Skip to main content

APESB Dinner Event Novotel Melbourne. Keynote Address from Gabriela Figueiredo Dias, IESBA Chair

Given May 9, 2024

May 9, 2024 | English

Good evening, esteemed guests and colleagues.

It is an immense pleasure to stand before you today at this distinguished gathering.

I would like to extend my deepest gratitude to the Accounting Professional & Ethical Standards Board and to Chair Nancy Milne very specially, for this very kind invitation to address you all. And I have had the privilege of counting on the unwavering commitment and dedication of my fellow IESBA Board member and dear friend Channa Wijesinghe, APESB CEO. I want to publicly recognize his highly valued contribution to the IESBA projects and strategy, thanking Nancy and the APESB Board and staff for all the support provided to Channa and to the IESBA.

As some of you may know, I come from Portugal, a relatively small European country on our globe but one with a rich heritage of exploration and discovery. Ferdinand Magellan, the first person to sail the Pacific and around the world, proving that the earth is round. Vasco da Gama, the first European to sail from Europe to India, enabling trade with the Far East, or Bartolomeu Dias, the first European to sail around the Cape of Good Hope, opening a sea route from Europe to Asia.

Well, I hear you say I’m in illustrious company, but I admit my wanderings have been far more modest in breaking new ground and changing the course of history. Before embarking on this new adventure with the IESBA in January 2022, I chaired the Portuguese Securities Commission (CMVM) for 5 years, and in total worked there for 13 years in different areas and roles. I was also a member of the Board of Supervisors of the European Securities and Markets Authority (ESMA), a member of the IOSCO Board, and vice-chair of the OECD Corporate Governance Committee.

Yet, while I have not found new lands or established new trade routes, I have seen clearly the spirit of my seafaring forebears who were driven by a passion and ambition to bring worlds together, to bridge divides, to mark land for fellow citizens in order to open their minds to the wonders of new frontiers, new knowledge, new possibilities, and yes, a better world. Like my illustrious mariner countrymen of centuries past, I strongly believe timidity has no place if we are to set sail in that spirit and towards that vision of a new world. To borrow from Magellan’s words, “The sea is dangerous and its storms terrible, but these obstacles have never been sufficient reason to remain ashore… unlike the mediocre, intrepid spirits seek victory over those things that seem impossible.”

It is with this ambition in mind that I made my way to the place where that conviction better translates into purpose, action, and impact – and that place is the IESBA.  

An Interconnected but Ethically Afflicted World

From the very different vantage points my wanderings have taken me, I have come to understand well the critical role played by markets and their agents in contributing, in a decisive way, to robust, resilient and dynamic economies, serving families, citizens, and ultimately, the society. From that intense experience, I have retained indelible conclusions:

  • That market integrity, and the integrity of the work and actions of all its agents, is a vital condition for sustainable economic systems; and
  • That in a deeply interconnected world, from technological, communications, economic and geopolitical perspectives, any isolated and fragmented frameworks and solutions will fail their objective of achieving strong and resilient responses to the different problems we need to address.

Unfortunately, from these vantage points, I have also seen too many high-profile adverse events in the financial sector, too many collapses, and too many cases of unethical behavior in accounting firms, both in my country and internationally. These events have had painful consequences in terms of individual investors sometimes losing all their lifetime savings, employees losing their jobs, and institutional investors losing confidence and departing markets which desperately needed their capital, causing direct harm to citizens and leaving governments with huge financial stability problems.

While all these events were different in many senses, there are two common and decisive factors I wish to highlight.

First, in one way or another, these events unveiled widespread and persistent unethical conduct or practices, revealing corporate culture failures in companies, accounting firms and other organizations.

And secondly, the events showed the ineffectiveness of individual reactions to individual cases, pointing to the imperative of integrated, though nimble, preventive responses.

The consequences of unethical behavior in business and financial markets, and by agents who are entrusted the mission to provide confidence in business and organizations, reverberate in waves – sometimes towering waves – throughout the system and society.

We must therefore recognize ethics as a structural and systemic element of financial resilience and economic performance, and agree on the need to expand the frontiers of possibilities for a more consistent, systematic and integrated approach to that objective.

The Response Requires Unity of Purpose and Action

This brings me to the question of how we might rescue businesses, companies and firms from its ethical afflictions.

All market relations are built upon information and trust. Market integrity is the result of the integrated ethics of all its agents and parts. All market agents have large responsibilities in ensuring that the information that supports market decisions and economic relations is trustworthy, and all actors are responsible for ensuring that they contribute to the integrity and reliability of the system that supports the whole functioning of economies and the society itself.

Professional accountants and accounting services are a crucial and very sensitive part of this system. Accountants’ social license to operate stems from the public expectation that they provide trust to the information and decisions of businesses, companies and clients.

