The Accountant March-April 2016

BUSINESS PRACTICE AND DEVELOPMENT
BUSINESS PRACTICE AND DEVELOPMENT
Oskar Gröning
is a German
former SS junior
squad leader who
was stationed
at Auschwitz
concentration
camp.
By CPA Charles Kai Mwangudza,
charleskai140@hotmail.com
THE ACCOUNTANT OF
AUSCHWITZ
The Auschwitz trial held in
Krakow, Poland was among
the trials held after the Second
World War to bring to account
those who bore responsibility
for crime committed during the Holocaust.
The following is an excerpt from the jury
decision which saw a verdict of 23 death
sentences and 17 imprisonments ranging
from life sentences to 3 years. “Torturing of
prisoners already tormented to the extreme
is the evidence of inhuman savagery
perpetrated by the defendants who as a
result of the trial were sentenced to death.
The listed violent crimes committed by
named defendants, who all took a smaller
or larger part in the mass murder of
prisoners also reveal that the accused were
involved in acts of killing for pleasure and
not pursuant to orders of their superiors. If
it were not for expressed desire to kill, they
would have otherwise displayed elements
of sympathy for the victims or at least
show indifference to their plight but not
torture them to death.”
April, 2015 saw the commencement of
the trail of 93 year old Oskar Groening.
Oskar was at the time of the war a 21,
year old junior non-commissioned
officer of the SS. Oskar is being tried
on 300,000 counts of accessory to murder
related to Hungarian Jews at Auschwitz
in 1944. Interesting for me is not the
duration it took to bring him to trial
rather it is the fact that Oskar was not a
guard, he was a book keeper, in today’s
era probably a CPA. Groening was not a
violent participant in genocide, he was not
one of those who clubbed, beat and shot
Jews, all he did was count the money the
Nazis stole from the Jews. Groening was
indicted under a new line of German legal
reasoning that anyone who helped a death
camp function can be accused of being an
accessory to murder without evidence of
participation in a specific crime.
What parallels can we draw from
the man the German press dubbed the
‘Auschwitz accountant’ with present
day members of the institute both in
public and private sector? As reports
of misappropriation, mismanagement
and outright theft continue to gain
prominence in the media almost on a daily
basis, one must ask the question how many
accountants are just like Groening ‘just
collecting and tallying money stolen from
new camp arrivals and sending it to Berlin’.
From the happenings at Kenya Airways
and Uchumi in the private sector to
NYS and most recently Communications
Authority in the Public Sector, how many
accountants are efficiently processing
illegal payments on account of doing
their duties? It is only when accountants
are found to have personally benefited or
are found to have been negligent is action
taken against them.
Anthony Smith-Meyer the Editor-in-
Chief, Journal of Business Compliance
states the following with regards to the
matter of ethics. “Ethical choice only
happens when there is a disruption to the
balance of values that determine our moral
consciousness, introducing an anguish,
anxiety, disdain or disgust over a personal
choice or an observed situation/behaviour.
Ethics only exists when there is a clash of
values requiring a rebalancing of choice
between what is, or was considered, right
or wrong”.
The Accountant code of ethics while
emphasising on confidentiality, provide
circumstances where professional
accountants are or may be required to
disclose confidential information or
when such disclosure is appropriate,
“………Where disclosure is required
by law such as disclosure to appropriate
Public Authorities of infringements of
the law that come to light”. The Internal
Auditors code of ethics makes similar
demands as regards confidentiality,
“Internal auditors respect the value and
ownership of information they receive
and do not disclose information without
appropriate authority unless there is a legal
or professional obligation to do so. This
section of the code should be read together
with the Public Finance Management
Regulations 2015 which provide for
Reporting material breaches and persistent
material breaches. “When indications
of fraud, material breaches and wasteful
expenditure have been identified in a State
Organ, or any other national government
entity in sections 92 of the Act, the head
of the internal audit unit shall immediately
notify the Cabinet Secretary”.
The Internal Auditing Standards
provide further guidance on this matter.
Internal Audit Practice Advisory 2440-2
on communicating sensitive information
within and outside the chain of command.
It provides guidance on possession and
communication of such information which
include fraud, waste and mismanagement,
illegal activities, abuse of power,
misconduct that endangers public safety or
other wrong doings.
There have been recent reports of
supermarkets having a variance between
display prices and till prices. There is
probably a ‘management accountant’ who is
responsible for providing sales projections
and reporting on variances. You may also
have another ‘accountant’ in charge of
reconciling store balances and this would
include verification of shelf prices. In this
modern era of enterprise management
systems that include palm held devices
for us in stock take it is surprising that
it takes public outrage on social media
for supermarkets to acknowledge these
facts. What of the internal auditor who
as part of risk based auditing would be
auditing the internal controls regarding
change of pricing? What may be even
scarier are rumours that some supermarket
outlets alter the expiry date of products
to continue engaging in their sale to the
detriment of the health of unsuspecting
Kenyans. The month of June 2015 saw the
anti-counterfeiting agency raid a palatial
home in Nairobi where fake goods worth
millions of shillings were discovered.
Again one would seek to ask in this era
of bar codes and supplier identification in
the enterprise resource planning system,
should these goods find their way to our
supermarkets, who is responsible for
controls with regards to supplier sourcing
and auditing controls of the same?
What do you do know? Ethical issues
face by Charted Accountant, a book
published by the Institute of Chartered
accountants of Scotland presents an
interesting perspective on what it refers to
as ‘Guardian’ and ‘Commercial’ perceptions
with regards to ethical responsibilities.
This perspective broadly refers to the
accountants’ dual responsibility to the
commercial interest of the institution as
well guard the stakeholders by providing
a true and fair representation of the
financial status of an entity. When faced
with a scenario where an entity requires
the accountant to falsify quarterly
management accounts in order to ensure
the company meets it covenant with its
financiers, the accountant is faced with
the commercial interest of ensuring the
company meets its funding conditions to
the bank where failure to do so results in
dire consequences for the firm’s survival.
On the other hand, the ‘Guardians’ role is
that the accounts must represent a true and
fair representation of the firm’s financial
position and performance that would be
in the interest of the creditors. Another
perspective would be the question whether
to falsify accounts in order to maintain an
audit client or express a qualified opinion
that could lead to winding up of a company
and loss of employment for many.
Oskar Groening was on the 15th of
July 2015 sentenced to serve 4 years in jail,
70 years after the liberation of the Nazi
concentration camp. On the first day of his
trial, Groening said he felt morally guilty
for his work at Auschwitz. To conclude,
I believe that appreciating the duality
of the role of the accountant in securing
the ‘commercial’ interests of the entity as
well as the ‘guardian’ role of protecting
public interest will provide a useful lens
through which ethical dilemmas facing the
accountant can be viewed and interpreted.
In this modern era of enterprise management
systems that include palm held devices
for us in stock take it is surprising that it
takes public outrage on social media for
supermarkets to acknowledge these facts.
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