This episode of the FM podcast is the start of an occasional series on the show. That series is called Beyond the Code.
In this case, that means taking a close look at the CIMA Code of Ethics.
Xose Lumor, manager, Advocacy and Professional Ethics – Management Accounting at AICPA & CIMA, together as the Association of International Certified Professional Accountants, talks with disputes attorney Alastair Campbell, of the firm Level, about some of the ethical issues that accountants should be prepared to face.
The vast majority of CIMA members comply with regulations, and misconduct is not the norm. But there are instances where ethical violations are reported or alleged. Campbell takes listeners through some of those examples and reminds accountants that being “unimpeachable in terms of your integrity” is one key way to make sure no ethics missteps occur.
Resources:
Campbell’s contact information: alastair.campbell@level.law and LinkedIn
Lumor’s contact information: Xose.Lumor@aicpa-cima.com and LinkedIn
More about Regulation 19 and the duty to notify
What you’ll learn from this episode:
- More about Alastair Campbell’s background and his expertise in dispute resolution
- Why disciplinary hearings for alleged violations are rare
- The role of Regulation 19 in self-reporting potential violations
- The importance of self-reporting offences that may not, on their own, seem like ethical misconduct
- How confidentiality agreements can complicate reporting of ethics violations
Play the episode below or read the edited transcript:
To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.
Transcript
Neil Amato: Welcome back to the FM podcast. I’m Neil Amato. We appreciate you listening.
Today’s episode is a conversation that starts an occasional series on the show. That series is called Beyond the Code, and its focus is the CIMA Code of Ethics. It’s a timely topic, with Global Ethics Day on Oct. 18.
Beyond the Code’s initial episode host is Xose Lumor, manager of advocacy and professional ethics at AICPA & CIMA. In the show notes for this episode, we’ll include links to several ethics resources mentioned, along with contact information for the speakers.
To share more on the series and to introduce the conversation with disputes attorney Alastair Campbell, here’s Xose.
Lumor: Hi there. My name is Xose Lumor, and I’m here to talk about a new series entitled Beyond the Code. It’s a series that will look to explore issues of ethics and professional conduct in relation to the accounting profession. The goal here is to explore some of the nuances surrounding important discussions such as — What is misconduct? What is the impact of trust on the perception of the profession?
We’ll be exploring a range of issues with the aim of helping CIMA members [unpack] complex ethical issues to help them better navigate the day-to-day challenges of the profession.
In this first episode, I’ll be speaking with Alastair Campbell, who is an experienced disputes lawyer who specialises in a number of fields including sports law, arbitration, and, more importantly for our purposes, disciplinary and regulatory work. We will be speaking a bit about the relationship between reporting misconduct, protecting the public, and safeguarding the reputation of the profession. Let’s take a listen and head Beyond the Code. Welcome, Alastair.
Campbell: Hi, Xose. Thank you very much for having me.
Lumor: Thank you very much for joining us. We really appreciate your time here. Before we begin, can you maybe introduce yourself to the audience and tell them a little bit about yourself and what you do?
Campbell: Of course. Thank you. My name is Alastair Campbell, and I’m a partner and disputes lawyer at a [firm] called Level. When I say I’m a disputes lawyer, that means I run arguments about contracts or disciplinary matters or other disagreements that people find themselves in and that generally takes place across the firm’s focus areas, which are sport, entertainment, media, and music. But happily, I also do quite a lot of work with CIMA and in accountancy, specifically in disciplinary work. I have been presenting officer on dozens of CIMA disciplinary cases, which I hope will give me some insight that’s helpful for members.
Lumor: Very happy to have you here to talk about this because some of this is quite interesting, and I think the members will find it quite useful to explore a little bit. As a starting point, can you tell us from your experience what some of the most common misconduct complaints are that find their way to a disciplinary committee hearing?
