New York State Accounting Code of Ethics
Introduction
The accounting system is constantly changing. During these changes, it is important for accountants to adhere to the high ethical standards that they have always lived by. Adhering to the high ethical standards is an accountant?s obligation to the public, the profession, and themselves. An accountant?s ethical conduct usually lies within four different areas. This includes competence, confidentiality, integrity, and objectivity. NYSSCPA.ORG states, ?Members also have a continuing responsibility to cooperate with each other to improve the art of accounting, maintain the public?s confidence, and carry out the professions special responsibilities for self-governance,? (Article 1).
New York State expects its accountants to act in a way that will serve the public interest. The public includes clients, credit grantors, governments, employers, investors, the business and financial community, and any other person that relies on the information provided by the accountant. It is the accountant?s responsibility to maintain an appropriate level of professional competence through continuing education of their knowledge and skills. New York State also expects its accountants to perform their duties in accordance with relevant laws and regulations, as well as providing clear and complete reports.
It is important for accountants to maintain their integrity. Often times, accountants are faced with situations that are questionable. It is important for the accountant to avoid situations of apparent conflicts of interest and to advise other public interests of these conflicts. Accountants should refuse gifts and favors
that would appear to influence their actions and should refrain from any activities that would prejudice their ability to perform their duties ethically. NYSSCPA.ORG states, ?Integrity requires a member to be, among other things, honest and candid within the constraints of client confidentiality,? (Article 3). Accountants must be willing to recognize and communicate professional limitations that would preclude successful performance of their activities. They are expected to communicate unfavorable as well as favorable information.
Client Confidentiality
Client confidentiality is very important in the accounting profession. New York State requires that accountants do not share any client information without the specific consent of the client. However, under certain circumstances, the State finds it necessary that an accountant might have to share client information. Examples of these circumstances include an accountant?s receipt of a subpoena or summons or an accountants participation in actual or threatened legal proceedings or alternative dispute resolution proceedings (NYSSCPA.
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.
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
Benevolence instructs the accountant to serve in the best interest of the public. It is described as the extent to which a trusty will want to do good to the trustor aside from an egocentric profit motive (Power Point Presentation 7, n.d.). From a utilitarian perspective, some actions may not be deemed worth the effort when there is a lack of profit to be obtained from the action. The AICPA Code of Professional Conduct is set up to establish professional norms and standards that discourages this type of behavior.
An auditor should keep objectivity at all times. Maire Loughran, a Certified Public Accountant and University Professor, explains “objectivity means the ability to look at facts the client presents, and reviews them with no preconceived notions or prejudices” (52). In other words an auditor has to exercise his ability to review information in a no subjective manner, and perform auditing work free of conflicts of interest. Many instances have occurred when objectivity was not present while performing audits, for instance the case of Bernard Madoff’s auditor, David G. Friehling, from the firm of Friehling & Horowitz, illustrates it well. On 2009, William K. Rashbaum and Diana B. Henriques, both reporters at The New York Times, inform in the online version of their newspaper:
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,
these are concerning competition, and ethical implications. Marketing in public accounting is here to stay therefore making an argument against its existence would be fruitless; however, in order to achieve maximum benefit to the firm, the client, and s ociety, more stringent guidelines must be implemented at the firm level.
Brooks, Leonard J. Business & Professional Ethics for Directors, Executives, & Accountants. Mason: Thompson South-Western, 2004. p227.
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...
What does ethics have to do with accounting? Everything, since there have been some recent financial accounting scandals; a few examples being Xerox, WorldCom, Enron, which have generated much unwanted and unfavorable publicity for CPA's, including those working as controllers or chief financial officers for organizations.
It is highly essential for accountants and business professionals to maintain a standard of ethical conduct in the workplace as the nature of their work places them in position of trust. (Senarante, 2011). Accountants have the responsibility to ensure that their duties are performed in accordance with the five fundamental principles set out in the Code of Professional Ethics such as integrity, objectivity, professional competence and due care, confidentially and professional behaviour (Cunningham et al. 2014). Accountants are expected to be reliable and trustworthy. Thus they are required to act ethically in relation to their clients, employers and the general public in order to provide quality services in the best interest of the society (Eginiwin & Dike, 2014). The International Federation of Accountants (IFAC) have established a code of ethics for accountants, allowing each specific country to add their own national ethical standards to the code to reflect cultural differences. The code provides emphasis on the five fundamental principles as well as resolution of ethical conflicts. In Australia, professional accounting bodies such as CPA Australia, Institute of Chartered Accountants in Australia (ICCA) and the Institute of Public Accountants (IPA) adopt the Australian Professional and Ethical
The code of ethics promotes the ethical values that internal auditing professionals are to uphold and practice by. The first principle in the code of ethics is integrity. The integrity of an internal auditor builds the foundation for trust with the client; if a client trust’s the auditor the communication process will be smoother when delivering difficult messages. The second principle is objectivity. Objectivity requires an internal auditor to preform and report the results of the audit without any bias. Objectivity aids in the delivery of grim news because the stakeholders can be assured that the findings and reports are the truth and aren’t swayed by the dislike or favoritism by the auditor. The objectivity principle also requires an internal auditor to disclose all material known facts so the stakeholders have the full picture and not just bits and pieces that could alternate the overall impression of the final report. Another principle within the code of ethics is competency. The competency requirement ensures that an internal auditor can’t perform and audit in which they don’t have the expertise or knowledge. Knowing that the auditor performing the audit and delivering the difficult findings and messages is competent and knowledgeable in what they are doing eases the communication process. Clients have the security and comfort of knowing that the auditor isn’t just pulling something out of a hat so that it appears as though they know what they are talking about. The auditor must actually understand the rules, regulations, laws, and obligations a company has to abide by before even entering into an auditing
The Code of Ethics for professional accountants includes set of the rules and guidelines Mostly code of ethics can contain set of ideal professional conduct and acceptable behaviour as well as define unacceptable behaviour []. Main advantage of he code is that accountants can emphasis on the positive attitude and activities that may encourage an effective...
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
An accountant makes sure that the Nation’s firms are run efficiently, the public records are kept accurately, and that taxes are paid properly and on time (“Accountants and Auditors”). Accounting is the study of how a business tracks their income, assets, expenses, and many other things for a period of time. They also do many other things like quality management, tax strategy, and health care benefits management (“Welcome to Careers in Accounting”). An accountant is crucial to the success of a business, without one the business tends to fail.
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: