According to the profession’s code of ethics, “a distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.” That is, not exclusively to satisfy the needs of an individual client or employer.

One wonders if that responsibility was front of mind when two partners from the Perth firm of WHK Horwath issued a flimsy report on the cost of the Opposition’s election promises, just days before the 2010 Federal election. Claims about the validity of the Opposition’s promises were well publicised. Plainly, the report was intended to influence voters.

Tony Abbott had earlier stated that the Opposition’s policies would be independently and authoritatively costed by a third party. The shadow treasurer Joe Hockey and shadow finance minister Andrew Robb had foreshadowed that they would be issuing a report of an “audit”. After publication they continued to claim that the “fifth largest accounting firm in Australia” had independently “verified” their “costings and assumptions”.

Horwath’s report did no such thing. In a half-page letter addressed to Abbott, the firm merely stated that it “has reviewed the complete set of recurrent and non-recurrent policy commitments and savings, and is satisfied that based on the assumptions provided, costed commitments and savings have been accurately prepared in all material respects”.

In other words, Horwaths had done little more than check spreadsheet calculations. They had not “independently verified” any assumptions about costs or expected savings of proposed initiatives.

Moreover, by not repudiating highly publicised claims that their work was an “audit”, the accountants had allowed themselves to be associated with communications that were false and misleading, or which omitted or obscured information so that the communications were misleading.

All this so offended me that I was moved to lodge a formal complaint (in a personal capacity) with the Institute of Chartered Accountants in Australia, citing chapter and verse of auditing standards and the ethics code, and alleging that the Perth accountants had failed to meet the standards of conduct and performance that are expected of members of the profession.

What followed provided disturbing insights into how this profession engages in “self-regulation”.

The first event was advice in September 2010 that ICAA management had “determined” that there was no evidence of conduct which would warrant disciplinary action by the institute. The Perth accountants had responded that no one would have made a financial decision on the basis of their report. They were not obliged to comply with auditing standards since they were not the auditors of the Liberal Party. In any event they had not undertaken an audit of prospective financial information but had undertaken an “agreed upon procedures” engagement – referring to an obscure auditing standard AUS 904 that was not indexed in the Institute’s members’ handbook.

The complaint had not even been referred to the institute’s Professional Conduct Tribunal.

This was more annoying since it was obvious that, contrary to their claim, the Horwaths report had not even complied with AUS 904. Hence a further complaint was lodged in September 2010.

Some months later in response to enquiries about the fate of this second complaint, it was explained that correspondence had been misfiled or misdirected within institute offices, and that the matter would henceforth be dealt with “swiftly”. Yet it took close to 13 months – until late November 2011 – for the complaint to be dealt with, if only in part. On technical grounds (non-compliance with AUS 904) it was announced that the Perth accountants had each been fined $5,000 plus $750 costs. And they received a reprimand (downgraded on appeal from a “severe reprimand”).

The tribunal’s finding (soon to be reported in the institute’s journal) made no mention of the complaint about the failure of the accountants to have regard to the public interest.

To place this in context: a discussion paper issued last year by the International Federation of Accountants titled A Public Interest Framework for the Accountancy Profession proposed three criteria for determining what matters are in the public interest – and one of these related to support for democratic principles and processes.

In March, a body with the grand title of the Accounting Professional and Ethical Standards Board – which represents the ICAA, CPA Australia and the National Association of Accountants – wrote in support of the IFAC proposals, agreeing that adherence to democratic principles and processes should be a criterion for determining what was in the public interest.

It short, there are competing narratives about the profession’s ethics. At one level, it is proclaimed that a distinguishing feature of the profession is its concern with the public interest. But when it comes to disciplinary proceedings, the profession only responds to complaints (sometimes, coupled with media pressure), and even then is tardy, and focuses on technicalities.