Campbell: Of course. So, I think CIMA gets contact from members of the public who have complaints about their management accountants. Now, not all those complaints relate to something which can properly be classified as misconduct. A large majority of complaints are about the provision of service and the complaints about how service that’s been provided perhaps wasn’t up to what was expected by the customer. That’s not the kind of case that generally finds its way to a disciplinary hearing. It has to be quite serious, sustained, and repeated — falling short of service requirements [to] end up being considered as misconduct.
What we tend to see in disciplinary hearings are more serious complaints, complaints about dishonesty, financial mismanagement, and often cases that arise out of accountants who have been sanctioned or been convicted of a criminal matter that is relevant to their membership at the Institute.
Lumor: You mentioned those cases arising from sanctions, convictions. Do those cases usually relate to a member’s practice or are they nonaccountancy issues?
Campbell: It varies. The definition of misconduct in the Charter, Byelaws and Regulations does include a reference to relevance to their membership at the Institute. If you look at the Code of Ethics, there are really two ways in which a member’s conviction could be relevant to their membership at the Institute. First of which is where it’s obviously relevant to their practice, if they’ve been convicted of some financial dishonesty. A fraud offence – that’s obviously relevant to finance and accounting issues and directly impacts upon a member’s practice.
But we also see other conviction cases which are not related to a member’s practice but are nevertheless serious. That might be a serious crime that involves sexual offences or violent offences that bring the reputation of the profession to disrepute, and those are the kind of events.
Campbell: That’s the second way in which we consider that a conviction case might be relevant to membership at the Institute.
Lumor: And of those cases we’re talking about relating to sanctions or convictions, how many of the members involved in those kinds of cases self-report to CIMA, in your experience? How often did they actually come forward and say, “Hi, this has happened. I’ve been sanctioned. What next?”
Campbell: It’s about 50/50, I think. It’s quite difficult to put an exact number on it. We do get cases where members self-report, and not all of those cases end up at a disciplinary committee hearing. Because of course not all of the current convictions that a member is obliged to report are something which CIMA considers to be misconduct or which CIMA considers to be relevant to membership at the Institute. But we do also see cases where CIMA becomes aware of the matter through other means. Obviously, CIMA members have an obligation to report misconduct that they see. It could come to light like that, or it could come to light through being in the press. You might see an accountant who is convicted of some sort of offence, and CIMA becomes a aware of it through publication.
Lumor: Yes, of course, and we spoke a little bit there about self-reporting. There is, of course, Regulation 19. Could you provide a brief explanation to the audience about Regulation 19 and what it relates to?
Campbell: Of course. So, Regulation 19 requires any member or registered student essentially to report where they have been found guilty of some offence. That includes a disciplinary sanction before any body or tribunal. It includes being found guilty of an offence by a court. It also includes things like bankruptcy restrictions, entering into a company voluntary arrangement, or being disqualified from acting as a director or a trustee. There are a number of disciplinary sanctions whereby if you are found guilty about by the relevant courts and tribunals, Regulation 19 requires you to notify CIMA with relevant details within 30 days of the event in question.
Lumor: Good to know, I think, because there may be members who are not aware that that’s a requirement of them. But I think it also goes some way to maybe explaining some of what we’re going to talk about next in terms of the protection of the public and maintaining the reputation of the profession. But before we maybe get to that, could you explain from your experience the potential consequences of not telling CIMA within the stipulated time frame if at all?
Campbell: As I say, if you don’t report the conviction or other finding to CIMA within 30 days, that is itself a breach of the regulations. A breach of the regulations ultimately could constitute misconduct. There’s quite a significant incentive on members to self-report, because it is always better to have this out in the open rather than to have CIMA discover it. If CIMA discovers it and considers that the underlying incident, perhaps the offence you’ve been found guilty of by a court, might be a driving offence, CIMA might consider that offence not to constitute misconduct.
But if you don’t tell you CIMA about it, that itself could constitute misconduct. It’s a case of… There’s a well-worn phrase, I think that gets used in Westminster: “It’s not the crime; it’s the cover-up.”
