Last year auditor-general Kimi Makwetu hammered home the point that accounting scandals have dented South Africa's image as an investment destination.
To support his assertion, he reeled off names such as Steinhoff, VBS Mutual Bank and sugar producer Tongaat Hulett, along with problems at Eskom and state asset manager the Public Investment Corporation (PIC).
SA had lost the number one spot it had held for the previous seven years with regard to the strength of reporting and auditing standards, Makwetu noted. "[It] means the significant erosion of trust in the auditing and accounting profession has already happened," he said in an address at a Brand Summit SA event in Johannesburg.
Importance of ethics in a trust economy
Now SAIPA, the Institute of Professional Accountants, is pushing the importance of ethics in today's trust economy and its particular important to professions such as accounting.
Ethics, says the institute's CEO Shahied Daniels in a statement released this week, is becoming recognised as the hidden asset on which long-term success is founded.
"As South Africans come to terms with state capture and everything it means for our economy and public life, the importance of ethics is receiving recognition," he states. "We can all see that even the best laws can be circumvented or broken – and that legal processes are slow and expensive."
Law is about rules; ethics about principles
By contrast to law, ethics relates to an individual's sense of morality, or right and wrong, Daniels observes. An ethical person is guided by law, to be sure, but he or she is fundamentally motivated by trying to do what is right.
"One could say that law is about rules, while ethics is concerned with principles," Daniels explains. "In the most basic sense, one can trust that an ethical person is not trying to get away with what he or she can, but is trying to do the morally correct thing."
Managing a profession's ethics
When it comes to ethics in general, there are different conceptions of what is right and wrong. This problem is more acute when one exists in a multicultural environment such as South Africa, he observes.
Another challenge is that deciding specific ethical questions can be surprisingly difficult at times, as most people can confirm from experience.
In response, professional organisations develop ethical codes to guide their members' actions in their professional lives.
Professional codes of conduct guide principles
"It is important to emphasise that ethics is not about following rules, but rather principles," Daniels emphasises. "Codes of conduct can help professional accountants work out how principles should be applied, but they do not specify certain actions.
"King IV, the latest iteration of South Africa's governance code, follows the same approach by focusing on outcomes and not rules."
He says digital technologies are ushering in the Fourth Industrial Revolution, which in turn is automating many accounting processes.
But in this often confusing and fast-moving digital environment, trust has become almost a currency. And trust is founded not only on an individual's professional record, but the knowledge that he or she is bound by an enforceable ethical code.