Accountability of accountants

There is an old Pashtun curse: may you live to become a taxpayer. It comes from centuries before the British adventured into Afghanistan and lost their teeth - almost the whole 32 of them. Somehow, avoiding this curse has become the hallmark of Pakistani society. Perhaps it was those successive invasions from the north-western regions in the pre-colonial times that sowed the seeds of tax evasion deep into the Pakistani soil.
But let us not ethinicise the issue, for indeed, tax evasion and tax avoidance is a global phenomenon. Businesses and individuals all across the world do not really want to pay taxes, like as if its cookie in a candy shop. Yet eventually, they do pay taxes; a handful perhaps out of some higher sense of citizen responsibility, but most out of fear and deterrence.
So how do you create fear and deterrence in societies like Pakistan where tax evasion is rampant? One option is of course to target the top tax evaders from each segment of the society: politicians, landed elites, industrial or manufacturing class elites, top evaders from service sector professionals such as doctors, restaurant owners, and etcetera.
The other option that can be simultaneously explored - and this will probably invite scathing criticism from the accounting/audit community - is to target those who intentionally help in tax evasion or are otherwise have complete knowledge of it but chose to remain silent: le accountants and tax lawyers, guilty by accomplice.
Most professional bodies have their ethics code, or at least ought to. So for instance, doctors found guilty of intentional malpractice run the risk of losing their medical license. Or CFA-holding investment advisors can lose their charter if, for instance, they are found guilty of insider trading. Their names are also published in CFA magazine as a part of global naming and shaming exercise.
Likewise professional accountants - even those in Pakistan such those from ICAP or ICMAP - can lose their certifications or licenses to audit if they are found guilty of intentional professional misconduct such as embezzlement or fraud in the company they are working for, or breaching public interest by intentional omissions in their audit, and so forth. Yet when it comes to tax fraud or tax evasion, or perhaps some other corporate malpractice, such as parking the sale proceeds of an asset of a listed company in the bank account of the companys CEO instead of the companys account, it is the company or its board of directors that gets penalized by the SECP or the tax department whatever the case may be.
On the other hand, professional accountants or those third or fourth-tier auditors (of whom there is no shortage) who help the management in such malpractices or tax evasion are usually left scot free - exceptions apply of course.
What this column would like to argue, therefore, is that the FBR, SECP, ICAP and ICMAP should sit together and devise a mechanism to strengthen the processes and the penal implications of the ethics code of professional accountants. The effort should be aimed at increasing the cost of tax evasion or corporate malpractice. Any professional accountant found in cahoots with the management - which is most usually the case for its the accountant who actually manages two books and not the BoDs - should run the risk of being professional debarred for life from the institution he/she belongs to. Of course natural checks and balance apply so that the accountants are not made the escape goat. Similarly, there could be different degrees of punitive action: from a wrap on the knuckles to being professionally debarred.
But the idea is to tighten the net around the facilitators of tax evasion, or corporate malpractices that fall in SECPs domain. It is relatively easier as well; those belonging to professional bodies are less in number and are faced with higher risks, than others in top management of a private or public company or their high flying BoD. Then again, this is just a thought-in-progress; BR Research would welcome comments and critique on the matter.