Standard Issues: Aicpa

We as business owners, management and or in a role of authority must set, address and comply with a solid foundation of ethics. “A code of conduct is the single most important element of your ethics and compliance program. It sets the tone and direction for the entire function. Often, the code is a standalone document, ideally only a few pages in length. It introduces the concept of ethics and compliance and provides an overview of what you mean when you talk about ethical business conduct.”

Article 8 gives examples on using the AICPA Code of Professional Conduct. The article gives the example of you taking over the role of handling the independence and ethical matters involved with auditing for a retiring partner in your firm. You are quickly given the task of determining whether or not your firm can provide auditing services to a client that owns a small, privately owned bank and a used car dealership. To perform work for the client you want to see the rules on how the firms will remain independent from the bank and car dealership, and you have a week to research any questions or concerns that you have with the potential client.

When auditing a publicly held company, auditors need to observe principles. The ethical principles of the American Institute of Certified Public Accountants (AICPA) Code of

In addition, associated with the misapplication of accounting methods, the financial industry has been plagued with one disaster after another involving numerous scandals from top leading American companies. Consequently, the Sarbanes-Oxley Act was passed in 2002 compromising eleven sections that are generated to insure the responsibilities of the company’s managers and executives. This act identifies criminal penalties for particular unethical practices and currently has new policies that a corporation must follow in their financial reporting. The following examples describe some of biggest accounting methods as a result of the greed and the outrage of the ethical and financial misconduct by the senior management of public corporations.

“ In order to prevent fraudulent financial reports and statements, the American Institute of Certified Public Accountants(AICPA) has created ethical standards” (Ethical standards in a financial statement, 2011). These standards aim to make financial professionals accountable for their accounting practices. This includes the integrity of financial reporting and ensuring financial reporting is done fairly and factually. Financial accountants and professionals should maintain professional integrity, objectivity, and independence to reduce the risk of resulting legal action, loss of profits, and a poor reputation if improper financial reporting is done (Ethical standards in a financial statement, 2011).

This post will discuss two ethical accounting dilemmas that could occur in the CPA profession. For each dilemma, it will explain how the dilemma could be resolved based on logic and reason. It will then support that proposed resolution through support from the American Institute of Certified Professional Accountants (AICPA) Code of Professional Conduct.

In the later part of 1990s, there was an epidemic of accounting scandals which arose with the disclosure of financials transgressions by trusted corporate executives. The misdeeds involved misusing or misdirecting funds, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, and overstating of revenues.

Accountants are held to a higher ethical standards and they must performed their duties in compliance with standards or ethical values of honesty, integrity, objectivity, due care, confidentiality, which must be fully committed to. They must put clients or public interest first before their own. They must have and ethical values and maintain those values way beyond what the society or the company’s code of ethic. It is important that accountants’ behavior or ethical values is in conformity with the

Three characteristics comprise the Model of Trust Enhancement – ability, benevolence and integrity. According to the textbook, the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct consists of the principles and rules established by the profession to aid as guidance in the

In January of 1988 the AICPA introduced the Integrity and Objectivity Rule number 102. The rule states that a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent the facts or subordinate his or her judgment to others (AICPA). Rule number 102 has three separate violation interpretations. The first interpretation of rule 102 states that a member that makes, permits, or directs another to make materially false and misleading entries in financial statements is a violation. A second interpretation of the rule states that if a member fails to correct an entity’s financial statements or records that are materially false and misleading when he or

Ethics in any industry is important, but for Accounting professionals and those in need of their services, it is a particularly stressed element. Information provided by accountants is used to make major decisions, including investing, downsizing, expanding, etc, so accountants are expected to be competent, reliable, and have a high degree of professional integrity. Because of these high expectations, the professional accountancy industry, like many other professions, has adopted professional codes of ethics (Woelfel, 1986). These ethical codes go above and beyond the requirements for state or federal laws and regulations. There are several professional organizations within the

The conduct of chartered accountants in the UK is governed by the Code of Ethics. The latest revision of these ethics took place January 1, 2011. The fundamental rules that govern the work of these accountants are as follows and similar to those in the US:

The AICPA Code of Professional Conduct, regardless of its numerous strengths, the Code of Professional Conduct has some serious weaknesses. The accounting profession is constantly changing and making improvements. The first weakness in the Code of Professional Conduct deals with conflictions within the code due to the code being constantly updated (Dienhart, 1995). Dienhart, Lunday, and Tavani have all criticized professional codes because the directives cause conflictions with one another, whether it is direct or indirect. Rule 301 and SAS No. 99 are examples when the code is having conflicting standards. Rule 301, Client Confidential Information, states that professionals shall not

Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc.

Code of ethics promotes the ethical culture in an internal audit profession. Principles and rules of conduct