An Experimental Study of a Change in Professional Accountants’ Code of Ethics: The Influence of NOCLAR on the Duty to Report Illegal Acts to an External Authority

Linda Thorne (), Krista Fiolleau (), Carolyn MacTavish (), Pier-Luc Nappert () and Sameera Khatoon ()
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Linda Thorne: York University
Krista Fiolleau: University of Waterloo
Carolyn MacTavish: Wilfrid Laurier University
Pier-Luc Nappert: University of Laval
Sameera Khatoon: University of Saskatchewan

Journal of Business Ethics, 2024, vol. 191, issue 3, No 6, 535-549

Abstract: Abstract This paper examines the effect of the 2018 change to the International Ethics Standards Board for Accountants (IESBA) Code of Ethics, NOCLAR, which is currently being rolled out to its approximately 138-member countries’ Code of Ethics. NOCLAR is an acronym for non-compliance with laws and regulations, and as enacted, NOCLAR adds language to the Code of Ethics that explicitly grants accountants the right to break confidentiality in the face of illegal acts (IESBA, http://www.ifac.org/publications-resources/responding-suspected-illegal-act , 2012). We use an experiment involving 113 Chartered/Certified Professional Accountants (CPA) from the US and Canada to examine how NOCLAR influences professional responsibility. We find that NOCLAR clarifies professional accountants’ professional responsibility to report fraud and elevates their professional responsibility to report illegal acts to an external authority. Implications for the accounting profession, society, and the implementation of the Code of Ethics are discussed.

Keywords: Code of Ethics; Non-Compliance with Laws and Regulations; Professional Accountants (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10551-023-05474-1

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