Why Are Ethics Important in the Accounting Profession?
Why Are Ethics Important In The Accounting Profession?
Sheree Fletcher
CE CAPSTONE COURSE FOR THE ASSOCIATES DEGREE
IDS399
September 10, 2006
What does ethics have to do with accounting? Everything, since there have been some recent financial accounting scandals; a few examples being Xerox, WorldCom, Enron, which have generated much unwanted and unfavorable publicity for CPA's, including those working as controllers or chief financial officers for organizations. When you hear the word "ethics," what is the first thing that comes to mind? Having to make the decision of doing what is right versus doing what is wrong. Some idealists say that decisions of ethics should not be conditional. However, that is not as simple as it may sound. What constitutes "right" to one person may be "wrong" to anther; what clearly distinguishes the line between right and wrong? What some may look at as being unethical does not necessarily make it illegal. In the predicament of David Duncan, the lead audit partner at Arthur Anderson the Accounting Firm for Enron, underscores the penalty that accountants may face under professional accountability. Duncan had pleaded guilty to obstruction of justice when he was involved in the connection with document shredding. The scandals have made some big implications on the profession as a whole. One being the decision from the Public Company Accounting Oversight Board (PCAOB), created by the Sarbanes-Oxley Act (SOA) of 2002, in April 2003 they voted to assume the responsibility for establishing auditing standards. The Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) previously played this role. The PCAOB has the authorization to provide rules governing the following areas; ethics, independence, and quality control for any registered accounting firms, supplanting the role of the AICPA for auditors of SEC registrants. Ethical and professional responsibility issues represent actual and
Sheree Fletcher
CE CAPSTONE COURSE FOR THE ASSOCIATES DEGREE
IDS399
September 10, 2006
What does ethics have to do with accounting? Everything, since there have been some recent financial accounting scandals; a few examples being Xerox, WorldCom, Enron, which have generated much unwanted and unfavorable publicity for CPA's, including those working as controllers or chief financial officers for organizations. When you hear the word "ethics," what is the first thing that comes to mind? Having to make the decision of doing what is right versus doing what is wrong. Some idealists say that decisions of ethics should not be conditional. However, that is not as simple as it may sound. What constitutes "right" to one person may be "wrong" to anther; what clearly distinguishes the line between right and wrong? What some may look at as being unethical does not necessarily make it illegal. In the predicament of David Duncan, the lead audit partner at Arthur Anderson the Accounting Firm for Enron, underscores the penalty that accountants may face under professional accountability. Duncan had pleaded guilty to obstruction of justice when he was involved in the connection with document shredding. The scandals have made some big implications on the profession as a whole. One being the decision from the Public Company Accounting Oversight Board (PCAOB), created by the Sarbanes-Oxley Act (SOA) of 2002, in April 2003 they voted to assume the responsibility for establishing auditing standards. The Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) previously played this role. The PCAOB has the authorization to provide rules governing the following areas; ethics, independence, and quality control for any registered accounting firms, supplanting the role of the AICPA for auditors of SEC registrants. Ethical and professional responsibility issues represent actual and
References: Bernardi, Richard A., and Bean, David F. "Ethics in Accounting Education: The Forgotten Stakeholders." The CPA Journal (2006). Retrieved on 16 September 2006 . Bernardi, Richard A., and LaCross, Catherine C. "Corporate Transparency: Code of Ethics Disclosure." The CPA Journal (2005). Retrieved on 16 September 2006 . Romal, Jane B., and Hibschweiler, Arlene M. "Improving Professionals Ethics: Steps for Implementing Change." The CPA Journal (2004). Retrieved on 16 September 2006 . Turner, Robert M. "Ethics and Professionalism: The CPA in Industry." The CPA Journal (1999). Retrieved on 18 September 2006 . Verschoor, CMA, Curtis C. "Ethics: Do The Right Thing." Strategic Finance (2006). Retrieved on 18 September 2006 .