ETHICS AND ACCOUNTING

Examination of the Responsibility of Accountants/Auditors to their Clients and Third Parties

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Examination of the Responsibility of Accountants/Auditors to their Clients and Third Parties

Introduction

While the two recognized Nigerian accountancy professional bodies? ICAN and ANAN? both claim to protect the public interest? the continued press reported cases of the implications of their members in various acts of professional misconduct in corporate Nigeria has become a matter of serious concern. These concerns are expressed on a daily basis by the press? Nigerian authorities? the regulators? by the same Nigerian public whose interests the ICAN and ANAN claim to be protecting? and paradoxically by some members of the leadership of ICAN and ANAN. As a consequence of the many cases of fraud? falsification and deliberate overstatement of companies' accounts and other professional misconduct? many financial institutions? public and private companies have either been declared distressed or have completely closed down. These distresses and closures have contributed to massive unemployment in the Nigerian economy and the poverty of millions of Nigerians.

However? various investigations launched into these cases of distress and closure by the government? regulators and other stakeholders have continued to reveal that accountants and auditors are implicated. This is as a result of the failure of the accountants and auditors to alert regulators when they discover frauds or other irregularities in the companies' books. The seriousness of the endemic nature of the professional misconduct prevalent among the accountants and auditors in corporate Nigeria has recently been made manifest by various speeches from the leaders of the two recognized professional bodies? ICAN and ANAN. For example? in May 2002? the then ICAN President? Chief Stephen Nwakwo? informed the new members of ICAN that “the qualification as a member of the profession and institute will impose on you an onerous responsibility in which excellence? honesty and transparency are expected to always underlie all your professional relations with clients and the public” (The Guardian? 2003). The President of the second recognized professional body? ANAN? Aloba (2002)? openly confessed to the charges of professional misconduct by accountants by noting that “professional accountants have become instruments of siphoning money and so professional ethics were thrown down the drains while integrity and honour paved way for materialism and professional turgidity.

Literature Review

The implications and culpability of accountants and auditors in questionable practices and conflicts of interest have long been documented by critical accounting scholars in developed and developing countries. Academic scrutiny has recently been applied to the use of the professional claims of protecting the public interest? commitment to public accountability and transparency as a convenient mechanism for avoiding criticisms and maintaining the power and privileges of delegated self-regulation by professional bodies. The activities of the state? regulators and professional bodies in shielding the professional misconduct of accounting firms? accountants and auditors have also been well-documented.

For example? the investigation following BCCI's closure in 1991 exposed a host of criminal activities including money laundering in several continents? bribery of government officials? arms trafficking? the sale ...