“The key pillars that underpin trust in our profession are our Code of Ethics, our By-Laws and our professional standards. Our focus is on ensuring the continued strong standing of the CA designation and that the profession’s trust and integrity are upheld. Any violation of these pillars will be pursued vigorously by CAANZ.”

These uplifting words are contained in a letter sent recently to all members of Chartered Accountants Australia and New Zealand (including this writer). It followed the disclosure of the PwC conflicts of interest scandal allegedly involving that firm profiting from the disclosure to clients of highly sensitive and confidential information obtained through multinational tax reform consulting with the Australian government.

Clearly, this letter was designed to reassure members and a horrified Australian public that the organisation is taking the matter seriously and will act to uphold the profession’s reputation. I’m not exactly sure what these words will mean in practice, but I assume some members may be stripped of their professional designations and will suffer considerable reputational and financial damage (at the very least).

Commentators and politicians across the political spectrum are quite right to ask how this could happen. What on earth were they thinking? After all, aren’t these people elite university qualified professionals who constantly tell themselves, their staff, their clients and the public that they adhere to the highest ethical standards and can be trusted to act with absolute integrity at all times?

Central to those standards is the requirement to avoid (not just to disclose) conflicts of interest. This is the foundational standard upon which unconditional trust is built in any true profession. Without it, a profession cannot exist. In the context of the financial advice industry, this is why Standard 3 (which some people would prefer to dilute) is in the mandatory Code of Ethics and is vital to its effective operation.

Therefore, a key question that must be answered in the enquiries that will inevitably follow this scandal is whether the apparent failure to avoid conflicts of interest is a systemic problem within PwC and more importantly, within the accounting profession as a whole.

We can be sure that some participants will try to play down the scandal as an isolated historical act of a few “bad apples” who have since been stood down. Nothing to see here. Problem solved! Predictably, we’ve already heard from another large accounting firm that “there is no joy in watching the reputations of talented and capable PwC partners and people being tainted by the actions of a few”. This sounds familiar in the context of the Hayne Royal Commission’s examination of the financial advice industry in 2019.

Sadly, the ability, credibility and sincerity of the professional accounting bodies to properly deal with this scandal is open to considerable doubt. That’s because they have constantly failed to deal with the damaging conflicts of interest that many of their members continue to have in offering financial advice to the public.

In fact, for nearly twenty years, the accounting bodies have supported the conflicted practices of those members by regularly delaying, obfuscating, resisting and rejecting permanent and comprehensive ethical reform. Concurrently, they have made reassuring public statements (using words like those in the latest letter from CAANZ) which claim to always support the highest ethical and professional standards, when in fact, they don’t do that at all, at least in the discipline of financial advice.

This is especially serious because financial advice is one of the most public facing professional services in which accountants are involved, arguably more so than international tax consulting which is not exactly an area to which the average Australian citizen can easily relate.