Question

Discuss how the professional accounting institutes have developed procedures to ensure their members adhere to good ethical conduct.

Answer 1

One of the key traits of a professional is adherence to a rigorous set of ethical guidelines set by the professional accounting institutes. When someone veers too far from ethical standards, their trustworthiness and judgment come into question and no one will trust them.

Generally in the accounting profession every organisation will publish their own ethical standards for their accountants, Some ethical codes, like the IIA’s, are succinct at only two pages long; others, such as the AICPA’s Code of Professional Conduct, stretch to 191 pages and require not only agreement for membership in the organization but also initial and periodic ethical examinations to maintain CPA licensure.

The main purpose of the ethical standard is, Accountants deal with the intimate financial details of individuals and organizations. Some have the ability to execute million-dollar transactions, and others assist with safeguarding retirement funds of cab drivers and social workers. Everyone has his own responsibilities, Ethical codes are the fundamental principles that accounting professionals choose to abide by to enhance their profession, maintain public trust, and demonstrate honesty and fairness. People who join organizations and secure the credentials to present themselves to the public as CPAs or IIAs strive to protect the reputation of the profession.

To be frank not everyone working in the accounting field is trustworthy, he following are five areas that deserve the attention of anyone considering working in the accounting profession

1. Independence and Objectivity : Ethics and independence go hand in hand in the accounting profession. A critical component of trust is making unbiased decisions and recommendations that benefit the client. Conflicts of interest, for example, demand exposure under independence guidelines. Benefiting from the sale of one financial product over another could lead to a bias that skews financial advice to a client. i.e., independent

2. Integrity : Demonstrating integrity means being straightforward and honest in all business and professional relationships. Upholding integrity requires that accountants do not associate themselves with information that they suspect is materially false or misleading — or that misleads by omission.

3. Confidentiality : Disclosure of financial information or revealing the disposition of a potential merger by an accounting professional without express permission violates the trust that is the foundation of a professional relationship — unless there is a legal or professional reason to do so.

4. Professional Competence : As technology, legislation and best practices change, a professional accountant must remain up to date. To exercise sound judgment, an accountant must stay abreast of developments that could affect a decision’s outcome.

5. Professional Behavior : Ethics require accounting professionals to comply with the laws and regulations that govern their jurisdictions and their bodies of work. Avoiding actions that could negatively affect the reputation of the profession is a reasonable commitment that business partners and others should expect.