It’s important to report these things to CIMA so it can be dealt with sooner rather than later.
Lumor: Could you maybe talk about some of the risks associated with the misconduct going unreported?
Campbell: Yes, so you mentioned one of CIMA’s purposes is to protect the public and ensure that the reputation of the profession is maintained. If misconduct goes unaddressed or if incidents of more or less being found guilty of offences by a court or tribunals and not reported to CIMA, that gives rise to risk of ongoing harm. This type of conduct is allowed to continue, particularly where CIMA considers it to be relevant to membership of the Institute. If that goes unaddressed, it can lead to tangible harm to employing organisations, coworkers, the wider public. Also of course, harm to the reputation of the profession, which is paramount.
Lumor: In the cases you’ve worked on, what kind of harm have you seen in terms of some of the people affected by misconduct that’s been found?
Campbell: It’s exactly that kind of ongoing financial harm. If you see misconduct in an individual case, taking this paradigm misconduct for an accountant and financial mismanagement, deliberately mismanaging the books. If that goes unreported or undetected, it can continue and affect individuals. I’ve seen, in practice, individuals who have been allowed to continue with their misconduct and that’s had very significant effect on a growing number of people. It’s important to nip that in the bud, to protect those members of the public.
Lumor: Of course, and while it’s a small percentage of CIMA members who may ever find themselves in front of any misconduct proceedings. As you say, harm that’s sustained over time, however small in terms of proportion, the impact could be quite significant, I imagine.
Campbell: Absolutely.
Lumor: I just wanted to move the conversation forward somewhat and talk a little bit about the challenges to report misconduct or perceived challenges. One of the things that comes up sometimes in conversations, colloquially, are settlement agreements, sub-clauses of NDAs (nondisclosure agreements), things of that nature. But from time to time, this conversation comes up in terms of how misconduct gets addressed. Or ways in which maybe conduct isn’t addressed. Could you help our listeners understand, first of all, what settlement agreements are and in what instances may they be used in relation to this conduct.
Campbell: [Under] the most common set of circumstances, we see a settlement agreement, an NDA, used, and of course that is circumstances that is relevant for our purposes, is where you have misconduct by somebody within a business that isn’t addressed then within the business’s own procedures. But you might have some misconduct which is, as I say, addressed within the business. That person then leaves the business, and there are settlement agreements, the terms of that agreement, remain private and both sides are subject to confidentiality obligations or an NDA.
There’s a conflict there a little bit where somebody might’ve been found guilty by their employing organisation or have admitted to their employing organisation some misconduct that then, pursuant to their confidential agreements to leave that business, they’re then prevented from talking about it in certain circumstances by their obligations under that agreement.
Lumor: Can you elaborate maybe on some of the benefits of settlement agreements and just why they are necessary?
Campbell: Of course, it’s often about their reputation management for a business and for the individuals involved. Imagine you are part of a large FTSE company and discover that some financial mismanagement has been happening or some other form of misconduct has been going on. That business manages that within its own procedures in order to protect its own reputation and to effectively manage its employment risk, [to] manage its reputational risks and. to remove that person from the business in such a way that all of those risks are minimised. Yet their misconduct can no harm a particular business.
They are a necessary part and a beneficial part of employment law landscape. But I think the tension between the confidentiality obligations that you see in those settlement agreements and the reporting obligations that we’ve been talking about can be quite difficult to manage.
Lumor: That I think is probably the crux of it, really. Can you maybe elaborate a bit on where the use of settlement agreements can cause problems or where there can be a perceived issue with the use of some of the sub-clauses within them?
Campbell: As I said it, settlement agreements in NDAs and confidentiality clauses themselves are not necessarily a problem, but it’s that tension with the obligation to report misconduct that creates a bit of an issue. But a well-drafted settlement agreement will also include the ability for the parties to the settlement agreement to disclose the matters that are covered by their settlement agreement to a relevant regulator as well as the police. That would include CIMA.
