Professional Empowerment Series - Professional Ethics for Success – Article -8

This article follows the earlier 7 on various aspects of empowerment of professionals seeking to practice in chosen area. In this article we look at professional ethics as applicable to the Chartered Accountant. The other professionals may have similar limitations with some aspects less focused on and a few where the aspects discussed may not be applicable.

All tax professionals would be providing services relating to advisory, assistances ( assignments), representational and attest services. We discuss the salient features of what is the ethics about and how it can enhance our success. The code of conduct keeps changing depending on the environment and practices which are acceptable today which were frowned on earlier. My confident journey dates back to 1988 when Shri K.S. Ravishankar whom I consider my guru replied to my query whether I can have a ethical practice in central excise. He replied with conviction in 2 words- WHY NOT? To be successful I practiced the suggestions given in the earlier article on how to attract clients.

The decline in the morality among the regulators and tax authorities is being sought to be curbed by the Government of India by introducing information technology and avoiding the interaction between the officers and tax payers. Faceless assessment, using of IT for detecting errors/ frauds are indicative steps. The days of the intermediary is contracting. Only knowledgeable long term quality advise and diligent compliance appears the way of the future. In IDT the number of professionals doing very well who by and large focus on value delivery quality service proves this point. In fact many a times clients ( bigger ones) come due to the fact that one is ethical and cannot depend on contacts to get the work done satisfactorily.

Our experience in different locations across India doing well after a few years also supports this view.

Serving to Build Trust

In my personal experience the need to have a proper perspective towards the clients and earning their trust is an objective which can be met while following the code of ethics.

In business we have unique selling product (USP) and in profession it can have the unique serving service {USS}. The clients are the wealth creators in this world and we serve them to do by offering our time, effort and advice. It is true that serving others prepares us to lead others which is a win win for our personal mastery and the client advantage. Albert Einstein - Only a life lived in the service of others is worth living. Everyone can be great, because everyone can serve- Martin Luther King.

Every professional needs to build trust. Trust can be said to be a firm belief in someone. Professionals are advantaged that they have a mandatory oversight body which can haul them up for wrong doings. Trust as you all know is hard to earn and it is fragile. It is easy to break/ lose- if that happens very hard to get back. Today we all believe in the higher power/ god or universe which appears to be overseeing us. In the Bible we have as saying - As you shall sow, so shall you reap- this has been repeated in all the other religions. He who does not trust enough will not be trusted- Lao Tzu- Military strategist.

Ethical Code

We all desire to succeed in profession with dignity and respect. We also have a bounded duty to live to our full potential. We need to remember that -We are what we repeatedly do. Excellence is a habit – Aristotle. Therefore, there is a need for us to build the following qualities/ characteristics in our professional life:

1. Integrity: Means doing the right things in an independent manner. It covers being straight forward & truthful (honest) and deal fairly with all including the client, employees, other stakeholders. Leaders need to keep their word- walk the talk to enhance the employees to get inspired and follow suit.
2. Objectivity: Means no compromise on professional judgment. It includes not having  bias. It also means that we do  to expose ourselves to undue influence. Not dealing with the client or seeking their favours can be sound approach to avoid conflict of interest.

Sticking to an earlier view inspite of new understanding is an example of not being objective. In case of doubt, the validation by peers and seniors would enhance objectivity.

3. Professional Competence: We being professionals are expected to use the available and applicable technical + professional Standards. One of the best practices especially once we have many leaders within is to use of checklist- filled in real time. It also means that we have confirmed that those who are delegated the work have sufficient expertise and also follow the standards/ checklists.

In todays fast paced world we need to delivery quality work in time. In case work is delayed, it is imperative to seek permission for additional time.

The proper supervision ( monitoring)of work by juniors by the qualified and finally by the partner should exist. Blind belief has been known to end up in embarrassment at times.

Though we are to add value to the clients, we need to deter non compliance and though we can serve those who come to our doorstep, can avoid the errant or evaders for long term success.

