Integrity
One of the key elements that an accountant will face in their job is making sure that their clients trust them to do their work and handle their finances. The ethical decision making process provides a model of trust enhancement with which accountants can use to enhance the trust a client has for them. One of the parts in the model of trust enhancement is integrity. Integrity is one of the most important characteristics that an accountant can be held to and known for. Those who work in the business demographic probably rely on accounting ethics and integrity more than they realize. With accountants holding to an extremely high standard of integrity, “investors, creditors and managers can be reasonably confident that the financial
…show more content…
As a professional Certified Public Accountant, an extremely large piece of one’s professional judgment is having applicable knowledge of the set rules, codes, and policies of the accounting profession displayed in the AICPA code of conduct and the Conceptual Framework. Without the need for professional judgment in Accounting, there would be no need for any of these codes, or for the universal title of being a Certified Public Accountant. The AICPA Code mentions many actions and decisions that could potentially threaten a CPA’s professional judgment, and highly warns against decisions such as these (AICPA, 2016). Moore (1989) writes, “The use of sound professional judgment in preparing financial statements is something most of us just tend to assume. But when judgments prove to be less than sound, some hard questions have to be asked about their quality and the lack of guidance concerning their role in financial reporting” (p. 54). Professional judgment is the first thing to be questioned in cases of accounting fraud and errors. The AICPA Code lists various threats to professional judgment such as the involvement in conflicts of interest (AICPA, p 33), failing to adhere to the Conceptual Framework (AICPA, p. 54), failing to adhere to GAAP (AICPA, p. 109), and incorrectly disclosing client or employer financial information (AICPA, p. 133). A CPA’s level of professional judgment is constantly at risk, and for this reason, it is to be greatly protected and actively built upon by professional accountants and
In addition, by deciding not to inform the limited partners of Ed’s deceit, Andrea would be disregarding the American Institute of Certified Public Accountants Code of Professional Conduct in her being unreliable, dishonest and deceitful. Andrea has the responsibility of protecting her client, which involves encouraging the correction of financial statements in order to prevent suspicion during audits that could lead to fines and imprisonment.
A Louisiana attorney is constantly asked by non-Louisiana peers if the state ever adopted the Uniform Commercial Code or if they are still using the old, outdated, Napoleonic Code. Though Louisiana has stark interpretations of the relevance of the UCC, the state has adopted the code in piecemeal. This article is a partial synopsis of introducing readers to a few of the concepts of UCC as adopted by Louisiana compared to the existing principles of the law of sales.
The principles of the AICPA Code of Conduct should guide the work that Jose and Emily do as auditors. The principles that specifically apply to this situation are Responsibilities, The Public Interest, and Due Care. CPAs have the responsibility to “exercise sensitive professional and moral judgments in all activities.” (Mintz, p. 19)
Throughout the past several years major corporate scandals have rocked the economy and hurt investor confidence. The largest bankruptcies in history have resulted from greedy executives that “cook the books” to gain the numbers they want. These scandals typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of assets or underreporting of liabilities, sometimes with the cooperation of officials in other corporations (Medura 1-3). In response to the increasing number of scandals the US government amended the Sarbanes Oxley act of 2002 to mitigate these problems. Sarbanes Oxley has extensive regulations that hold the CEO and top executives responsible for the numbers they report but problems still occur. To ensure proper accounting standards have been used Sarbanes Oxley also requires that public companies be audited by accounting firms (Livingstone). The problem is that the accounting firms are also public companies that also have to look after their bottom line while still remaining objective with the corporations they audit. When an accounting firm is hired the company that hired them has the power in the relationship. When the company has the power they can bully the firm into doing what they tell them to do. The accounting firm then loses its objectivity and independence making their job ineffective and not accomplishing their goal of honest accounting (Gerard). Their have been 379 convictions of fraud to date, and 3 to 6 new cases opening per month. The problem has clearly not been solved (Ulinski).
Turner, Robert M. "Ethics and Professionalism: The CPA in Industry." The CPA Journal (1999). Retrieved on 18 September 2006 .
The stereotypical image correlated to the account mirrors that of a public accountant. An individual working as a public accountant can expect to work as an independent third party to a multitude of companies. As this third party it is their duty to oversee financial transactions to ensure that the statements of not only the company, but also its’ supporting companies, correctly correspond and match up to the position, results and cash-flow of the clientele. This general quota outlining a public accountants job description is not the same for a private accountant. The main difference between a public and private accountant is that unlike the public and its handle on a multitude of accounts, a private accountant specializes with a certain company or field. With this specialization, a private accountant tackles setting up a system that records the transactions within the business. The recordation of the transactions is then generated into statem...
With every business activity come opportunities for fraudulent behavior which leads to a greater demand for auditors with unscathed ethics. Nowadays, auditors are faced with a multitude of ethical issues, and it is even more problematic when the auditors fail to adhere to the standards of professional conducts as prescribed by the American Institute of Certified Public Accountants (AICPA). The objective of this paper is to analyze the auditors’ compliance with the code of professional conduct in the way it relates to the effectiveness of their audits.
