IN THE WAKE of scandals such as Libor, Wonga and now Tesco, it seems like some senior executives could perhaps be of the view that ethics and profits are not compatible. Early reports of Tesco’s expensive £263m mistake are that this serious breach of accounting standards emerged due to a small group of staff providing misleading information to auditors. If these allegations prove to be correct then it raises serious questions about the structures in place within the company to verify accounts.
As painful as end-of-year accounting and auditing can be, when lunch and other corporate expenses mount up but cannot be substantiated with receipts, the forensic inquiry by accountants that forms part of their ethical duty of “professional scepticism” is an important check and balance. Knowing how much a business is worth is one of the many fundamental public services that accounting provides, assuring the markets that a firm is worth what it says. This highlights, in my mind, why ethics and profits are not and should never be seen as mutually exclusive.