New ACCA policy report
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ACCA have released a report on their new guidelines for business taxation that encompasses a number of different areas of the reporting process that range from ethical considerations to new policies on tax evasion. The aim of the revised policies is to makes the corporate reporting process more transparent while also pushing more ethical practises. Below we will go into more depth on what these policies are and ACCA views on ethics in accountancy.
ACCA’s ethics proposals
The Association of Chartered Certified Accountants have recently changed their policies on taxation practises, this is significant as this is the first time that ACCA have updated their policies in the last five years. ACCA have cited drastic changes in the global economy/business environment as the main reason as to why they felt that these changes were necessary. The report which is titled ‘Global Policy on taxation of companies: principles and practises’ outlines a new set of standards for ACCA certified accountants to follow. The new standards will mainly have to do with tax advisory. ACCA policy lead for tax and business law, Jason Piper has stated that they plan to make a coordinated effort internationally to keep their system of standards relating to tax up to date with the rapidly changing business environment with the more specific aim of “capturing the substance of economic activity in the calculation of liability to tax”. ACCA are planning on supporting a policy of tax transparency highlighting the fact that it shows more social responsibility since there are unethical practises which are technically legal, such as some aggressive tax avoidance methods. ACCA believe that more companies should avoid such practises, in favour of more transparent reporting. Further evidence of this is the fact they have started supporting global reform efforts being made at G20/OECD level.
In the report ACCA have also outlined a number of different polices to help reduce the amount of “legal tax avoidance”. These include a minimum global tax which would potentially ensure that international companies pay a minimum of tax on their global profits, while also debating whether or not corporate tax can survive in the current global business environment. Therefore further highlighting the need for new tax law changes by testing/considering new forms of taxation as an alternative. The report does note that wider tax and contribution disclosures will be difficult to implement, they stress that it’s vital for businesses to be ‘good corporate citizens’. This is an attempt to highlight the overall impact that current tax policies can have on the global economy and the ethical expectations of consumers.
In the report ACCA also further committed to the idea that accountants have a ‘clear duty’ to fully advise clients in an effort to avoid any allegations of professional misconduct. This includes advising clients on not only financial issues but also the ethical risks involved in their taxation practises. Additionally they have stressed that accountants should ensure that they advise their clients on all the relevant tax options available. More evidence of ACCA commitment in pushing ethical behaviour in accountancy would be the scrutiny of the International Ethics Standards Board for Accountants (IESBA) and push for them to review their current standards connected to ethical issues, such as tax avoidance.
The report conducted by ACCA didn’t just recommend revisions to current policies it also highlighted the need for accountancy bodies to continue the debate on ethics in accounting and the role of accountants in keeping the businesses accountable. This is an especially relevant point given the recent failures of the big four accounting companies a prime example being the Thomas Cook case.