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Ethics Board Seeks Greater Disclosure of Illegal Acts, But Concerns Abound

A new guideline encourages accountants to contact the proper authorities if th

Those with corporate accounting jobs will soon have a new set of guidelines to follow when it comes to reporting alleged illegal activities committed by either an employer or a client, according to the International Accounting Ethics Standards Board.

The new guidelines, which were released in a draft for stakeholder review on August 22, provide additional clarity for accountants in both the public and private sector when it comes to breaking confidentiality and reporting possible crimes to the proper authorities.

“Breaching confidentiality is not something to be taken lightly,” said Jörgen Holmquist, chair of the IESBA. “However, when the consequences of non-disclosure are potentially harmful to individuals or society, confidentiality must be overridden. Accountants have an important role to play in protecting the public interest and enabling authorities to take appropriate action.”

In reacting to the announcement, Michael Cohn of Accounting Today pointed to a recent case study that found there are inadequate provisions currently in place to protect accountants and others with finance jobs from retaliation when illegal acts are exposed. The study, titled "University and AACSB Diversity," concluded that until such protections are guaranteed, "professors should advise their students and professional accountants to be silent."