At a glance
- Ethical views and values can vary based on perspective, while professional obligations can clash with commercial pressures.
- Current regulatory frameworks for new financial technologies are often inadequate.
- When faced with an ethical dilemma, the solution for accountants is not always clear.
- Accountants, firms and professional bodies all have a role to play in setting and implementing ethical guidelines.
Ethics have never been more important in accounting, yet we’re facing a global trust crisis following high-profile corporate failures and ethical lapses in firms, according to the International Ethics Standards Board for Accountants (IESBA).
The organisation says prioritising ethics serves the public interest. But this isn’t always easy; ethical views and values can vary based on perspective, and real-world scenarios can test these principles, making some situations tricky to navigate.
To make things harder, established ethical principles in accounting don’t always take into account the fast-evolving use of emerging technologies.
To demonstrate this challenge, we present a hypothetical ethical dilemma that raises questions about disclosure requirements in Australia’s digital economy, with the advice of three people — an accountant, an academic and an auditor — on how to manage it.
A modern ethical dilemma
Senior accountant “Sarah”, who works at a mid-tier accounting firm, has discovered that her client, a respected technology company, is employing sophisticated blockchain technologies to organise cryptocurrency trading transactions.
While these methods technically comply with current accounting standards and are not illegal, they potentially obscure the true nature of the company’s financial position from stakeholders.
Should Sarah sign off on the accounts or push for greater transparency, potentially risking both the client relationship and her firm’s reputation in the expanding tech industry?
What should Sarah do?
Accountant: Tony Dimitriadis, director of AD Partners
“Sarah’s situation highlights an important reality: accountants aren’t just passive observers, we’re decision-makers whose work shapes financial integrity.
“Before making any decisions, Sarah should discuss her concerns with senior colleagues or the firm’s ethics committee. Consulting a mentor or industry body can also provide clarity and support.
“The APES 110 Code of Ethics for Professional Accountants emphasises integrity and transparency. Even if something is legally compliant, accountants have a duty to ensure financial statements reflect reality.
“A direct conversation with the client could clarify their intent. If they’re deliberately trying to obscure financial realities, that’s a red flag.
“If the firm signs off on misleading accounts, this might keep a client happy in the short term, but it could lead to regulatory scrutiny, reputational damage or even legal trouble.”
Academic: Wes Hamilton-Jesson, accounting expert at the University of Sydney Business School
The University of Sydney Business School
“Accountants’ ethical principles of integrity, objectivity, competence, confidentiality and behaviour are as relevant today and with the threats of emerging technologies as they have always been.
“Australian corporate regulation uses the concept of ‘true and fair’. So Sarah needs to ask, do the financial statements faithfully represent the economic activities of the entity? A complete depiction is not only the amounts recorded in the accounts, but the words used in the financial statements to contextualise and explain the values.
“My advice would be to raise her concern about the structuring of the transaction with the company’s directors, or preferably, if it exists, the audit committee. The question is: why was the transaction recorded this way? It may not be the intent of the company to provide information that obscures the true financial position.
“Sarah’s role is to form and provide an opinion on the financial statements. Forming this opinion can only be done by understanding why an accounting choice was made and then deciding if it complies with the accounting standards.”
Auditor: Willem Olivier, partner and leader of ethics and monitoring at global accounting firm BDO
“While it’s natural for most professionals to want to avoid difficult or contentious discussions, this can compound matters.
“Professionals should define the ethical issue, identify all impacted parties, analyse potential implications on client relationships and the firm’s reputation, and reflect on alignment with organisational values and the fundamental principles contained in the industry’s APES 110 Code of Ethics.
“Seek guidance from colleagues, mentors and relevant professional bodies to ensure a well-rounded perspective. By following this approach, Sarah will be well-prepared for a thoughtful and constructive conversation with the client, aimed at achieving the most ethical and optimal outcome.”
How can firms play a better role when it comes to ethical standards?
Accountant: “Creating an environment where ethical concerns can be raised without fear is crucial. That responsibility starts at the top.
“Being known for integrity also attracts quality clients and talent; accountants today want to work for firms that do the right thing, not just the profitable thing.”
Academic: “Decisions and actions within a company must align with the company’s core values. Management must lead by example, demonstrating ethical behaviour in their actions and decisions.”
Auditor: “By embedding ethical decision-making into daily practice, accounting firms can create a culture where integrity is the norm, difficult conversations are encouraged, and professionals feel supported in doing the right thing.
“Accountants aren’t just passive observers, we’re decision-makers whose work shapes financial integrity.”
Tony Dimitriadis, Director, AD Partners
“Leaders play a key role in fostering a culture where professionals feel safe raising concerns without fear of negative consequences.
“Where a difference of opinion remains or concerns persist, professionals should use formal escalation channels, such as whistleblower mechanisms or dedicated ethics committees, to ensure their ethical concerns are properly addressed.
“Firms that prioritise ethical behaviour are likely to foster a culture of trust and integrity. This causes a chain reaction that enhances employee morale and attracts clients who value ethical business practices.”
What is the role of professional bodies in setting ethical guidelines?
Accountant: “Bodies like the IPA and others have a big role to play in shaping ethical standards. They need to develop clearer guidelines on cryptocurrency accounting, work with regulators like ASIC and the ATO to ensure accounting ethics align with laws, provide more training on digital finance risks and ethical challenges, and advocate for stronger disclosure standards.
“The profession must push for financial reporting that reflects economic reality, not just compliance with outdated rules. Ethics in accounting is about creating a culture of trust and transparency.”
Academic: “It is the accountant that needs to be ethical. The professional bodies offer a code on what constitutes an ethical accountant, but it’s the accountant and our professional accounting firms that need to uphold the principles.”
Auditor: “Professional bodies should provide clear guidance on how to navigate ethical dilemmas related to new technologies, and offer training resources and explanatory guides to help accountants stay up-to-date with industry developments.”
How should accountants adapt in an increasingly digital world?
Accountant: “As financial transactions become more digital and decentralised, accountants must remain the trusted advisors who bring clarity, integrity and transparency to the table.
“Crypto transactions can be complex and, at times, deliberately opaque. Accountants need to push for clearer disclosure standards and more regulatory oversight of crypto and digital assets.
“They also need to upskill in digital finance. Understanding blockchain, smart contracts and decentralised finance (DeFi) is now a must for accountants dealing with tech-driven businesses.”
Academic: “As society evolves, what is predominately viewed as ethical can and does change — but regardless of the increasingly digital financial world, the role of accountants has not changed. The ethical accountant needs to stand ready to uphold the integrity of accounting information.”
Auditor: “As the financial world becomes increasingly digital, accounting ethics must evolve and adapt to new challenges. Accountants must remain vigilant and proactive in addressing ethical issues related to emerging technologies.”
“The professional bodies offer a code on what constitutes an ethical accountant, but it’s the accountant and our professional accounting firms that need to uphold the principles.”
Wes Hamilton-Jesson, Lecturer,
The University of Sydney Business School
How does IPA’s Code of Conduct work?
According to the IPA’s Code of Conduct, members must adhere to high professional standards from the Institute of Public Accountants (IPA) and various auditing and accounting boards.
The IPA investigates complaints against members for rule breaches, with possible disciplinary actions including membership suspension or fines.
Some complaints may be referred to the police, and the IPA can continue investigations even if a complaint is withdrawn.
Victimising those who report harassment is against IPA policy and can lead to severe penalties.
More information on IPA’s Rules and Standards here. IPA’s Annual Ethics Refresher Short Course will be held on 25 June 2025, more details here.
