Rules of Professional Ethics and Conduct
Kay M. Massengill
ACC 499 Accounting Capstone
Professor Randolph Stanley
December 2, 2012
Rules of Professional 2 This research paper is on Rules of Professional Ethics and Conduct of the American Institute of Certified Public Accountants. They will be four cases that will be discussed for violation for the following rules. They are Rule 102 – Integrity and Objectivity, Rule 201 – Professional Competence, Rule 202 – Compliance with Standards, and Rule 501- Acts Discreditable. They will be 4 main points that will be discussed on each case in the paper. They are the following: a. The expectation of the code and how the CPA violated it. b. The disciplinary action taken.
c. Discuss whether you agree or disagree with the disciplinary action taken and state your rationale. d. Determine how the AICPA can prevent this type of breach in the code of conduct in the future. The four cases that I have picked are the following:
1. David Beck, Certified Public Accountant of Lexington, Kentucky – violated Rule 201-Professional Competence & 202-Compliance of Standards 2. Paul T. Fink, Certified Public Accountant of Eagan, Minnesota – violated Rule 102-Integrity and Objectivity 3. Stuart Becker, Certified Public Accountant of New York, New York – violated Rule 501-Acts of Discreditable 4. Carl F. Ruzicka, Certified Public Accountant of Northfield, Illinois – violated Rule 202-Compliance of Standards
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The first case that I am going to discuss is one that concerns Paul T. Fink of Eagan, Minnesota, Certified Public Accountant. This case involves Rule 102 – Integrity and Objectivity of the Code of Professional Ethics and Conduct of the American Institute of Certified Public Accountant. It will be discussed in the next two paragraphs on the expectation of the code and how the Certified Public Accountant violated it.
This rule states that it is a violation for any misinformation to be use to prepare the company financial statement that is use by any public hold company. This means that any information in any document that could be taken as false and not the whole truth. It states that if the Certified Public Accountant signs or have another person to sign or force another person to sign the documents that contains false information is a violation of the rule. Mr. Fink violated Rule 102 by having knowledge of some shipping documents not having the correct date on them. This was to make collections on some credit letters that was not in according to the term of the contracts. He signs a form as a invoice which did not match a invoice signed by the carrier. This did not match any invoice that was prepared by the company. In a statement to the Security and Exchange Commission, Mr. Fink stated that he would not sign a representation letter for the management for the third quarter of 1996. He would not sign this letter because he was not sure of a particular sale. He did state that he signed the third quarter Form 10-QSB that showed that the financial statement was done correct and according to all general accounting principles. When signing the second and third quarter Form 10-QSB, He stated he had prior knowledge that the company would not be able to fully be able to meet the term of the contracts. One contract involved the sale of coating equipment that was being
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produce by the company for a customer. This letter of credit would expire before securing the payment for the machine. The company still showed on all reports of the profits for the sale contract under the percentage of completion method....