aCCOUNTING cODE of eTHICS
APril 10, 2012
Accounting Code of Ethics
The accounting system is ever changing and constantly evolving. Therefore, it is extremely that accountants adhere to very high ethical standards. The code of ethics for accountants “guides those in the profession to behave in a respectful, controlled and moral way. Clients need to have confidence in the business practices of professional accounting firms. A clear ethical code ensures that accountants practice a high standard of business that is exceptional in integrity and professionalism (Maughan, 2012). In its most basic form, an “accountant agrees to uphold the ...view middle of the document...
“According to the AICPA Code of Professional Conduct, a distinguishing mark of a profession is acceptance of its responsibility to the public” (Roth, 2009). Due to the fact that the accounting world is forever changing and evolving, it is important that all accountants maintain professional knowledge and skill at the level required to ensure that all of their clients receive well-informed professional service. Not knowing a new law or regulation is no excuse for relaying poor information to the client. “The maintenance of competence requires a commitment to learning and professional improvement that must continue throughout an accountant’s professional life” (Roth, 2009).
Conflicts of Interest
Accountants should avoid any and all situations that could possibly create a conflict of interest. “A conflict of interest exists when a person’s private interest interferes in any way with the interests of the company” (Steel, 2003). In other words, when decision is made on the job that would allow them to give favor to a client in exchange for anything of personal benefit to themselves, their friends, or their family would be considered a conflict of interest.
There are several situations that could give rise to a conflict of interest. One of the most common types of conflict is accepting gifts from clients in exchange for favorable treatment or unfair reporting. A gift can be defined as any item or service of value. No employee or member of an employee’s immediate family shall accept any type of gift from an actual or prospective customer or supplier. If at any time an employee or an employee’s family members receives an unsolicited gift, it should immediately be returned as well as reported to the employee’s supervisor.
Another conflict of interest “is when an accountant provides accounting services to a company while owning the company's stock, advises management on financial transactions and audits the company's general ledger or pursues self-interest over that of the general public interest. In short, any activity that limits an accountant's objectivity and independence can create a conflict of interest” (Vitez, 2010)
Conflicts of interest often occur in the accounting profession. Accountants must recognize that they have an enormous amount of responsibility in the business world. Therefore, it is important that they stay away from even appearing to have a conflict of interest with a client.
Client confidentiality is very important in the accounting profession. Accountants are often exposed to “client’s sensitive proprietary information such as the names and status of our client’s customers, performance reviews, salary information, legal matters, research data, company reduction or expansion plans, labor negotiations, finances, and product development” (Unknown, 2011). It is very important that the information that the client is exposed is protected to the highest degree possible. ...