How employees view the prevailing ethical culture within organizations is the focus of a March report from the Ethics & Compliance Initiative (ECI). The report, funded by Deloitte, KPMG, PWC, the Center for Audit Quality and several large corporations, states that while 47 percent of the employees interviewed reported they had observed corporate misconduct, that was 8 percent less than what had been observed in the previous year. Which might seem like good news, but of those who observed misconduct, 63 percent said it was by someone in management or a first-line supervisor, and of those 67 percent said it was multiple incidents. The misconduct observed in 70 or more of these cases were in: misuse of confidential information; giving or accepting bribes or kickbacks; stealing; failed specifications; and sexual harassment. The findings reflect 5,101 responses collected in 2017 from people who were 18 or older and employed by their primary employer for at least 20 hours per week.
Among the presentations at NASBA’s June Regional Meetings will be an update on ethical issues, including how a CPA should respond to a client’s noncompliance with laws or regulations (“NOCLAR”), and a session on what an accountancy board might do in cases of sexual harassment. Meeting participants will be asked to give their views on these and other topics.
The ECI’s annual studies have discovered an ongoing trend of employees increasingly experiencing pressure to compromise standards. In 2017, such pressure was experienced by 16 percent of all those who answered the questionnaire.
“Pressure creates an environment in which questionable business practices are almost twice as likely to be accepted. Sixty-three percent see such practices rewarded, fueling the likelihood that violations will appear,” the report states. “These findings are troubling, because increases in pressure have shown to precede a weakening of ethical cultures.”
As the ECI reported continuing misconduct, the Securities and Exchange Commission reported its highest-ever Dodd-Frank whistleblower awards, with two whistleblowers sharing a nearly $50 million award and a third whistleblower receiving more than $33 million. “These awards demonstrate that whistleblowers can provide the SEC with incredibly significant information that enables us to pursue and remedy serious violations that might otherwise go unnoticed,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “We hope that these awards encourage others with specific, high-quality information regarding securities laws violations to step forward and report it to the SEC.”
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