economy under constant pressure from global shocks and local legislative changes. Lee White is the chief executive officer of Chartered Accountants Australia and New Zealand. He was formerly the chief accountant for the Australian Securities and Investments Commission.