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Ethics important to the accounting profession
Why is ethics so important in accounting
Ethics important to the accounting profession
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Introduction
American Institute of Certified Public Accountants The non-profit professional organization, American Institute of Certified Public Accountants (AICPA), was founded in the United States of America. The organization was founded in 1887, to help ensure that the accounting profession would gain the same respect as the other prestigious occupations had received from the public. The accounting profession, similar to the medical, legal, and engineering professions, is characterized by “…rigorous educational requirements [150 credit hours], high professional standards, a strict code of professional ethics, licensing status [Uniform CPA Examination], and a commitment to serving the public interest” (AICPA, 2016). These five characteristics
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This organization has been setting ethical standards and publishing the Code of Professional Conduct for the profession since the early 1900s. A Code of Professional Conduct is necessary for any profession to help maintain strict ethical standards. This organization is the basis of ethical reasoning in the accounting profession because of what the Code of Professional Conduct covers. The code is comprised of a preamble and six articles. The preamble and the six articles serve as a foundation to provide guidance and guidelines for accountants to overcome any emerging ethical issues with ease on a daily basis. The six articles’ purpose is to protect the public, investors, and creditors. The AICPA Code of Professional Conduct consists of: Responsibility, Public Interest, Integrity, Objectivity and Independence, Due Care, and Scope and Nature of …show more content…
Accountants following the professional code in the society are critical. The Code of Professional Conduct has been closely related and referred to as accounting ethics. Accounting ethics are difficult to comprehend because accountants and auditors must take into consideration the public’s interest and ensure they are performing up to standards. Listed below are some focuses in the Code of Professional Conduct that accountants follow.
• First, the Code of Professional Conduct encourages accountants to behave ethically. Encouraging accountants to behavior ethically is a strength because it helps create customer loyalty, positive work environments, and dedicated employees, which helps avoids legal issues. Accounting professionals have to behave ethically just because of the profession they are in. Accountants need to behave ethically because the investors, creditors, and rest of the public rely on an accountant’s professional judgment to make
Ethics plays a vital role in developing accurate and high quality financial statements for management, financial institutions, and investors. As management utilizes financial statements to make decisions regarding the operations of the business, it is necessary to review accurate financial statements to make strategic decisions about the future of the organization. Investors and financial institutions require accurate financial statements to make informed decisions upon whether to invest funds into the organization or the wisdom of lending funds to said organization.
Besides, a CFO is responsible for providing investors with an accurate reporting. On the other hand, ethical responsibilities of the professional accountant is essentially important. As a CPA, they must take all the facts into consideration that which action are
The AICPA Code of Professional Conduct defines independence as consisting of independence of mind and independence in appearance. According to the AICPA Code of Conduct, Section 55 Article IV, An accountant member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. Moreover, a member who practices their accounting work in a public firm should be independent in fact and appearance when providing auditing and other attestation services (aicpa.org). According to the case study What Lies Beneath, I think that Betty did not show her professional skepticism since she built trust on her client, which she could not have as an auditor. As an auditor,
As of April 2015, over half of the NFL’s second time offenders, in the abuse and personal conduct misconduct categories, are given the exact same suspension length as their punishment in their first offense, a maximum of six games WITH pay (Patra). This in-depth analyzing of the NFL will bring to light some of inconsistent uses of the revised Personal Conduct Policy, as set by the NFL, its commissioner, Roger Goodell, and the NFLPA, or the National Football League Player’s Association. The policies used recently, different examples of abuse and/or violence in the league at this time, and the commissioner’s exempt list are important factors. This article will consist of what the NFL’s policies are today and how they are used inconsistently,
Professional Code of Conduct for Nurses Chantel Findley Nova Southeastern University Professional Code of Conduct The classical term for the word ethics is, moral philosophies that rule an individual’s or group behavior or action. The American Nurses Association used ethics to write the Code of Ethics for Nurses with these values and visions in mind: “(1) As a statement of the ethical obligations and duties of every person who chooses to enter the profession of nursing. (2) To act as the nonnegotiable standard of ethics.
