Code Of Professional Ethics By American Institute Of Certified Public

Code of Professional Ethics by American Institute of Certified Public Accountants

Introduction

"A code of professional ethics is a voluntary assumption of self discipline above and beyond the requirements of the law. The Code of Ethical Conduct serves the highly practical purpose to notify the public that the profession will protect the public interest" (Carey, Doherty: p 3). When people need a doctor, a lawyer or a certified public accountant, they seek someone whom they can trust to do a good job, not for himself but for them. People assume that the hired professional is qualified since they cannot appraise him. They must take it on faith that he is competent. That is why professionals are distinguished from businesses and why there is a need for ethical regulations.

The Code of Professional Ethics

The Code of Professional Ethics for public accountants was developed by the
American Institute of Public Accountant and includes four different categories.
The first, Concepts of Professional Ethics, establishes major requirements for
CPAs in different areas of their day-to-day professional activities. The main parts of the Code are: Independence, Integrity and Objectivity in the practice of public accounting, Competence and technical standards, Responsibilities to clients, Responsibilities to colleagues and Other responsibilities and
Practices. Independence has always been the fundamental concept to the accounting profession. In fact it is the most essential to the practice of all professions. The financial reports produced by CPAs would be of little value to the public unless CPAs maintain their independence. Independence has always been associated with integrity and objectivity. Since faults on financial statements may be the result of either a honest mistake or a lack of integrity it is imperative to associate the notion of independence with the objectivity and integrity. As part of the requirements by the Code of ethics, CPA should avoid any relationships that may result in the CPA's becoming dependent on the particular client. Such relationships include financial interests and client management. It is very important that the opinion of the CPA reflects the results of operating decisions taken by the client and not any underlying ideas which may be the case if a CPA takes part in the decision making process of the company. Another important ...

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... of particular cases given under Ethics Rulings.

In addition to the standards described above, state CPA institutions and other government establish their own ethical standards.

Conclusion

Professional ethics is concerned with human behaviour and human relations. As human society becomes more complicated, so do the codes of professional conduct.
The purpose of the rules is to attract and increase public confidence and discourage behaviour inconsistent with the image of profession. Public confidence may even be more important to the public accountant than to any other professional because CPAs are concerned not only about their clients but also about those who rely on their reports. The code of ethical conduct provides members of the profession with the rules that were worked out on the historical basis to attract the confidence of the public. Therefore, the rules of ethics are the foundation of public confidence.

Works Cited

John L. Carey and William O. Doherty. Ethical Standards of the Accounting
Profession. New York: American Institute of Certified Public Accountants, 1966
American Institute of Certified Public Accountants. Code of Professional Ethics.
New York: AICPA, 1977