So, you might see language such as “Terms of the settlement agreement are private and confidential, no disclosure shall be made, say, to the police, to a relevant regulator, whether or not requested by that regulator.” That last language is quite important because that goes back to Regulation 19, and misconduct that CIMA doesn’t necessarily know about through its own channels, through the press, through reporting, through other members. It allows you to make a disclosure under Regulation 19 even if CIMA hasn’t specifically come and asked. So, it’s possible [for] the lawyers involved in assessments agreements to draft around the tension that’s created by an NDA or confidentiality obligation.
Lumor: You can of course correct me if I’m wrong, but I imagine in your work, you’ve come across the issue of organisations wanting to manage their own reputation as a factor potentially in not reporting.
Campbell: Yes, it is something that I’ve come across, and it’s a matter really for the organisation involved as to how much assistance they are able to provide or [are] willing to provide. There’s no – unless they’re CIMA members themselves – no [requirement] on them to assist CIMA with its inquiries; so if they decide that their reputation is best managed by not assisting CIMA, then CIMA’s inquiries have to proceed elsewhere. I think it’s important to note that they do proceed elsewhere, you see businesses pull down the shutters a little bit sometimes, but CIMA’s inquiries continue with people who are associated with the member and other avenues. These investigations often do lead to disciplinary proceedings, so is not necessarily fatal to CIMA’s goals of protecting the public and maintaining the reputation of the profession, if that does happen, if a business does pull down the shutters. But obviously, I would encourage all businesses to be open with CIMA about any misconduct for the reasons we’ve talked about.
Lumor: Now, I want to move on just a little bit towards the overarching aspect of this conversation that we’re talking about in relation to the protection of the public and maintaining trust in the profession. This episode is entitled Beyond the Code, and the code that we’re referring to is the CIMA Code of Ethics, a principles-based code that includes within it some fundamental principles such as integrity, objectivity, professional competence, and due care, confidentiality, professional behaviour. All of which provide not only rules that our members have to abide by, but also provide guidance on how members can navigate some of the potential threats to compliance with the code, but also some of the things members can look at to try and resolve those threats. As we have the Code of Ethics that our members are expected to abide by, but also as our members are expected to use their professional judgement to navigate the compliance of that code, this is where for me the protection of the public anyway and maintaining the trust in the profession become an important talking point because ultimately it’s upholding the standards, which the code is set out to do, that allows our members to do what they need to do, as it were, to protect the public and maintain trust. With that clarified, Alastair, you yourself are a qualified lawyer, so you know a thing or two about the need for people to trust you. Can you talk to us a bit about maintaining the trust and [being] professional?
Campbell: Of course, and I think, as a lawyer, I occupy a hallowed ground that is also occupied by other professions, like barristers and accountants, where trust is absolutely paramount, that the people who hold that qualification need to have the highest standards of honesty, integrity, and trust is absolutely paramount. It’s not simple customer service issues or having a bad day at the office. It’s about really being unimpeachable in terms of your integrity as somebody who takes part in that profession.
Lumor: No, absolutely, I think it does speak very much to the point you’re making about the need for a professional to be trusted in order for that work that you do, that is so important to really hold any weight. To that point actually, can you elaborate on why [a] professional engaging in misconduct is a particular risk to the public? Because there is, I think, something here, and ultimately you can again correct me if I’m wrong, of course, but I do think there’s something here about the particular knowledge the professional has, the skill, the expertise that [a] lay person doesn’t, but can you maybe talk to us a bit about just that particular risk to the public?