The American Institute of Certified Public Accountants (AICPA) was formed in1921. The organization, however, does have history dating back to 1887. The AICPA is the face of the CPA profession. Rule-making and standard-setting for the profession is handled by the AICPA. The organization also serves an advocate before interest groups and legislative bodies. Besides developing standards and grading the Uniform CPA Examination, the AICPA also enforces technical and ethical standards. Being a member of the AICPA has many advantages to advance a profession’s career.
For accounting careers, a generalization of principles was created by the AICPA. There are six principles in their professional code of conduct. As the basis of those principles are the public interest, or knowing that a member will act in the best interests of the public. (Code of Conduct, 2015). Next is to act with integrity. Members should use integrity at all times. All members should use objectivity and be free of conflicts when conducting business. Additionally, all members should use due care in their career. Finally, all members should know the scope and nature of the services (Code of Conduct, 2015) they are going to be rendering in the course of their
To provide an example of a breach of ethical conduct in the workplace, we may remember the case of a financial manager in a corporation that decided not to pay overtime to some employees. After a deep outside investigation, the company was summoned with thousands of dollars to remedy the payment that was supposed to be paid to all employees who worked more than forty hours per week. Again, it is needed more than just a booklet stating that the company adheres to the code of business ethics. It is needed serious managers that can run the company with the most seriousness as possible. Consequently, any written codes of business ethics, regardless of how well it has been crafted, need people that adhere to its internal content with a serious desire to do the right thing.
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:
The minimum adequate models permit accountants and administration the utilization of escape clauses and specialized exemptions, subsequently they have financial explanations that are in compliance with GAAP, yet don't give a reasonable portrayal of the organization in an ethical way. The significant reasons a code of ethics ought to accomplish more than set up the minimum standards, is recognize any conceivable dangers to resistance. You can make that a stride further and ought to have the capacity to decide
The McKesson & Robbins scandal of 1938 was the first catalyst for auditing reform. It was found that McKesson & Robbins had “’fraudulently represented its assets’ and that its affairs were being ‘carelessly conducted and mismanaged’” (Baxter,1999, p.165). The SEC investigated the audit firm used by McKesson & Robbins, PW. During this investigation, SEC found PW had “failed to employ that degree of vigilance, inquisitiveness, and analysis of the evidence available that is necessary” (Baxter, 1999, p. 172). The PW retorted that they had conformed to standards then applicable. As a result, the American Institute of Certified Public Accountants (AICPA) issued a new set of standards. The first set issued by the Auditing Standards Board (ASB) were the Statements of Auditing Procedures, which lasted from 1939 until 1972. In addition
As an individual and ambitious accounting student with plans to pursue a career in public accounting, I recognize the importance of understanding my core personal values and behaviors that guide the ethical principles of my everyday actions. I recognize that I have a responsibility to myself, family, future colleagues, future clients, and the general public to follow certain guidelines and conduct myself in an ethical manner. Furthermore, I acknowledge the idea that ethical dilemmas will occur, but I am committed to my “Personal Code of Ethical Values” (as seen above) that represent my desire to live ethically in every facet of my life.
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.
The three important characteristics or elements of trust, ability, benevolence and integrity, are an integral component of the AICPA Code of Professional Conduct. These elements emphasize the importance of the code in relation to maintaining and enhancing public trust in the services rendered by the accounting profession. In other word, as CPAs possess high levels of the three characteristics of trust, and use them when applying professional judgement to resolve accounting ethics dilemmas, the public trust is enhanced (PointCast Presentation, n. d.).
In both cases, the public interest supersedes the individual interest. Ethics and professionalism are required for admission of an individual to a professional body. For instance, the US accountants must have ethics and show professionalism for admission in the AICPA. Finally, both ethics and professionalism require a predefined code of behavior that directs individual actions.