Unethical Business Practices Of Multinational Companies

In the world of business, it is so obvious that Certified Public Accountants are playing an extremely important role to the public. Working as Certified Public Accountants, it is so special that they provide accounting professional services not to a specific person but to the whole public. Therefore, the ethics and conducts of the Certified Public Accountants becomes much more important because it affects the reasonable operation and successful development of the whole industry. So, as a professional accountant, we need take the duties that required by the AICPA code of ethics --- “professional competence, confidentiality, integrity, and objectivity".

Accountants and their practices have traditionally been held to very high standards. The most recent publication of the AICPA’s Code of Professional Conduct defines a key position as,

The Code of Professional Conduct of the American Institute of Certified Public Accountants consists of two sections—(1) the Principles and (2) the Rules. The Principles provide the framework for the Rules, which govern the performance of professional services by members. The Council of the American Institute of CPAs is authorized to designate bodies to promulgate technical standards under the Rules, and the Bylaws require adherence to those Rules and standards.

As stated earlier, the IASB arose from specific needs of the accounting industry and the public. As international trade has increased, the need for transnational accounting information has increased as well. This sparked the demand for development of international accounting standards to make financial data between countries more comparable. In 1973, the International Accounting Standards Committee (IASC) was formed to develop these international standards. The standards issued by the IASC, prior to 2001, were called International Accounting Standards (IASs). In 2001, the IASC made the International Accounting Standards Board (IASB) the official international standard-setting body. The standards issued by the IASB are called International Financial Reporting Standards (IFRSs) (Schroeder, Clark, & Cathey, 2011, p. 82-87).

The discussion board attempts to evaluate the Code of Professional Conduct Provisions as indicated in the AICPA principles section. One of the six principles of the code of professional conduct stated in the AICPA principles section is the public interest principle. A main characteristic of professionalism is to accept the overall responsibility to the topic. Thus, the public interest principle call for people to focus on the collective welfare of the community of the people and institutions in which they provide their professional services.

The AICPA is a Code of Professional Conduct that inform individuals what they are mainly accountable for and what their performance on professional services should be comprise of. Throughout these codes, there are many guidelines that range from the most to least authoritative. The principles provide and overview of what the code of conduct is, meanwhile the set of guidelines helps enforces the code to individuals. The code of conduct has four parts including the preface, a part that applies to the individual in the public practice, business members, and the rest of other individuals.

The introduction to the old AICPA Code of Professional Conduct of the American Institute of Certified Public Accountants provides guidance and rules for all members as it explains the composition of the code, application of standards and compliance enforcement procedures. The code consists of two sections principles and rules. The Principles provide a general framework for the Rules which CPAs have to adhere to the rules of the AICPA Code when practicing. The AICPA Code of Conduct consists of three levels: Principles of professional of conduct, Rules and interpretations and rulings. If a member violates the Code rules, disciplinary actions would be taken. The Principles of Professional Conduct (Sec 50) explains the responsibilities, public interest, integrity, objectivity and independence, due care and scope and nature of services for professional accountants. The rules of the AICPA Code are (Sec 90) Applicability and Definitions, (Sec 100) Independence, Integrity and Objectivity, (Sec 200) General Standards and accounting principles, (Sec 300) Responsibilities to clients, (sec 400) Responsibilities to colleagues and (sec 500) Other responsibilities.

Multinational Corporations have always been and are currently now under harsh criticism. They are mainly condemned for exploiting resources and workers of third world countries, taking jobs away from the US industry, and destroying local cultures. Although there are negatives of multinational corporations, there are also positives. Business done overseas provides jobs for the people of the host country, improving the standard of living, and transfers technology. Richard T. De George explains moral standards, in five basic theses, that multinational corporations must adhere to in order to maintain corporate ethics.

The American Institute of Certified Public Accountants has created a code of professional conduct that all certified public accountants must follow. This code of conduct lists the responsibilities CPAs have when working with a company 's financial information. The AICPA also includes information regarding the integrity, objectivity, independence and due care that CPAs must use when working in the accounting industry. The AICPA offers an ethics course for accountants to refresh their understanding of accounting ethics.

This section is reserved for future literature regarding the rules a member should follow in regards to responsibilities they have to their co-workers and colleagues. The AICPA Professional Code of Conduct generally states that members have a duty to remain ethical and uphold integrity in practice and relationships. This would cover the professional behavior expected with colleagues. Stay tuned for official rules to be added and defined by the AICPA.

In the wake of accounting malpractices across several companies in the United States such as Enrol Corporation, Tyco International and WorldCom, there has been a lot of attention with regards to the accounting practices in the corporate sector. Specifically, the Sarbanes – Oxley Act (SOX) which was passed by congress in 2002, was aimed at addressing the situation by regulating fraudulent accounting practices such as bribery and wrong entries in books (Williams & Elson, 2010). While regulation has its own limits, it is hoped that ethical principles can go a long way in keeping accountants in check. To this end, a number of institutions formulated within the accounting professions such as the AICPA have come up with codes of conduct to guide the action of members and ensure that they act in a way that is morally right and in line with the profession.

For nearly half a century, a movement has been underway to establish a high-quality, comprehensive set of international accounting standards, with the goal of facilitating international trade and investment. In the global capital market, differences in the rules of accounting for the purposes of recognition, measurement, and reporting of financial results have impaired the smooth transfer of information across borders. Given that it accounts for nearly a third of the global market, there is considerable pressure for the United States to conform to the International Financial Reporting Standards (IFRS), as promulgated by the International Accounting Standards Board (IASB). While moving to a single set of accounting standards could create

A set of internationally recognized accounting standards facilitates capital flows across borders. Globally accepted standards make financial information readily comparable for its users. Foreign investors are more inclined to put money into a U.S. company if they are familiar with the company’s financial reporting. Conversely, U.S. investors will find it easier and less risky to invest in foreign companies when they know the local accounting standards (Epstein 2009). This will make U.S. companies and capital markets more competitive, since it saves costly reconcilition of different standards. Preparers, investors, auditors, and others will benefit from these cost effieciencies, since a Results of an IFAC Survey among accounting leaders around the world with respect to the importance of convergence to International Financial Reporting Standards for economic growth in their countries:

International business ethics challenges the corporate world to deal with questions of what to do in situations where ethical standards come into conflict as a result of the different cultural practices in the nation. Since, there is this dilemma that has progressively troubled the large multinational corporations, international business ethics has arisen to help address these adhesive subject matters. There are several international business ethics discussions on the question of how to act in the home country as opposed to the host country is at the central point of most international corporations. The argument in question is how companies should practice their business according

Ethical issues arise when one is unsure of what is the right course of action to be taken at a single time. This problem becomes exponentially complex when applied to a multinational organization.