The importance of independence

The following is an article written by the institute of Chartered Accountants on the importance of independence. 

A subject that often engenders discussion and debate is around the real and/or perceived value of professional independence in the provision of financial or any other advice. For many professional financial advisors (including accountants), independence is a highly valued characteristic and one that differentiates their service offering to clients.

Interestingly, independence means different things according to different sources, including government legislation. For example, is acting independently something that can be achieved through individual thinking and judgement or is it independence of ownership? Furthermore, is the value of independence in the mind of the advisor and reflected in how they operate, or is it through a client’s perception?

For professional accountants providing financial advice, the answer is both. The Code of Ethics discusses the importance of ‘independence of mind and in appearance’ and encapsulates the principle under the obligation of objectivity:

‘The principle of objectivity imposes an obligation on all Members not to compromise their professional or business judgment because of bias, conflict of interest or the undue influence of others.’

This obligation is one of the fundamental aspects of being a Chartered Accountant.

The importance of independence has come up for discussion recently in light of the FoFA reforms where there are a range of concerns about the increased regulation resulting in less competition and fewer independently owned licensees. (While this is not my view, that discussion is a blog for another time!)

For Chartered Accountants, it is at the foundation of the Institute’s position in developing an appropriate replacement for the accountants’ exemption. The retention of professional independence as well as the perception of it is vital – not just for Chartered Accountants, but also for their clients.

For this reason, it is a value that needs to be protected.