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We Are IESBA—Interview with James Gaa

Jan 27, 2015 | English

James Gaa is a Professor of Accounting at the University of Alberta (Canada) and has been a public member of International Ethics Standards Board for Accountants (IESBA, the Ethics Board) since 2010.

What made you interested in serving on the Ethics Board?

JG: I’ve been aware of the Ethics Board for a number of years. Their meetings are open to the public so I attended a meeting as an observer in the late ‘90s or so. Also as an academic—I teach accounting and ethics at the University of Alberta—I felt a responsibility to be engaged with the profession, which I’ve tried to do over the years. I’ve been involved with one of the member bodies in Canada and served as a member of its Board, and I was a member of the International Accounting Standards Committee, the predecessor of the International Accounting Standards Board, in the late ‘90s. So I’ve been involved with the profession for many years. Joining the Ethics Board was a natural progression. I also find the international and cross-cultural aspects of it really interesting.

What particular perspectives or experiences do you bring to the board as a public member?

JG: All members are obligated and agree to act in the public interest and not in the interest of any one segment of society. As an academic and public member, I’ve never worked as an accountant. That can be both a strength and a weakness, but it allows me to bring a different perspective to the board. Everyone is biased to some extent, so of course I bring mine as well. But, I hope it is a more disinterested point of view. I think that’s an important thing.

I’m trying to encourage the board to apply more of a research base to our standard-setting process. One of the limitations of the Board is resources, but if we can leverage members of the academic community to support our efforts by providing reviews of research or analyses, that would be very helpful to us. Increased interaction with the academic community is part of our strategy and work plan for the future, so it’s a visible and fairly prominent initiative of the board moving forward. I have had some discussions with organizations in the academic community to determine their interest. So far I have talked to several groups, and they are very interested, so I think it will gain some traction.

Since you became a member, how has your view of the Ethics Board and its work changed? Has serving on IESBA been what you expected?

JG: I think my basic view of the Board has not really changed, but it has developed. I’ve been impressed with how challenging the work is. It’s intellectually challenging, and the cultural differences that come to the Board is something I have come to appreciate even more. I had had experience with that through the International Accounting Standards Committee, but I think it’s fair to say that the cultural differences are more suppressed when you are dealing with accounting standards than when we’re talking about ethics.

I have also been very impressed with the other members of the Board. Their hard work and their abilities, their perceptions—it is a really impressive group that I’m privileged to be a member of.

A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. What does this mean to you?

JG: Part of it is what I was just saying about being a public member—that is, having sort of a disinterested, more neutral point of view and trying to bring that to the table. As a concept, the public interest is almost impossible to define. IFAC and the Ethics Board have tried. And there is much literature in the sociology profession that tries to define the public interest. I think it defies definition partly because it probably means a number of different things. But one thing it means is to try to separate out our deliberations from the private interests of specific sectors of the economy, occupations, industries, or companies. So to me, it means not favoring any one group or any one segment.

That’s a big challenge with international standards. Because there is so much diversity in the world of occupations and national interests, and cultural differences and so on, to somehow represent all of that in our setting of standards, and then, therefore, in the standards themselves, is a real challenge. One of the ways we address these differences is by basing the Code on principles, rather than rules, so that it can be applied in any jurisdiction, regardless of local regulation and custom.

For instance, the task force for Part C of the Code, dealing with professional accountants in business, is grappling with this in its work around inducements, gifts, and bribes. Clearly there are cultural differences about what is acceptable behavior from one place to the next. Gifts are especially challenging, for example, what is a gift, and what does giving a gift or receiving a gift imply about peoples’ relationships, and so on? And, how can we factor that diversity into writing a standard? Or do we?

At our meeting in October, we finalized an Exposure Draft that will be looking at two issues: fair and honest reporting and intentional manipulation of information, and pressure imposed on professional accountants and imposed by them on others to breach the fundamental principles of the Code. The Exposure Draft will be open for comment from mid-November 2014 at the board’s website—www.ethicsboard.org. We welcome public comment from all interested individuals and organizations.

What pressures or challenges do accounting professionals face today in terms of acting ethically?

JG: I think there is more demand on people’s time and attention. I think that’s important, because assessing the ethical dimension of a person’s behavior requires being reflective and thoughtful. And to the extent time demands are higher, it could restrict people’s ability to consider their situation, and assess aspects of what is going on with their job.

Another major challenge is the increase in regulatory oversight, which presents challenges and pressures, but is a fact of life. Clearly, there is a social demand for more regulation of business and professions. And that’s not going to change anytime soon, I don’t think.

But back to this issue of bribes and corruption, there has been, in the last few years, increasing attention to this kind of thing. The laws are changing around the world about what kinds of payments or inducements can be given without violating laws. So the social norms around the world on that particular issue are changing rapidly.

To what extent do you think that the board’s work will be influenced by the laws and the regulations and the pace at which they are changing?

JG: That’s a really good question because an ethics code is more than just “don’t do anything illegal,” because then our Code could be very short. It could be one sentence long. People generally recognize that a code of ethics is different from a legal code. The Code holds accountants to a higher standard than the legal standard in their jurisdiction. But with the laws and regulations changing over time, how we respond to or even lead the thinking on those issues is very important. As the laws change, the Code has to reflect, and I think will reflect, the current, generally accepted world view on the issue.

What do you see as the key factors influencing the development of global ethics standards in the future?

JG: I think one of the factors is more attention and interest in regulatory oversight and legal requirements. That impacts the Code, of course, and the Ethics Board. It also increases our visibility and the importance of demonstrating our commitment to the public interest.

 

About the “We Are IESBA” Series
The purpose of this series is to bring the work of the IESBA to life, adding context and color to the people who carry out the activity of ethics standard setting for the international accountancy profession. The series aims to further increase the transparency of the board’s activities. Transparency is written into the board’s due process, and indeed, into its operations. The IESBA’s agenda papers and meetings are public (you can register to attend and observe any meeting, or listen to meetings and summaries via our iTunes channel). To learn more about the board, follow along via Twitter and email: Follow @Ethics_Board and subscribe to IESBA eNews. For additional developments related to ethics and other areas of the profession, subscribe to topics from the Global Knowledge Gateway.