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Accountants Under Pressure

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IFAC and the World Bank Centre for Financial Reporting Reform hosted a joint Regional Small- and Medium-sized Practices (SMP) Forum for Europe and Central Asia on May 31 in Vienna, Austria.
The Forum provided the opportunity to discuss addressing the challenges and opportunities SMPs and medium-sized entities (SMEs) face. This is a presentation by Paul Thompson, Director, European Federation of Accountants and Auditors for SMEs.

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Accountants Under Pressure

  1. 1. 31st May 2017 Accountants Under Pressure 1/10 Accountants Under Pressure Paul Thompson EFAA Director CFRR – IFAC Regional SMP Forum Vienna, Austria May 31
  2. 2. 9th February 2017 Accounting and Ethics 2/22 Who We Are SMPs as Trusted Advisors of SMPs 2/20 ★ EFAA is an organisation of 17 national accounting and auditing associations ★ Representing more than 370.000 professionals ★ Supporting professionals working as SMPs and mainly servicing SMEs ★ Twitter - @EFAAforSMEs Website – www.efaa.com
  3. 3. 9th February 2017 Accounting and Ethics 3/22  Assists member organisations in their efforts to strengthen SMPs and SMEs in professional public affairs  Over twenty years experience and focuses primarily on engaging with the European Institutions, European SMP / SME accounting and auditing stakeholders and IFAC What We Do European Stakeholders SMPs as Trusted Advisors of SMPs 3/20
  4. 4. 31st May 2017 Accountants Under Pressure 4/10 About the Survey ★ Report: http://www.efaa.com/publications/studies/index.html ★ Pressure defined as contrary to professional ethics and / or to tax and accounting legislation ★ 664 respondents from 23 countries with vast majority having over 10 years’ experience of being accountants, auditors, tax advisors, consultants and academics ★ Employed across practice, business, government bodies and education ★ 44% female - 56% male
  5. 5. 31st May 2017 Accountants Under Pressure 5/10 Pressure How common is it? Who exerts it? Is this an issue only for the accountancy profession? Is it entity / role specific? ★ 64% of respondents said that they had been put under pressure with majority noting they had been under pressure 5 times or more ★ Pressure was exerted as follows: Client (highest), Owner, Director, Line Manager, Colleague (lowest) ★ Role specific: auditors and tax advisors ★ Accountants – more pressure when dealing with limited liability entities ★ In 72% of cases pressure was exerted by a person who was NOT responsible for financial accounting matters
  6. 6. 31st May 2017 Accountants Under Pressure 6/10 Rewards / Threats ★ No obvious reward promised for “doing what was asked” ★ Evident obvious “threats” if action was not undertaken ★ What form did the threats take? ⭐ Loss of income (practice / practitioner) ⭐ Loss of employment of accounting professional ⭐ Termination of relationship
  7. 7. 31st May 2017 Accountants Under Pressure 7/10 What were People Asked to Do? ★ Postpone recognition of costs and expenses ★ Manipulate value of inventories ★ Categorise personal expenses as expenses of entity ★ Overstate expenses ★ Deliberately account for items in a manner that changed way they were treated for tax
  8. 8. 31st May 2017 Accountants Under Pressure 8/10 How did Respondents React? ★ 68% DID NOT succumb to pressure ★ 32% DID succumb to pressure ★ More likely to succumb if an employee of organisation ★ Consequences of resisting pressure were mixed: ⭐ Employment or engagement terminated ⭐ Bullying ⭐ Stronger relationship ⭐ Weaker relationship ⭐ None
  9. 9. 31st May 2017 Accountants Under Pressure 9/10 Role of Consultation ★ 51% consulted ★ Impact of consultation is unclear but ability to consult seems of value with 85% of respondents considering it helpful in that it provided: ⭐ support to the conclusion ⭐ third party view ⭐ much needed challenge / sounding board ★ Those that did not consult cited: ⭐ no need ⭐ confidentiality
  10. 10. 31st May 2017 Accountants Under Pressure 10/10 Stakeholders / Recommendations ★ Professional accountancy organisations ★ Regulators / legislators / standard setters ★ Business community ★ Accounting and business ethics

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