5.6 Working Outside Your Expertise, Conflicts of Loyalty & Resolving Ethical Conflicts

Working Outside Your Expertise, Conflicts of Loyalty & Resolving Ethical Conflicts

Two learning outcomes in Area 4 are examined almost exclusively through scenarios: "respond appropriately to the request of an employer to undertake work outside the confines of an individual's expertise or experience" and "suggest how a conflict of loyalty between the duty a professional accountant has to their employer and the duty to their profession could be resolved."

1. Being asked to work beyond your competence

Why it is an ethical issue, not just a practical one

Two fundamental principles are engaged at once.

• Professional competence and due care requires a member to maintain knowledge and skill at the level needed to give competent professional service, and to act diligently in accordance with applicable standards. Performing work you are not equipped to perform breaches this directly, whatever the outcome.
• Integrity is engaged if you allow an employer, a client or a user to believe the work carries a competence it does not.

There is also a threat to classify. A junior asked by a partner or a finance director to take on work beyond their experience faces a self-interest threat — fear of appearing unhelpful, of losing a promotion, of losing the job — and often an intimidation threat where the request is pressed forcefully. Both push towards saying yes when the correct answer is not yet.

The correct response, in order

1. Assess honestly what you can and cannot do. Distinguish "I have never done this but it is within my training" from "this requires expertise I do not have." Not every unfamiliar task is beyond competence; stretch with support is how competence is built.
2. Raise it promptly and in writing where practical. Tell the person requesting the work exactly which aspects fall outside your experience. Delay compounds the problem, because by the time the deadline arrives no remedy is available.
3. Propose the safeguards that would make acceptance appropriate:
   • training before the assignment begins;
   • supervision and detailed review by a person with the relevant expertise;
   • involvement of an expert or specialist team;
   • reallocation of the technically demanding element to a qualified colleague;
   • a realistic timetable allowing the work to be done properly.
4. Escalate if the request is repeated without support — to the engagement partner, the ethics partner, or those charged with governance as appropriate.
5. Decline the assignment if adequate safeguards cannot be arranged. Declining is not insubordination; it is compliance with a binding professional obligation.
6. Never sign, certify or take credit for work whose quality you cannot vouch for, and never conceal a limitation in the work performed.

What you must not do

• Complete the work regardless and hope the reviewer catches any errors.
• Copy last year's file without understanding the underlying issues.
• Rely on the client's own analysis in place of your own procedures.
• Represent, expressly or by silence, that the work meets a standard it does not.

2. Conflicts of loyalty: employer versus profession

A professional accountant in business owes real duties to an employer — diligence, confidentiality, and pursuit of the organisation's legitimate objectives. Those duties are genuine, and they usually align with professional duties. A conflict of loyalty arises when they do not.

Typical scenarios:

The governing principle

The duty to act in the public interest and to comply with the fundamental principles takes precedence over the duty to the employer. Employment does not license conduct that would otherwise breach the Code. An accountant who prepares misleading financial information cannot defend the act by saying they were instructed to do so.

Resolving the conflict

Work through the steps and document each one:

1. Establish the facts and the exact nature of the instruction. Misunderstandings account for a proportion of apparent conflicts.
2. Identify the principles threatened and classify the threat — usually self-interest and intimidation.
3. Consider alternative courses of action and the consequences of each.
4. Discuss the matter with your immediate superior. If the superior is the source of the pressure, go to the next level.
5. Escalate internally to the audit committee, the non-executive directors or those charged with governance.
6. Obtain independent advice — ICAB's ethics helpline where available, or independent legal advice — while observing confidentiality.
7. Document everything: the instruction, your objection, who you spoke to, when, and the response.
8. Consider whether the matter constitutes NOCLAR and follow the response protocol if so.
9. If the conflict cannot be resolved, refuse to remain associated with the information, and resign from the engagement or the employment if that is the only remaining option.

Documentation is the practical safeguard

Contemporaneous records of the instruction, your objection and the escalation are what protect a member later. A file note written on the day, an email confirming a conversation, and a copy of the analysis you refused to change are worth more than any recollection given months afterwards.

3. A worked scenario

You are the financial controller of a listed Bangladeshi manufacturer. Ten days before the year end, the CFO instructs you to reverse a BDT 35 million impairment against a factory that has been idle for two years, saying "the market will recover and the auditors will not notice." Your annual bonus is set by the CFO.

Analysis. Principles threatened: integrity, objectivity, professional competence and due care, professional behaviour. Threats: self-interest, because your bonus depends on the person instructing you; intimidation, because refusal carries career risk.

Actions. Establish whether any genuine new evidence supports reversing the impairment — a signed lease, a buyer, a restart plan — because if so this is a legitimate accounting judgement rather than a conflict. If there is none, state clearly and in writing that you cannot support the reversal and set out why. Escalate to the audit committee chair. Record the instruction, your objection and the escalation. Do not sign financial statements containing the reversal. Consider whether the matter is NOCLAR given the entity is listed and the information will be issued to the market. If the reversal proceeds regardless and the escalation fails, resignation is the remaining course, and you must not permit your name to be associated with the statements.

What would be wrong. Making the entry and relying on the auditors to find it. Making it and adding an unlogged note to file. Agreeing verbally to reconsider in order to defer the confrontation past the reporting deadline.