Accounting ethics has been difficult to control as accountants and auditors must keep in mind the interest of the public while that they remain employed by the company they are auditing. The accountants should take into account how to best apply accounting standards when company faces issues related financial loss. The role of accountant is crucial to society. They serve as financial reporters to owe their primary constraint to public interest. The information provided is critical in aiding managers, investors and others in making crucial economic decisions. An accountant is responsible for any fraudulent financial reporting. Some examples of fraudulent reporting are:
I strive to embody integrity in everything that I strive to do. This means that each and every one of my actions must encompass and demonstrate the values I possess, no matter what the context of the situation. Additionally adhere to high moral principles and professional standards put forth by the American Institute of Certified Public Accountants. Secondly, I believe that it is important to be honest and respectful. I desire to express truth in every written and spoken word. Presenting information in a fair and impartial way when it comes to performing accounting duties is necessary in a profession that serves the public interest. I believe that being respectful means showing consideration and thoughtfulness in my relationships with my fellow those that I come into contact with. This goes hand in hand in treating everyone from fami...
When working within any professional body, an individual will be subjected to circumstances in which personal ethics will come into play. The Accounting profession is no different as ethical questions arise as part of any working day and can effect how an individual or the company conducts business. These questions can vary greatly in practice from selection of new customers to the rates at which those clients are going to be charged. These ethical questions are raised regularly within the workplace and each employee will react to them differently. The varying reactions will depend on the morality of each individual, or each employees own ‘ethics’. As each employee has their own set of values companies must be alert to the fact that some of their employees may have more ‘flexible’ morals than others. This ‘flexible’ morality can lead to corruption and manipulation within the workplace and can give companies serious problems. As a result of this, all of the main professional accounting bodies have begun to re-introduce mandatory courses teaching ethics to their employees. As well as this, ‘A Guide to professional ethics’ was published which contains a number of different principles in order to govern the behaviour of accountants and also to identify and reduce the greatest areas of risk with respect to unethical behaviour.
Considering why unethical choices are made aids in creating solutions that will be efficacious; solutions that do not address the root causes of the problem are less likely to result in change. One reason an accountant might not make an ethical decision in a particular circumstance is lack of knowledge; he or she may not know what the ethical choice in that situation is. Another reason an accountant might do something unethical is lack of prudence; he or she may know the ethical actions that should be taken, but choose unethically, either because they are being pressured by others to do so--and perhaps threatened with the loss of significant income or even their job--or simply for his or her own personal or company gain. These underlying roots of breakdowns in ethics are important to keep in mind when thinking of ways to improve ethical
Increased competitions and high expectations of the companies have put high pressure on the accountants. Making the most accurate decisions and helping the companies maximize their financial performances have become almost basics of the accountants’ duties. Many business owners question why they need to seek the services of an accountant when they can do many things themselves with the help of the technological tools. Today, an accountant must provide more than what technology can do for the company. They have to set business plans, goals and provide guide to achieve them with less cost and most profit. They have to advise business on their investments and project the most profitable decisions for the company. Beside the investments, accountants expected to consult the firms on their consolidations with other firms. Making decisions and researches on reducing costs, and sharing resource while providing variety of offerings puts lots of stress on the
As per ISA (NZ) 200-A17, this ethical requirement includes the auditors integrity, objectivity, professional competence and due care, confidentiality, & professional behaviour. Integrity is an ethical attitude which includes the auditor’s honesty, accuracy, and fair practice. Objectivity is a mental attitude while carrying out the audit wherein the auditor is fair and just with all his/her work. Professional competence is the knowledge and skill of the auditor, gained through education, training and experience, while due care is a degree of care of an auditor on certain situations wherein an he/she must act diligently. Confidentiality is the commitment of the auditor not to disclose any information regarding his/her client, unless required by law. Professional behaviour means the auditor must act in accordance to the law and set of standard as a manifestation of respect to the
In a business surrounded by money such as accounting, a sense of trust must be formed between the client and the accountant. An accountant must know who they can or cannot share a client’s information with. Anytime someone’s bank accounts or cash is handled, there needs to be trust that the accountant will not go around telling everyone how much money is in what accounts. State law acknowledges that a business relationship between a client and the accountant is to be confidential. However, the federal law does not distinguish an accountant and client confidentiality relationship. The accountant is to protect the information from others, which causes clients to speak more openly about their money and accounts. In the Chartered Institute of Management Accounting code of ethics, Section 140 is directed towards confidentiality. This section includes whom may obtain knowledge of a client’s information, whether to include a third party or not, and what should happen if a business relationship has ended. This section protects information such as payroll data and account history.
The function of accounting information system transforms from simple storage to a supportive tool of decision-making, producing high quality information and detailed analysis, bringing about real economic benefits. However, it also challenges the skills and ethics of modern accountants, putting forward the new demand for the professionals who use the accounting information system. As a result, two capabilities are recognized to be essential for the professionals. One is the competency, it lists out a pattern of knowledge used in the job as well as be aware of the link between information systems and decision-making. On the other hand is the ability of analyzing and diagnosing, which is good at problem solving. Another challenge is about ethical issue, requiring integrity and confidentiality as a professional quality of an accountant. To conclude, the accounting information system integrating the information, analyzing and supporting decision-making will become more important in the forming of a company’s strategy. Understanding the structure of accounting information system would lead to a competitive advantage over competitors in the