Campbell: Well, I think with professionals like accountants and lawyers, the work we do, and the skills that we have, public and lay people trust us with some of the most important aspects of their lives. Trusting somebody to execute your instructions implicitly and without question, or at least without filtering those instructions in any way, is particularly important. The application of an accountant’s particular set of knowledge and skills to something which is very difficult for the lay person to do and the importance and the integral nature of that piece of work to that person’s or that business’s finances and wellbeing, etc. It requires a level of trust that a number of professions don’t require, and so where you see examples of dishonesty, of a lack of integrity, that breaches that trust, and it means that the public can no longer trust in that individual to comply with their instructions to do what’s best for them. That’s the risk to the public. It’s why the public trusts in the professions, and it’s why I think, integrity and honesty are so paramount.
Lumor: Absolutely, and what would you suggest to a member or even an employee or organisation, for example, what do you suggest they do if they suspect misconduct is happening around them?
Campbell: I think for members in particular, the first place you should go is the code and the Charter, Byelaws and Regulations, and figure out exactly what your obligations are. Of course, there is an obligation to report misconduct, so it’s certainly something you should be considering. It’s worth bearing in mind that there are a number of sensitivities in doing so, and it’s worth bearing in mind that CIMA would want to investigate that reported misconduct, so it’s always a good idea to write things down, to document things, to keep emails and so on, paper trails, because that makes any reported misconduct that much easier to follow through and to investigate and to decide whether or not it is in fact misconduct, and so follow the procedures from there. So, I think, start with the code and the regulations and keep a record.
Lumor: For me, I suppose this gets a bit more complicated, when you think of things from Level perspective, for example, you have some organisations that are multinationals that operate across different jurisdictions, I suppose there’s difficulty there. Does that make a difference at all in the way misconduct cases are managed? For example, with the member based in one country, the organisation’s main offices in another, the person affected by the conduct is in another, does that make a difference at all?
Campbell: You’re right, absolutely. Culturally and across different jurisdictions, there are different ways of working and different approaches to things, but ultimately, there is the code, and that’s why I say that the first place for a member to go should be the code because that is the overarching document that applies [no matter which] jurisdiction a member is in, and that sets the minimum standards. So, regardless of cultural or regional differences in working practices, the minimum standards are there in black and white in the code, the anchor, if you like, for anybody in this situation. I would also recommend that people seek advice from relevant parties, whether HR, or their manager or even I think CIMA offers some hotlines or that sort of thing. With the code in one hand and that advice in the other hand, I think that gives you the best base to figure out where to go next.
Lumor: Of course, that makes perfect sense. On the topics of maintaining trust in the profession and protecting the public, any other considerations, talking point issues you think are important to raise at this point?
Campbell: I think the overarching advice I would give to the audience is that you have to be, as a management accountant and member of the profession, unimpeachable from an ethical and integrity perspective. Wherever you have doubts, consult the code and take the ethical path and make sure that you document that you’re doing so, so that no confusion can arise in future. Again, back to Regulation 19, and just tying that into that piece of advice, what that means is do report if you find yourself from the wrong side of any of those particular decisions, that will always work out better for you than failing to report, than trying to cover it up. I said it before, I’ll say it again — it’s not the crime, it’s the cover-up, and any misconduct that CIMA sees without failing to report is only ever meant to be an aggravating factor. So again, be unimpeachable, follow up with the code, take the ethical path, and that will be the best outcome for anybody that ever finds themselves in trouble.
Lumor: That’s well-said, Alastair, and thank you very much for your time and your thoughts. We really do appreciate you taking the time to talk to us today. If anyone wants to get in contact with you, how and where can they reach you?
Campbell: You can always find me on the firm’s website, www.level.law. I’m on LinkedIn.
Lumor: We’ll put your LinkedIn in the show notes for any of the audience who might want to get in contact with you to seek your advice. Thank you again, [we] really do appreciate you taking the time to talk to us.
Campbell: My pleasure.
Amato: Again, that was disputes attorney Alastair Campbell talking with AICPA & CIMA’s Xose Lumor.
And again, resources mentioned will be in the show notes for this episode. I’m Neil Amato. Thank you for listening to the FM magazine podcast.