Therefore, I would like to stress the power of a strategic alliance among all stakeholders, among us all, among the accountancy profession, regulators, governments, international organizations, investors, companies, the corporate governance community and others. We must have the boldness of vision and the intrepidity to venture beyond our comfortable and familiar shores to contribute in each of our roles and through leveraging the power of togetherness to uphold ethics and trust in accounting services, in the profession and in business.

Ethics must be the next frontier for us, because from the ethical afflictions we continue to witness in the business and financial world we live in, we know we must keep on making the journey towards a better place. And to chart this next frontier, we must have unity of vision, purpose and action, and importantly, trust in one another.

Navigating the World of Risks with an Ethical Compass

But how then do we navigate our journey forward together through this turbulent and uncertain world?

If I were to choose three words to define the times we are living in, they would be: change, promise and risk.

Change, and therefore promise and risk, is a condition for growth, progress and success in meeting the needs of an evolutive society.

Important triggers for change – and risks – in our space are challenging the accountancy environment and calling all stakeholders, including the IESBA, to respond firmly to these risks, serving the public interest and the economic development for the welfare of the people.

Ethics is an element of organizations’ risk profile, which may not be as front and center as legal conflicts, cyber risks or compliance risks, yet somehow runs through everything. In a world brimming with risks – from geopolitical tensions and societal shifts to environmental challenges – our ethical compass becomes not just a guide but a strategic imperative. As we confront these uncertainties, actions must reflect the integrity that defines an activity, a profession, an organization.

Given the potentially significant impacts of unethical culture and behaviors in organizations, including accounting firms, ethics must lie at the heart of organizational strategy and risk management. It prevents unforeseen consequences, fosters a strong culture and builds trust. At a time when younger generations seek purpose and impact in their work, ethical conduct becomes a beacon that attracts and retains talent – a promise they can hold on to build a better world – whereas pervasive ethical issues make them stay away or depart from certain organizations or professions. Organizational and professional reputation is built on trust, and just like a sturdy ship with fresh sails navigating the high seas, strong ethical foundations can help organizations to weather crises and uncertainty.

Organizations with a strong ethical culture and which choose to have ethics as a strategic asset for their growth and sustainability adapt better to rapidly evolving circumstances. Their agility stems from a foundation of integrity. They have built trust with their stakeholders and society. They have cultivated a culture of accountability and transparency. They have aligned their purpose and strategy with the public interest and the sustainable development goals. These are the qualities that make ethical organizations resilient and successful in the long run. And these are the qualities that IESBA strives to promote and support through our standards and guidance.

That is why IESBA's ethics and independence standards are more relevant than ever in this world of risk – where we witness continuing concerns about fraud, corruption, tax avoidance, disruptive technological developments, and pressing sustainability reporting requests and issues.

The awareness of emerging external risks, changes and challenges; the timely and humble identification of areas where we, as standard-setters, or the profession may have to adopt a different approach; and the efforts of us all to raise recognition of IESBA’s role in a coordinated way and to focus on the local implementation of our global standards are fundamental to the achievement of our common goals.

The Role of IESBA and Its Standards

IESBA is of course not a newcomer in sailing these choppy waters. Despite the dimension of the challenges, IESBA has over the past two decades strived to live up to its responsibilities as an independent global ethics standard setter in this ambitious project to bring ethics higher in the agenda in a world of change and risks. Let me outline a few of the ways in which we have recently brought the old world to join with the new, viewed through our ethical spyglass.

Technology, one of the main triggers for innovation, with both severe impacts and great opportunities for the profession, is one of the fields where we have recently done important work. We undertook two comprehensive research phases into key technologies such as AI, blockchain, robotic process automation and cloud computing, culminating two reports issued in December 2019 and November 2022. These led, firstly, to a comprehensive revision of the IESBA’s International Code of Ethics to respond to the transformative effects of major trends and developments in technology on the assurance, accounting and finance functions (these revisions in fact come into effect this December); and secondly, to the publication of a series of thought-leadership pieces and guidance materials, in collaboration with some national standard setters and professional accountancy organizations, on topics such as ethical leadership in an era of complexity and digital change, and AI. These standards and resources have never been more timely and relevant as the world witnesses explosive growth in generative AI applications.

Another area where we are bringing a new dimension of awareness and ethical responsibility is tax planning. In this regard, we just released last month the first global ethics standards on Tax Planning. Three years ago when this work started, there were many doubts and concerns about where this voyage would take us. Fear of the unknown was certainly in the air. Today, the ship has sailed and it is more than ever clear that ethics in tax planning is absolutely crucial to avoid pervasive cases of unethical tax planning and its very harmful impacts. In this regard, we have seen a metamorphosis in public attitudes to tax avoidance across jurisdictions. Tax planning is a subject with a high reputational risk for professional accountants, dramatically affecting the public trust in them.

