Question

You are studying to enter professions that require high moral and ethical behavior. Your commitment to such standards should begin in this class and continue through every class in your graduate degree program. This week's discussion questions:
1) Why ethics and professional conduct are so important in the accounting professions, and
2) Why behaving ethically in your graduate studies is critical to your goal to graduate and work in the accounting industry.

Some major professional accounting associations/organizations include:

American Accounting Association

American Institute of CPA's

American Society of Women Accountants

American Taxation Association

Association of Certified Fraud Examiners

Association of Government Accountants

Chartered Global Management Accountants

Information Systems Audit and Control Association

Institute of Internal Auditors

Institute of Management Accountants

Institute of Industrial Accountants

Insurance Accounting and Systems Association

International Association of Accounting Education

National Association of Black Accountants

National Society of Accountants

Professional Association of Small Business Accountants

Professional Accounting Society of America

Your state" Society of CPA's

Questions to spark class discussion:

Randomly select one of the professional accounting organizations from the list below.

Summarize and discuss the professional code of ethics of the organization you selected.

Identify a few of the key codes and or responsibilities of ethical and professional conduct in this organization.

Discuss their importance and how you, as students can model these behaviors.

Answer 1

There are multiple questions. Hence, question No 1 and 2 answered.

Answer to Question 1 & 2

To start with the discussion on this topic, we would discuss two major accounting frauds happened in US and India in the similar nature to attract investors and increase the price of the shares which had ultimately benefitted the promoters temporarily. The issue of Enron in US and issue of Satyam in India are in the similar nature whereby both of the companies had forged their books, inflated their revenues, hidden their losses and cash flow issues. Both the companies were publicly traded in the stock market of the respective countries. Therefore, all these manufactured financials had resulted in high valuation of the shares. Market investors had shown high degree of interest in investing in these companies and therefore when the actual situation was unveiled after investigation, the small shareholders had lost a huge sum of money since the share valuation of these companies were dropped to scrap value.

Now the question is what ethics is? Ethics is the value or principles which drives a person or organisation to adopt the right things to do, even if someone is not observing.

In the above two examples given, who was unethical? Was it Company, executives of the company or the accountants and auditors? Everything setting aside the main perpetrator would be the accountants and auditors. Why? Anderson and PWC being the auditor of these two companies, did investors not rely on the published financials certified by these auditors? The accountants and auditors are considered to be gatekeepers of the financials. Was it not the duty of the accountants and auditors to disclose the situation well in advance when the investors were relying upon these two pillars?

The job of an accountant is very simple. Publishing a true and fair view of the financials is the responsibility of the accounts and certifying the same is the responsibility of the auditors. Accountants are neither selling nor producing or not involved in any serious strategy formulation. The only expectations from the accountants are to compile a correct financial position of the company as on balance sheet date and disclose all important events as on date in accordance with the accounting standards and reporting standards set by various competent authorities. Auditors are responsible for certifying the same. Being in accounting profession, this may be hardest job challenge one may face due to performance pressure felt by the senior management. However, since every job has their respective professional challenge, accounting professionals should live upto their expectations and should demonstrate the highest standard of ethical principle. The job may not be easy for them. In few occasions, the accountants or auditors may face serious challenges within the organisation. However, being ethical is one of the key expectations from any accounting professionals. Hence a graduate student should start living the ethical standards set for accounting professionals right from the start of their career.