The accounting profession has been in the news lately and for all the wrong reasons viz. the KPMG / SARS Rogue Unit and the Steinhoff debacles.
Accountants have a primary responsibility to protect the public interest. In support of this primary objective, the International Ethics Standards Board’s Code of Ethics has been updated to include “Non-Compliance with Laws and Regulations” (NOCLAR).
“Accountants” include all categories of professional accountants, auditors, accountants in public practice, accountants in organisations, including those in business, government, education, and the not-for-profit sector – an all inclusive gathering of the profession.
NOCLAR came into effect on 15 July 2017. This new standard identifies the processes that need to be followed before an accountant need report an instance of non-compliance committed by a client or an employer.
NOCLAR requires an accountant’s response where there is evidence of non-compliance within the following areas (among others):
- Fraud, corruption and bribery
- Money laundering, terrorist financing and proceeds of crime
- Securities markets and trading
- Banking and other financial products and services
- Data protection
- Tax and pension liabilities and payments
- Environmental protection
- Public health and safety
The overriding principle: Accountants need to take such further action as is appropriate in the public interest.
NOCLAR sets out the framework to guide accountants in what actions to take in the public interest when they become aware of a potential illegal act committed by a client or employer and clarifies the way in which accountants must disclose potential non-compliance situations.
The pressure is now on for accountants to revisit the call to act ethically and with integrity by identifying and reporting (where necessary) to the relevant authority any client / employer non-compliance that may materially cause harm to investors, creditors, employees or the general public.
