1. APES codes of Ethics for Professional Accounting states that all the members of accountancy profession should act in the interest of their clients, employers, investors, government, employees and all others who rely on the report or work done by them. (Moroney R, 2011). It gives the reason why these bodies produce ethical guidance: the public interest.
Professional accountants require an ethical code as they hold positions of trust because of which people put their faith on them. The accountability to act in the public interest is the distinguished mark of this profession.
The fundamental ethical principles are to act with integrity, objectivity, professional competence and due care, confidentiality and professional behaviour; which govern …show more content…
GBB, when auditing inventory costs of LPL, reviewed that the cost accounting system and discovered that a large unfavourable labour variance is recorded as asset in 2014. The variance led to the material misrepresentation in the financial reports. This bug in the new accounting system is directly responsible for the calculation of the unfavourable variance. The fundamental principles of Integrity (Sec 110) refers being honest and straight forward in professional and business relationships (BPP Learning Media, 2012) but Gordon’s act is a breach of this principle.
Gordon knew the fact but without informing discussing it with LPL’s management he decides to inform Jane about the overall situation.
b. Jane advises Gordon that GBB cannot afford to lose a client (Auditing since 2012) which will also impact Gordon’s profit share too. The fundamental principles of objectivity (Sec 120) refer an obligation of all professionals not to allow bias, conflict of interest or undue influence of others as well as not to compromise professional or business judgement. (BPP Learning Media, 2012) This implies the breach of ethical principal of objectivity.
Jane is also a university mate of LPL’s Chief Executive and a good friend since
However, circumstances changed “in cases in which an auditor fails to establish that applicable auditing standards were followed” (Zack 2011). Since WoolEx Mills’ auditors failed to properly identify the fraud risks that caused the material misstatements, they would be in breach of professional duty to shareholders. Litigation would mostly be pursued by WoolEx Mills’ shareholders, WoolEx Mills, third parties impacted by the auditors services, creditors, and other parties who rely on WoolEx Mills financial statements. Each plaintiff would have the right to sue the auditors for their negligence in performing the audit with due diligence. To prove a breach of contract, WoolEx Mills would need to provide the engagement letter as proof that the auditors did not peform the duties agreed upon. Additionally, WoolEx Mills’ auditors would be charged with either gross or ordinary negligence based on their deviation from proper auditing standards. Since the auditors failed to test the company’s internal controls, they would be found guilty of gross negligence. The auditors would be guilty of ordinary negligence if they forgot to complete a section of the vertical analysis of the Income Statement (Zack 2011) (Krishnan & Shah
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.
The codes typically are broad in definition, seldom providing detailed, acceptable behavior. Essentially, the code of conduct expands on the right behavior definition of ethics, which is the study of right or wrong behavior (Miller). The Institute of Management Accountants (IMA) has adopted an ethical code called the Statement of Ethical Professional Practice that describes, in some detail, the ethical responsibilities of management accountants. All employees must follow ethical business practices to maintain a healthy economy built on trust in the reliability and fairness of everyday transactions (Noreen). Accordingly, management accountants must adhere to the standards established in the IMA’s Statement of Ethical Professional Practice, or they will lose the trust of their peers and customers and could risk prosecution.
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.
Telling Susan Nickles will create a very uncomfortable working environment for Fred and their workplace. Nickles may lose trust on her co-managers, escalate the situation to Human Resources and can create chaos for the entire department. Nickles may also decide to end her partnership with Smith or end her employment at ABC Management Consulting. Fred knows that Nickles is very valuable in the company because of her education and skills.
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)
The PCAOB has the authorization to provide rules governing the following areas; ethics, independence, and quality control for any registered accounting firm...
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 aim of this paper is to provide the framework of the current professional accounting code of ethics. What are the ethics and how we define them? In this report we try to determine the main ethical principles that will establish the right and
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
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:
4) . One of the largest bankruptcies in history was enabled by accountants hiding debt and destroying the evidence to avoid implication (Buckstein, part 2 pgs. 1, 2, and 3). These unfortunate events led to the need for increased scrutiny and regulations, including the Sarbanes-Oxley Act (Buckstein, part 3 pg 1). This legislation inspired the creation of the Canadian Public Accountability Board (CPAB) (Buckstein, part 3 pg 1). These changes have led to an increased awareness of the need for auditor independence as well as higher standards for accounting and business in general (Buckstein, part 3 pg 1). While these measures have helped to reassure the public, there is still the question of why Accountancy is not a protected