28 December 2023

Accountants on the front line of whistleblower protection

Legislation to safeguard whistleblowers from retaliation has improved in recent decade but these protections are only effective if accountants and finance professionals fulfil their ethical responsibilities.

Earlier this month, the International Federation of Accountants (IFAC) and CPA Canada co-published a report by the Whistleblowing International Network (WIN) on the current issues and complexities relating to the implementation of whistleblower protection laws.

While legislation in this space has increased significantly, the laws and regulations often fall short, the report found. In particular, there is a lack of access to case decisions and the laws are underutilised. In addition, most whistleblowers do not formally succeed in retaliation complaints and they often face adverse consequences when they have been successful in their cases.

"Whistleblowing laws have generally fallen short in terms of their effectiveness," CPA Canada president and CEO Pamela Steer summarised. "People need reassurance that laws and practices exist and are working effectively, and this requires continuous transparency, action and education."

Speaking on a panel hosted by IFAC and CPA Canada, WIN executive director Anna Myers explained that the research was intended to inform accountants and policy makers on how best to protect whistleblowers in this context.

"Accountants, internal auditors and forensic accountants are on the front line of this work," she said.

This was echoed by IFAC CEO Kevin Dancey who called on the accountancy profession to "champion means of protecting whistleblowers from retaliation and help ensure accountability for wrongdoers".

He added: "In the accountancy profession's pursuit of truth and ethical conduct, silence is not an option. Whistleblower protection is not merely a legal requirement; it is a moral imperative that transcends statutes and regulations."

Accountants can help whistleblowers to understand the proper channels for reporting concerns while maintaining anonymity. In addition, they can help outline the protections afforded to whistleblowers through national legislation and regulation.

In an interview with CPA Ontario, Jennifer Lynch, certified fraud examiner and professor at York University, said forensic accountants, fraud examiners and auditors "can investigate allegations of illegal or unethical activities within an organisation and provide objective assessments of the evidence and the financial impact of any wrongdoing".

She added: "Forensic accountants can also serve as expert witnesses in legal proceedings related to whistleblower claims, providing insight and analysis on financial and accounting issues."

Kieran Pender, senior lawyer at the Human Rights Law Centre, also stated that the finance profession is "on the front line" of the whistleblower protection cause.

"They're the ones that are either receiving information from others within an organisation, or they're the ones seeing the wrongdoing themselves, seeing the evidence of it, and then needing to speak up," he said.

Pender added: "It is within the core role responsibility to do that, as part of their professional ethics. It's in the profession's interest to have robust whistleblower protections, because otherwise, the trust in the accountancy profession, the legal profession and other professions is undermined."

The International Ethics Standards Board for Accountants (IESBA) released the Non-compliance with Laws and Regulations (NOCLAR) framework in 2017, which outlines the actions finance professionals should take when they become aware of any potential illegal activity from a client or employer.
Within the NOCLAR framework is a provision for accountants to set aside their duty of confidentiality to report any non-compliance with laws or regulations to the relevant authorities.

IESBA chair Gabriela Figueiredo Dias said: "Governments, legislators, and regulators are uniquely placed to introduce or strengthen legislation or regulation governing the reporting of NOCLAR, appropriately tailored to their national circumstances, including establishing appropriate protections for whistleblowers."

On top of the individual accountants and policy makers, professional accounting bodies, such as CPA Canada and IFAC, also have a key role to play in supporting whistleblower protections.

The aforementioned bodies - as well as the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in England and Wales (ICAEW), to name a couple - offer hotlines whereby accountants and individuals can confidentially report instances of fraud or malpractice.

They also offer training programs on the practicalities and ethics of whistleblower protections, which Myers said was "really needed", in particular the "ability to talk through practical dilemmas".

Dancey ended the webinar with a call to action for the whole profession to fulfil its responsibility in this space: "Demonstrate your commitment to the public interest by actively engaging in whistleblowing related policy discussions in your jurisdictions. Promote the adoption of effective whistleblower channels across organisations, governments, and not-for-profit entities as an integral element to promote ethical and responsible behaviour and business. Let our collective commitment be to cultivate a culture where silence is replaced by the courageous voices of those who uphold the principles of transparency, accountability, and ethical conduct."