Chandra J writes to President on Code of Ethics for professional accountants, calls for support

Good governance activist Chandra Jayaratne has written to President Maithripala Sirisena emphasising the fact that the Government and law enforcement institutions must support professional accountants in practice and business, now bound by professional codes of ethics to respond with appropriate action in regard to known instances of non-compliance with laws and regulations. The letter has been copied to Prime Minister, Speaker of Parliament, Minister of Law & Order, Minister of Justice and Law Reform, Minister of Finance, Secretary to the President, Attorney General, Inspector General of Police and the       President, Institute of Chartered Accountants of Sri Lanka. Following are excerpts.

Dear Mr. President,

The Government and law enforcement institutions must support professional accountants in practice and business, now bound by professional codes of ethics to respond with appropriate action in regard to known instances of non-compliance with laws and regulations

You have since assuming office in 2015, clearly articulated on many occasions, the commitment of your Government to uphold the rule of law, transparency and minimise bribery, corruption and waste. As per media reports you are purported to have recently articulated your displeasure over the failures of those in governance to live up to the above commitments; highlighting especially the failure to prosecute those errant persons responsible for high profile crimes and acts of corruption and to pursue, trace and recover proceeds of crime, where appropriate.

In the above context, you would no doubt be pleased to learn that the Code of Ethics binding professional accountants, who are members of the Institute of Chartered Accountants of Sri Lanka engaged in public practice as well as in business, has been revised to include a specific set of stipulations governing their expected response to situations of Non Compliance with Laws and Regulations (NOCLAR). The revised Code of Ethics comes into force with effect from 15 July 2017. The relevant Code as revised can be accessed at   https://www.casrilanka.com/casl/images/stories/2017/2017_pdfs/code_of_ethics_2016.pdf and the stipulations relating to Non Compliance with Laws and Regulations (NOCLAR) are set out in Section 360. (Refer Pages 214 to 226).

This groundbreaking, courageous and highly-professional commitment adopted by the Institute of Chartered Accountants of Sri Lanka, in line with the International Ethics Standards Board for Accountants’ (IESBA’s) new standards for its Code of Ethics for Professional Accountants (IESBA Code) regarding responding to non-compliance with laws and regulations (NOCLAR), must be duly recognised by you and your Government, as it is significantly supportive and lays the foundation for a process of good governance led assurance of the rule of law and minimisation of crimes and acts of corruption.

The civil society desirous of good governance, urges you to kindly prevail upon the Prime Minister, the Cabinet of Ministers, the Government (especially the investigative and prosecutor community), statutory and regulatory authorities and independent public institutions, to support and facilitate the implementation of the processes established by the Institute of Chartered Accountants of Sri Lanka to effectively respond to situations of Non-Compliance with Laws and Regulations (NOCLAR), all as set out in the Code.

In line with your personal commitment, to signal your presidency as an era where all possible avenues to ensure the Government, the Executive, Judiciary, professionals and business, uphold the rule of law, transparency, minimise bribery, corruption and waste, you should support the positive actions of the Institute of Chartered Accountants of Sri Lanka by;

1.promulgating Executive Orders, urging and appealing  to;

• the Cabinet,
• the Parliament, Provincial Councils and Local Government Bodies,
• Public Services Commissions and other similar public institutions, and
• All professional associations and institutions, the Organization of Professional Associations and its members including the professional associations governing  the legal, engineering, medical,  banking, accounting/finance/audit, investments and fund management, marketing, architectural, valuation and survey, procurement and supply management, etc.,

to adopt or revise Codes of Conduct and Ethics, to include a specific set of stipulations governing  and compelling members to respond to situations of Non-Compliance with Laws and Regulations (NOCLAR)

2.Require the Cabinet to promulgate statutory and regulatory reforms essential to give effect to and facilitate effective implementation of NOCLR and specifically enact necessary amendments to Whistle Blower and Witness Protection legislation to extend protective coverage to ,

a.All professionals

b.private sector employees and

c.members of State services

engaging in whistle blowing, being witnesses  or in responding in any manner in terms of a Codes of Conduct and Ethics imposed stipulations governing response to situations of Non-Compliance with Laws and Regulations (NOCLAR)

You are kindly requested to support and facilitate the professional accountants in their initiative to effectively respond to situations of Non-Compliance with Laws and Regulations (NOCLAR) as set out in the Code, by requesting the law enforcement authorities, including the investigative agencies and the Attorney General’s Department to adopt the following strategic support initiatives:

1.The initial focus, expectations and follow up on NOCLAR implementation to concentrate on high impact serious financial crimes, cybercrimes, money laundering, bribery, corruption, and those crimes and offenses:

a.Which impact significantly on the macro economic and monetary stability;

b.Which impact significantly on the social fabric and social wellbeing;

c.Which undermines commercial or financial interests in general;

d.Where the actual or potential financial losses involved are high;

e.Which involves transnational transactions linked crimes;

f.Which results in high level of proceeds of crime and remains yet to be recovered;

g.Where there is a significant public interest element involved;

h.Involving new species of fraud; and

i.Focused on by the UN Office of Drugs and Crimes and the United Nations Convention Against Corruption

2.Effectively promote and pressurise other associated professional bodies controlling other key professionals engaged in practice or business as professional  lawyers, valuers, corporate secretaries, bankers,  assessors, tax advisers, engineers, actuaries, and possibly the Organization of Professional Associations to adopt similar codes binding these professionals to respond to  situations of Non-Compliance with Laws and Regulations (NOCLAR).

3.Ensure professional Accountants in practice and in business responding to situations of Non-Compliance with Laws and Regulations (NOCLAR) have protection under Whistle Blower Protection legislation and facilitation support.

4.It is important that the Government, the Immigration Authorities and the Board of Investments should be cautioned and placed on watch to ensure that expatriate professional accountants or pseudo professional Accountants from other countries who are not bound by the promulgation of NOCLAR are not allowed to flood in as expatriates granted work permits to engage in business and practice in place of local professional accountants bound by NOCLAR.

Civil society and professionals look forward to your favourable response to this set of recommendations and remain ready to support you in your good governance leadership initiatives.