A third area where we have been sailing on a voyage for over 18 months now is Sustainability. In December 2022, we launched our two projects, one with the mandate to develop ethics and independence standards for sustainability reporting and assurance, and the other to develop ethics standards addressing the use of experts. Our vision in this ambitious voyage is unabashedly bold – to provide not only the essential third pillar but also the foundation in the global standards infrastructure for corporate sustainability disclosures, alongside sustainability reporting and assurance standards. Last January, we reached a key port of call when we released the Exposure Drafts from those two sustainability-related projects, the consultation periods for which have recently closed.

However, what makes IESBA’s work in the sustainability field even more important in the public interest is that we are bridging the divide between two worlds that have, up until now, largely operated separately by developing profession-agnostic standards for sustainability assurance: joining the world of professional accountants and the world of conformity assessment bodies and other practitioners under the same new framework. For this, we recognize and thank the International Accreditation Forum (IAF) for its willingness and commitment to enter into a strategic partnership with IESBA, announced last February. This recognizes the reality of jurisdictions gradually allowing a broad church of sustainability assurance practitioners regardless of their backgrounds. Our partnership with IAF thus holds the promise of a new world of jointness and togetherness to serve the greater public interest, as opposed to the downsides of insularity and separation.

All these standards I have mentioned have the potential to make a difference. And I am sure they will, if we remain as ambitious and firm in our convictions as the issues addressed require us to be, refusing weaker solutions or any race to the bottom for the benefit of compromise. Our commitment as a Board is to serve the public interest. And this may be not achieved if we work for the agreement and wide adoption of yet modest standards.

Sailing on IESBA’s Next Voyage

As well-weathered as IESBA is, we are working to make IESBA thrive even more as a leading ethics standard-setter in times of unprecedented risks, putting ethics at the top of the business and corporate agenda. We have drawn three strategic axes on our map as we chart the path forward.

First, we are determined to maintain and enhance the IESBA Code not only as the global standard of behavior for the profession, but also as the strongest imperative for all those setting the scene at the top of accounting firms. This axis speaks to our recently launched workstream on accounting firm culture and governance. As we have seen in recent times, high-profile unethical behavior within accounting firms both abroad and here in Australia can damage public trust not only in the firms involved but also in the profession as a whole. The questions we seek to address are challenging and we are under no illusion that there are easy solutions. But we assert that boldness and determination are in our veins.

Our second axis will explore extending the impact of the IESBA Code beyond professional accountants to many others doing the same things that accountants do without being subject to the same standards. We will also explore what can be done for companies and those therein who design and manage the culture and governance of organizations. This will necessarily take aim at decision-makers at all management levels who must ensure ethical options and directions, setting the tone from the top. Further, we know that very often, part of the problems lies with other professionals, including consultants, technical experts, and lawyers, who opt to take the wrong direction, while the reputational risk and other consequences mostly fall over professional accountants. IESBA has already made concrete nautical progress in that direction with the development of proposed professional-agnostic standards for sustainability assurance.

And thirdly, it is not sufficient to map the navigational contours, intersections and turns of standards, but to lead discussions with policy makers, regulators, other standard-setters, the profession and other providers of similar services, and users of those services, about the importance of effective implementation and enforcement. Yes, one may say, we need both trained sailors on the galleon to sail it effectively and the cannons to give it the necessary affirmation and respectfulness. Without these essential supporting structures, the standards will remain a weak tool, and the advantages of international frameworks serving as a global and convergent baseline diminished. At the same time, we need to add effective communication and stakeholder engagement to the list of the top elements required to achieve the full potential of the standards. The world is today totally connected. The importance of communicating the message and the impact, purpose or result of a standard requires timely and high-quality education and communications.

Reaching Final Port

IESBA’s role and desired achievements take of course ambition and inspiration, but also awareness, attention, openness, timeliness and intense dialogue with all stakeholders. It takes us willingness to leave our comfortable shores. It takes focus on innovation and change, in a very wide sense.

The intensity of the request of the whole community regarding the importance of the essential nature and purpose of IESBA is clear: to bridge the gap between material and ethical worlds. They are completely interconnected, as we, at IESBA, have always believed, as we believe that the split between profit and ethics that the economic thinking and business practice has created is completely artificial. Rather than moving blindly, the only lucid way forward is to carefully choose and integrate all the positive elements of ethics and accounting and finance, to adjust to positive systems and economic models.

Creating, more than a proposition for value, real social and economic value.

This is what brought me to Australia in such a busy period. The intense and irreplaceable nature of the dialogue and interaction with all our stakeholders is much more than a part of our due process: it is the life insurance of our standards and ultimately, of IESBA’s relevance. Creating trusted relationships, accepting that we do not own the truth, listening, sharing, taking suggestions and concerns on board for reflection, even if never prescinding of our core values and convictions, understanding the others’ concerns, objectives, and views, making the best from the natural tensions that will always arise from different perspectives – these are crucial tenets onto which we hold dear at IESBA.

Let me finish by thanking you all in advance for joining IESBA in this great adventure of sailing the seas – no, setting global and leading ethics standards – in the age of consciousness but also of insane threats to our goal: to make a better world for the people.