4. Professional Behaviour: This means that we do not make exaggerated claims on our competence. It would also include disparaging reference to other who maybe competing for the same assignment. Both these can bring disrepute to the profession and also erode our own worth.
5. Confidentiality: It means no inadvertent disclosure of clients information. If possible to have a need to know sharing. In our firm we have proposed a non disclosure agreement from all employees as a means to sensitise them on this aspect. 
6. Anti corrupt practices: This could be said to a concept borrowed from the latest in ethics. Many MNCs have a requirement for the CFO to understand and agree (sign) not involve in any corrupt practices, the violation of which would mean summary dismissal and investigation thereafter. 

Some practical Recommendations:

In our efforts to follow ethics which has provided long term sustained growth some of the action points which have helped are listed below ( the experience in indirect taxes has been discussed) which could be considered:

1. Making firm’s policy clear to avoid expectations of managing- liasoning( negotiating to favour) with the tax/ regulatory officers. Those who have indulged have been terminated/ allowed to go their way.
2. Ensuring that from the time of offer, seeking information, draft and final opinion/ reply/ report are on record. The important oral communication with client ( to & from) are also captured by way of an email.  
3. Once our professional image is created – revenue may avoid adversarial action, accept our view and even refer work!! In some cases where they harassed the client, after that client has enjoyed a decade of peace.
4. In case of doubtful interpretation, we can examine and give option as per you including payment under protest to protect the client against the interest/ penal costs.
5. Client to be communicated risk of disputes and possible short term outgoes ( pre deposits) and long term impact, rather than keeping quiet about it. This can be in opinions, SCN replies or in certification.
6. One can guide on way forward also to avoid dispute – amendment of PO/ contract, credit to the receiver ensured.
7. We should have the willingness to avoid/ lose errant clients who force us to give their opinion.
8. When our considered opinion is that there is a liability always advise to pay. Client may or may not which may not be our responsibility unless we are also certifying.
9. We have seen that when we focus on the long term advantage of compliance, clients ( especially at owner level) would see that as preferable.
10. Correct/ retract/ add to change of our view as we are always learning. In case of conflict, it makes good sense to withdraw when mistake identified, not after a few years when the regulator or tax authority starts an investigation.
11. Seek appointment with revenue/ regulator officially and share clients stand in wirting. ( send by RPAD previous day). The meeting to also be documented with CC to the client and if officer difficult mark to higher officer.
12. Initial Disclosure on various aspects of supply, rate of tax, exemptions claimed, place / time of supply, valuation, ITC and record keeping. Seek confirmation.
13. The professional should not advise in a way in which dispute happen. Must make all efforts to avoid notice. The attitude should be to resolve doubt – not drag on.
14. Empower/ support the client in case of possible summons/ statement to be recorded by suggesting a letter sent prior to the summons date.
15. Any untoward action at the regulators/ tax office – politely put on record to higher officer, vigilance if harassment continued.
16. Once ethical/ face value created – revenue will toe the line of not bothering the professional or his client on the presumption that they would be compliant. [ This may take a few years to establish]
17. Any repeated visits to be put on record and escalated to higher officer. This may be needed for refunds as well as MEIS/ SEIS claims. Seeking interest for delay can make the officers personally responsible.
18. In case of Personal hearing, send a synopsis in advance with the updated case laws, circulars etc. Document the personal hearing if the record of personal hearing not provided. In case of the direction of the argument being new, send additional submissions to be considered before order on record.
19. In case of adverse order- assess the chances. If not in favour suggest to pay the tax with interest to avoid the penalty and continued interest cost. See whether the tax can be passed onto the customer for him to avail the ITC.

Conclusion:

The IFAC looking into the future is looking at ethics as the way of the future for the individual professionals as well as the firms in accounting and consulting practice. In the initial stages it looks impractical and many may laugh. Persevere for a few years to enjoy the sweet fruits of prosperity. We will not have doubt of whether to practice and also not feel that we need to retire. However, once we are able to do well economically while following ethics, an option opens up to continue to grow with contentment and respect of all. Reading the biographies of the professional celebrities would indicate that they followed good ethical practices with smart working. Feedback – [email protected]