This essay Ptinciples of professional conduct for CPA's has a total of 1290 words and 8 pages.
Ptinciples of professional conduct for CPA\'s
"Code of Professional Ethics by American Institute of Certified Public Accountants."
Code of Professional Ethics by American Institute of Certified Public Accountants.
"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 issue discussed in the Code of ethics is competence and responsibility of CPAs. It establishes a basic ethical obligation that a CPA shall not render any services which he is not competent to render. Within this topic, the code mentions continuing improvement of the competence of CPAs in all areas in which they engage. In fact, the requirements of competence are established by law. If a man renders a service he is not familiar with, he commits a fraud on the public (However, CPAs are supposed in a reasonable manner to carry this principle beyond). The code of ethics assumes that in situations where CPAs face a problem he/she is not familiar with, they may ask other practitioners for help. A CPA may drop the case only when his/her efforts prove to be futile. From the other standpoint, there are always unknowns in every profession. Thus, to assume that every practitioner is completely knowledgeable would be inaccurate.
Responsibilities to Clients include CPAs’ maintaining their independence, integrity and objectivity regardless of any personal interest that previously exists. CPAs should hold in confidence, all the information about their clients which they acquire during engagements. However the Code states that CPAs should insist on disclosing in financial reports, all information necessary for the fair presentation of the clients’ affairs.
The accountancy laws in some states of the USA contain provisions which do not require disclosing information obtained during engagement by accountant in any court. These clauses directly interfere with federal jurisdiction. Federal courts have held that a "state statute conferring privileged status on communications to accountants does not apply to a Federal administrative proceedings" (Carey and Doherty: p. 133) and may require disclosure of the information by CPA.
With reference to the Responsibilities to Colleagues, good relations within a profession are very important because they aid in the exchange information and opinions. "The public confidence in professional accounting is gained mainly by cumulative accomplishments of all CPAs" (AICPA, Section
Topics Related to Ptinciples of professional conduct for CPA's
Professional accounting bodies, Certified Public Accountant, American Institute of Certified Public Accountants, Accountant, Accounting, Minnesota Society of Certified Public Accountants, Florida Institute of CPAs
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