Financial Reporting and Ethics - The Institute of Chartered ...

ETHICAL FRAMEWORK, CONCEPTS AND VALUEshould evaluate scientifically not just the adequacy and flawlessness of themeans but also the value of the ends.ILLUSTRAUSTRATION TION 6-1Mr. Dokus is a fellow member of The Institute of Chartered Accountants ofNigeria. He has been a consultant on auditing and taxation to his client formany years, for which reasonable fees were received. The accountant has,however, been secretly giving information on the financial transactions of hisclient to the relevant tax authority. The Inland Revenue Service subsequentlyindicted the client for tax evasion. The client cleared the arrears of the taxowed and the penalty. He later sued Mr. Dokus for failure as an accountant torespect his privacy and give him loyalty. His Attorney submitted before theHigh Court of Justice that “a client has a right to feel he is getting undividedloyalty and confidentiality from his accountant.” The defence counsel counteredthis point by saying that “loyalty and confidentiality to a client end when theyare in conflict with the law.” The client lost the case. What is your view on thismatter?SUGGESTED SOLUTION 6-1The position of Mr. Dokus, the chartered accountant, is only legally acceptable.He has to preserve the confidentiality of information acquired in the course ofhis duties. The professional accountant should not use the information to his/her personal advantage. Mr. Dokus, the accountant, should not have disclosedany such information to third parties without the authority from his client unlessthere was a legal or professional right or duty to disclose. Legally, the client toMr. Dokus went to court with soiled hands. Whoever goes to equity, should gowith clean hands. The principle of law which the court invoked to pronounce‘quilty’ on Mr. Dokus is “Ex turpi causa oritur non actio.” This legal maximmeans “out of illegality nothing legal shall come out.”Although, the client lost the case to the law, in ethics, he won. Mr. Dokusinfringed the Code of Professional Conduct of Members issued by The Instituteof Chartered Accountants of Nigeria and strengthened by the InternationalFederation of Accountants. If he was in doubt as to what to do, Mr. Dokus shouldhave sought and obtained guidance from ICAN, his professional body.6.3 COMMONLY USED PRINCIPLES AND THEORIESThe philosophical dimension to ethics evokes various views and postulationsfrom experts. The different schools of thought use terminologies or principlesto ventilate fervently their positions. The various classifications of ethicaltheories would be discussed below.117