By CPA Mutitu Dennis
The accountancy profession has a vital distinguishing aspect which is the acceptance of the role to act in the capacity to serve public interest. A professional responsibility of an accountant is not to satisfy the needs of employing organizations or individuals exclusively. Thus, the laws and ethics provide a suitable guide in the profession which largely impacts the analysis of bills and laws that play a major role in any economy. The critical element of professional behavior requires all professional accountants to ensure compliance with relevant regulations and laws.
Accountants have access to vital financial information such as income statements and cash flows that they can easily manipulate for personal interest or gain. To ensure such incidences do not happen, various bodies governing accountants, such as Institute of Certified Public Accountants of Kenya, ICPAK, develop rules and values for professional accountants known as ethics. Ethics entail discipline that focuses on the obligation and moral discipline, as well as bad and good, in any environment.
ICPAK is a body that regulates the accounting industry in Kenya.
Some jurisdictions however, might be having provisions that go beyond or differ from the usual se of code of conduct. Thus, accountants in such jurisdictions must be aware of the prevailing differences and ensure compliance with the stricter provisions unless such laws are prohibited by regulations or law. It is vital to note that there are instances when a professional accountant might experience unusual events where the accountant believes that the impact of applying a precise law or regulation would be regarded as inappropriate or might not serve in the interest of the public. In such a case, it is recommended for the accountant to consult with the regulatory body or a professional.
Analysis of Bills and New Laws
Parliament has one chamber and the role of the legislature is to make laws. The legislature is made of the National Assembly and the president of the republic while the speaker presides over the various meetings conducted at the National Assembly.
Most laws in Kenya stem from an act of parliament. The laws are introduced into parliament as bills. Afterwards, the bill is published in the Kenya Gazette, 14 days before it is introduced.
Afterward, the proposed bill gets a first reading, which is the reading of the Bill. The second reading entails debating on the key principles of the Bill, and it is then referred to the National Assembly for comprehensive discussion and debate of the provisions. If the reports submitted by the committee are favorable to the National Assembly, the bills get a 3rd and final reading.
Additionally, the parliament an essential role not excluding, a role in financial control over expenditure and revenue through the establishment of consolidated Fund, where all government revenue must be paid.
Though, parliament can authorize the creation of other funds for precise purposes, and also may issue a provision that some of the collected revenue must not be paid into any fund established but can be retained by the receiving authority, for the purposes of offsetting expenses of that authority.
The Fundamental Principles of Accounting
The fundamental principles of ethics set the standard conduct or behavior that is expected of all professional accountants. The conceptual framework of laws and ethics in the accountancy profession provides the accountants with the appropriate guide required for compliance with the fundamental principles.
The various bills that are passed into law also play a key role is enhancing compliance and uniformity in the profession, and this various from every jurisdiction. There are instances where an accountant might encounter situations or a situation where compliance with a fundamental principal conflict with compliance with one or more fundamental principles.
In such a case, the professional accountant is encouraged to consult anonymously with the following group of persons:
- The legal counsel
- A professional body
- The persons charged with governance
- The regulatory body
- Others withing the employing firm or organization
Nevertheless, it is important to note that such consultations do not render the accountant irresponsible or relieve them for the responsibility to attain professional judgement to ensure that the conflict is resolved or, if needed, and unless the laws or regulations prohibit, distance from the issue raising the conflict.
As a result, the accountant in such a case is required by the law and ethics to ensure proper documentation of the subject, the various details that require discussion, the decisions made out of discussions or consultation and the approach used to make such decisions.
There are 5 fundamental principles of ethics for accounting:
- Integrity
Each and every professional accountant is expected to be honest and straightforward in all business and professional relations and dealings.
- Objectivity
All professional accountants are required not to compromise business or professional judgements due to conflict of interest, bias, or undue influence from other people.
- Professional Competence and Due Care
Professional ac accountants are required to ensure professional competence and due care to:
- Act with diligence and according to all applicable professional and technical standards.
- Maintain and attain professional skills and knowledge at all required levels to make sure that the employing organization or client receives competent and comprehensive professional services, based on the prevailing professional and technical standards and appropriate legislation.
- Confidentiality
All professional accountants are required to respect and ensure confidentiality of all the information they acquire as a result of business and professional relationships.
- Professional Behavior
All professional accountants are required to ensure compliance with appropriate laws and regulations and evade such conducts that the accountant knows or should have the idea that might discredit the accounting profession.
All professional accountants shall continue to ensure compliance with the code of confidentiality even when the relation between the employing entity or client and the accountant comes to an end. When getting new clients or changing employment, the accountant has all the right to use experience acquired from the previous job. However, they shall not disclose or use any confidential information received or acquired as a result of business or professional dealings.
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