Question

Just one to two pages to be written for this second assignment. Internal controls are an important tool to control theft, absences, fraud, embezzlement and other internal issues. Write an internal controls memo that will satisfy the AICPA ( Articles of Professional Conduct) standards that will be published and sent to all employees of your company.

Answer 1

As we deal with changes in the industry, one must provide themselves with experience with the changes. The new Codification of the AICPA Professional Code of Conduct is a way that organizes the Ethical Standards within the accounting industry in an easy-to-understand format. Making effective decisions is of utmost priority to protect the interest of the AICPA member accountant, clients, and community. Without strict guidelines and adherence to strong ethical standards, adverse effects may occur, causing public trust to diminish. By following the simple steps of the conceptual framework, members can be assured that the public trust be maintained and continue to lead the profession, and all industries going forward. With the major fraudulent events that have occurred in the past decade, this codified approach to the Code of Conduct will assure that the integrity of the profession is maintained well in to the future.

The principles outlined within the new code are similar to that of the extant code. The principles are: Responsibilities Principle, The Public Interest Principle, The Integrity Principle, Objectivity and Independence Principle, Due Care Principle, and the Scope and Nature of Services Principle.

Responsibilities Principle

This principle states that members, in carrying out their responsibilities, “should exercise sensitive professional and moral judgments in all of their activities”. Members of the AICPA must act in a manner that maintains public confidence in the accounting industry, and continuallystrive to improve the art of accounting, and understand the industries responsibilities of selfgovernance. Members should keep in mind that their actions affect many within and outside of the accounting industry.

Public Interest Principle

This principle states that members should proceed with their responsibilities, and keep the public interest in mind in their decisions, and “honor the public trust and demonstrate a commitment to professionalism”. The public consists of “clients, credit grantors, governments, employers, investors, the business and financial community, and others who rely on the objectivity and integrity of members to maintain the orderly functioning of commerce”. This principle also discusses the pressures that may come from the public, and the fact that members must maintain integrity, objectivity, due professional care, and a genuine interest in serving the public.

Integrity Principle

To have integrity, a member must be “honest and candid with constraints of client confidentiality”. When a decision is made, it must be determined that the act is right or just. In the absence of specific rules, standards, or guidance, or in the face of conflicting opinions, a member needs to make sure that they make sure that their integrity is maintained through the decision.

Objectivity and Independence Principle

A member should maintain objectivity and independence and prevent any conflicts of interest in their practice. To be objective is to be impartial in the professional services offered by the member, and use professional judgement during the engagement with the client. To be independent is to preclude relationships that may hinder the objectivity of the member in the professional services being offered.

Due Care Principle

The due care principle suggests that a member observe the professions ethical and technical standards, continuously improve competence and quality of services, and, to the best of the member's ability, act in a professionally responsible manner. Exercising due care is keeping the best interest of the client in mind as services are performed with diligence and competence.

Scope and Nature of Services Principle

The Code of Professional Conduct should be at the forefront of determining the scope and nature of services. If there is a probability that any of the aforementioned principles will be violated in providing professional services to the client, then it is assumed that violations of the code will exist.