Storm over ExxonMobil signing bonus underlines importance of accountants, auditors

Dear Editor, The current news swirling around the ExxonMobil signing bonus saga reinforces the important role of accountants and auditors in the anti-corruption effort. It is rather strange that such a large and relatively suspicious transaction escaped the eyes of accountants at the two Ministries involved, the central bank of all places, and worse, the Audit Office?

Credit goes to accountant and attorney Mr. Chris Ram for first sounding the alarm and to Opposition Leader and former President Bharrat Jagdeo for ably and competently following through the audit trail to bring it to the Guyanese public.

It is also a stark reminder that Government Ministers including the President need to be financially literate. A good understanding of accounting, auditing, and finance fundamentals will enable these elected officials to effectively discharge their mandate in addition to understanding and interpreting financial reporting.

How can accountants and auditors help in this anti-corruption drive? First, accountants are the first set of gatekeepers to ensure that transactions are valid, at arms-length, captured and properly recorded according to established standards. Secondly, as professionals with a duty to protect the public interest, they are bound by rigorous codes of professional and personal ethics calling for the highest levels of integrity and objectivity. Thirdly, their key strategic positions within an enterprise or organisation – whether in an internal position or as an external auditor or adviser – mean that they very often have access to highly privileged and confidential information.

A few years ago, the International Federation of Accountants (IFAC), the global umbrella organization for the accountancy profession with over 175 members and associates in more than 130 countries representing almost 3 million accountants, took the lead in anticorruption and came out with a paper entitled “The Accountancy Profession and the Fight Against Corruption.” The Institute of Chartered Accountants (ICAG) of Guyana is a member of the IFAC and so is the Global Institute of Internal Auditors, a chapter of which exists in Guyana.

IFAC urges accountancy bodies worldwide to unite with various professions including the business community, government agencies, and other organizations to wipe out corruption. The document mentioned above contains several proposals, one of which advises accountants to develop outlets for building relationships with legislative and regulatory authorities, the legal profession and other groups interested in improving the framework for good governance, transparency and accountability.

In addition, the document places responsibility on audit committees to consider the propriety of anti-corruption policies in place and insist that corrupt acts be reported.

Auditors too are advised to promote codes of conduct among practising firms, their clients and governments that expressly prohibit corrupt activity. The paper goes on to focus on the accounting profession’s individual role in curbing corrupt practices by urging ‘professional skepticism’ when establishing business relationships and in reviewing transactions.

Within this context, it is mind boggling that almost US$20 million could have escaped a typical accountant’s and auditor’s watchful eyes and ready pen.

Corruption is now a global problem common in both developed and developing countries and reaching epidemic proportions across borders. In democratic nations, where checks and balances deter corrupt and other unethical practices, corruption is still prevalent. The impact on business and the wider society is even greater as it diverts resources from productive to unproductive sectors and makes a few rich at the expense of others. Corruption also undermines institutions and redistributes wealth to the undeserving.

What this indicates is that, human nature being what it is, no country and indeed no system is immune from corrupt practices. Indeed, nations have gone to war, governments have been toppled, companies have been made bankrupt and whole kingdoms lost due to corruption scandals.

The most obvious effect of political corruption is a loss of public esteem for politicians and political life. The cynical view that ‘politics is a dirty business’ becomes a reality; people enter politics not from a sense of public service but in pursuit of personal power and advancement. If left unchecked, corruption weakens the very structures of an organized society as it undermines the forces of law and order and reduces public morale. In the long run, both economic and social developments become crippled and all suffer.

This disease increases risks and costs to the economy, damages investor confidence and stifles economic growth. Corruption acts as a strong deterrent to foreign direct investment.

With corruption being a scourge to societies, there is now more focus being placed on good governance practices and sound risk management efforts. It is clear that both the accounting and audit professions have an important role to play now and in the future in preventing, detecting and reporting on corruption. After all, stakeholders place a considerable amount of trust on these highly trained professionals to do so. Yours faithfully, Lal Balkaran, Past President, Institute of Internal Auditors (Toronto)