Strong governance and a robust investigation and discipline (I&D) system are core elements of a professional accountancy organization (PAO). An effective I&D system should protect the public interest in a proportionate way. Not only does this provide assurance to those using a professional accountant’s services, but it also protects the reputation of the PAO and the profession.
This is why investigation & discipline is one of the core IFAC membership requirements, under Statement of Membership Obligation (SMO) 6.
A commitment to delivering public value and robust regulation of the profession is central to ACCA’s vision to develop the accountancy profession that the world needs. This focus on public value and ethics is also embedded in the commitments that ACCA made in 2019 to the United Nations Sustainable Development Goals (SDGs), including SDG 16: Peace, justice, and strong institutions. Our commitment being: ACCA will promote and adhere to the highest standards of professionalism, integrity, and ethics.
ACCA’s longstanding I&D system continues to evolve today to meet global standards, the needs of a rapidly changing world (particularly in response to the global pandemic), and to react to our own evolution and growth as a global organization. Learning from and sharing with partners, including the global PAO community, is something that ACCA has been doing for many years.
This has included knowledge sharing on the principles and approaches that form the basis of ACCA’s I&D service at recent forums, such as:
- The ASEAN Federation of Accountants/IFAC SMO workshop in December 2021
- A webinar to support the United Arab Emirates Accountants and Auditors Association with establishing an I&D mechanism in February 2022;
- An upcoming Arab Federation of Accountants and Auditors and IFAC regional workshop
- A seminar with the Institute of Chartered Accountants of the Caribbean
ACCA’s Director - Professional Conduct, Joe Johnson, who has responsibility for the delivery of ACCA’s I&D service, commented: “A key focus of my role is delivering an efficient and effective [I&D] service that is fair and transparent and that protects the public interest in a way that is balanced and proportionate to our members interests.”
While PAOs vary in size and regulatory remit, there are some underlying principles that are important to all PAOs irrespective of size; these principles, and some examples of how this is applied within ACCA’s context, are set out below.
- Public interest, which in this context includes considerations such as protection of the public, maintenance of public confidence, and declaring and upholding proper standards of conduct.
- Proportionality both from a member perspective, but also from a resource perspective. Essentially this is a balancing act! It is important that sanctions and other outcomes are not unduly penal in nature and that any action taken by the PAO is proportionate when compared to the risk to the public. Resource should be focused on those matters that pose the highest risk to the public (see Proportionality of Sanctions in IFAC’s SMO 6).
- Fairness and transparency – It is important that any I&D system is credible and well respected. It not only acts to protect the public interest, but it also helps maintain PAO’s reputation and brand. Systems need to be fair and transparent, processes documented, and rules, regulations, and guidance publicly available. Findings should be evidence based and decisions subject to public scrutiny, unless there are exceptional circumstances (see Administrative Processes and Public Interest Considerations in IFAC’s SMO 6).
- Independence and impartiality are connected to fairness. Wherever possible, a PAO should incorporate independent “check points” to ensure robust oversight and governance of processes and decisions made. This includes those involved in decision making declaring any conflict of interest, and ensuring decision makers are objective, capable of identifying bias, and taking decisions that are unbiased. They should also be careful to ensure that any apparent bias is managed appropriately, including by recusing themselves if necessary (see Investigative Process and Disciplinary Process sections in IFAC’s SMO 6).
As an example, the process below is similar to that used by ACCA, with those elements which include independent “check points” and decision making highlighted in green:
Key considerations for implementing an I&D system
Some important considerations when identifying the steps to implement and operate a just and effective I&D service include:
- Documentation is the backbone to an effective investigative and disciplinary system with regulations and guidance made publicly available to ensure transparency.
- Processes must be determined and documented. They must be fair and transparent, agile and adaptable.
- Structuring needs to be considered. It is important that roles and responsibilities are clearly defined, allowing for independent assessment and decision making. And that consideration is given to how the service will be practically implemented, including likely resourcing needs and availability of funding.
- It goes without saying, that legal and regulatory considerations are also key.
Support to gain a ‘head start’ on how to practically implement the underlying principles can be sought from other PAOs and IFAC, particularly through IFAC’s PAO Development and Advisory Group. There is a wealth of guidance and resources that can be accessed by PAOs looking to collate and develop this documentation, for example:
- IFAC Self-Assessment Against Main Requirements of SMO 6 (available in Arabic, French, Spanish, Portuguese, and Russian)
- IFAC’s PAO Development and Advisory Group Point of View: Trust, Transparency, and Accountability & the Importance of Effective Enforcement Systems
- Aplicación Efectiva de un Sistema de Investigación y Disciplina como Pilar de la Profesión Contable, a presentation from IFAC and the Colegio de Contadores Públicos de Costa Rica available in Spanish
- The CAPA Maturity Model Guidance Series: Investigation & Discipline
ACCA’s I&D service will continue to evolve and build on these core principles, meeting global good practice and aligning with our broader governance functions, oversight of our members, and internal reporting. All of this, and more, is expanded upon in the presentation below.