Question

When dealing with issues such as professional ethics, the stakes can be high. This is why such care is taken to painstakingly clarify terms such as integrity and independence in the AICPA Professional Code of Conduct, as they could otherwise be open to interpretation. In this week’s discussion, you will find illustrative examples of these key principles to share and discuss with your peers. First, review the terms and definitions identified in the “Principles of Professional Conduct” section of the preamble to the AICPA Professional Code of Conduct. Select one of the principles (e.g., responsibilities, public interest, integrity, objectivity and independence, due care, or scope and nature of services) and research a current event that demonstrates that principle being threatened or otherwise not adhered to. (This does not need to be a case strictly about accounting—it could be any relevant business scenario. If you have trouble finding a current event, you can create a hypothetical scenario related to your final project business.)

I am choosing public interest

Answer 1

Let us first in brief understand what are the “Principles of Professional Conduct”.

Any auditor or accountant while carrying on any professional services has to adhere to the principles of professional conduct. He should look professional and be professional while carrying on any services. His conduct should be such which does not bring disgust to the profession. Following are the main principles of professional conduct:-

1) Responsibilities

2) Public interest

3) Integrity

4) Objectivity and independence

5) Due care

6) Scope

7) Nature of services

There can be many such events where such where we can find that these principles are not adhered to. Let us discuss once such event for public interest in detail.

Public Interest - An auditor or accountant should act by keeping public interest in mind. Acting in the public interest means that the professional conducts his duties keeping in mind the interest of public. Generally, public is interested to know financials of the company and how much their wealth is increased.

Sometimes, Auditor audits and certifies as true and fair to the financials of the company which is going in losses since many years, where many frauds are taking place and illegal dealings are taking place. He certifies such financial as true and fair because he is getting more money from the client. In this case, auditor has not taken public interest in mind. He has not acted as per professional conduct in this case. Same thing happened in the case of Enron, which is considered to be the biggest audit failure. Enron's auditor, Arthur Andersen, was found guilty in a United States District Court of illegally destroying documents relevant to the SEC investigation.

During such cases, public interest is being threatned or otherwise not adhered to.