Financial fraud remains one of the most corrosive threats to institutions and economies across the world. Even highly developed markets, the United States, the United Kingdom, Europe and parts of Asia, have suffered major corporate scandals involving global giants such as Enron, Tyco, MCI Telecommunications and Cadbury Schweppes. These cases demonstrate a universal truth: financial fraud is a cankerworm that erodes trust, destroys value and destabilises economies. Nigeria is no exception. Recent revelations of massive fraud in several corporate institutions have once again exposed the fragility of internal systems and the urgent need for more robust preventive frameworks.

Financial fraud, at its core, is deliberate deception for personal or financial gain. It thrives where incentives, pressure or opportunity exist, and it is amplified in environments marked by weak internal controls, poor oversight, inadequate governance structures and dominance of management by a single individual or small clique. Other red flags include poor working conditions, persistent arrears, related-party transactions, high staff turnover, inadequate working capital and declining profitability. These factors create fertile ground for unethical behaviour to flourish.

The consequences are devastating: financial loss, reputational damage, psychological distress, erosion of public trust and, ultimately, the weakening of entire economic systems. Addressing this requires more than periodic reforms or reactive investigations. It demands a structural shift in how organisations perceive, monitor and respond to financial irregularities.

While tools such as whistle-blowing policies, forensic audits and independent reviews are essential, a more transformative framework has emerged globally, one that places public interest at the heart of professional responsibility. This is the NOCLAR principle.

NOCLAR, an acronym for Non-Compliance with Laws and Regulations, is a groundbreaking ethical standard introduced by the International Ethics Standards Board for Accountants (IESBA) and implemented on 15 July 2017. It provides clear guidance on the obligations of professional accountants when they encounter suspected illegal acts committed by a client or employer. The principle compels accountants to move beyond passive observance or concealment and to take appropriate action in the public interest.

What makes NOCLAR particularly powerful is its ability to bridge a long-standing gap in the profession. In many jurisdictions, existing laws and regulations do not adequately define the responsibilities of accountants when confronted with potential illegality. NOCLAR fills this void by outlining the steps accountants must take, internally and, if necessary, externally, to ensure that non-compliance is addressed rather than hidden under the guise of confidentiality.

The scope of NOCLAR is wide-ranging. It covers money laundering, fraud, bribery, corruption, tax evasion, environmental breaches, public health misconduct, social reporting violations and other offences that undermine organisational integrity and public trust. By compelling professional accountants to act, document concerns and escalate issues to appropriate authorities, the principle strengthens governance systems and discourages malpractice at its root.

The benefits of adopting NOCLAR are far-reaching. First, it raises the ethical bar for the global accountancy profession, reinforcing the idea that accountants are custodians of public interest, not just financial technicians. It reassures stakeholders, including governments, regulators, shareholders, donor agencies and the wider public, that the profession prioritises transparency over secrecy and integrity over convenience.

Second, NOCLAR enhances accountability and operational transparency within organisations. By empowering accountants to question and report irregularities, it reduces the likelihood of financial manipulation, protects investments from losses caused by non-compliance and creates a culture where wrongdoing is less likely to be overlooked or normalised.

Third, it strengthens the roles of auditors and other professional accountants involved in oversight functions. The principle mandates appropriate reporting, even of confidential matters, thereby preventing ethical breaches from being quietly buried. It encourages professionals to insist on compliance and to escalate deviations to those with authority to act.

Furthermore, NOCLAR positions the accounting profession at the frontline of the global fight against money laundering, insider trading, tax evasion and financial crimes. Its structured framework supports early detection, enhances organisational resilience and helps restore public confidence in both private and public institutions.

In conclusion, NOCLAR is not merely another regulatory tool; it is a transformative ethical compass for the accountancy profession. It provides actionable guidance in jurisdictions where legal provisions are vague and complements legislation where frameworks exist but enforcement is weak. Ultimately, its purpose is clear: to prevent professional accountants from hiding behind confidentiality to shield misconduct and to ensure that transparency, accountability and public interest become non-negotiable standards in financial governance.

Kingsley Ndubueze Ayozie, FCTI, FCA, is a public affairs analyst and chartered accountant.