Students apply professional standards of ethics to determine whether
a proposed business action is ethical or unethical.
will understand how ethics enters into the decision-making process of
professionals, accountants, and CPAs.
will understand the characteristics embodied in actions that are deemed
will use the characteristics of ethical decision-making to determine
whether business actions are ethical or unethical.
are principles of good conduct that help people decide whether an action or
decision is morally right or morally wrong. The most fundamental ethical
principle is: Do unto others as you would have them do unto you. Known as the Golden Rule, this rule implies
that ethical people are concerned not only with themselves, but also with the
well being of others.
Despite the notion that the sole consideration is the
bottom line, businesses are concerned with ethics. At a minimum level, businesses
are concerned with acting in an ethical manner in order to protect themselves,
avoid scandals, and stay free of government intervention, which, in turn, can
avoid the levying of fines and the assessment of penalties, if not
imprisonment. At a higher level, however, businesses pay heed to the notion of
proper ethical conduct since such conduct often defines another bottom line,
which is not what you earn financially, but who you are. In light of todays
image conscious public, proper ethical conduct may add more to the bottom line
than price hikes and cost-cutting measures.
Another common misconception is that laws and ethics are the
same: If its legal, its ethical. Quite the contrary. In fact, an individual can be dishonest,
untrustworthy, unfair, and uncaring without ever breaking the law. Laws rules
of society only outline minimum standards of what is proper. Laws do not always define or address proper
ethical actions or behavior.
Proper ethical behavior is founded on the belief that it is
imperative to distinguish between right and wrong. A Certified Public
Accountant (CPA) abides by a code of ethics that all members of the profession
must observe. The principle source of
information concerning the CPAs professional ethical standards is the AICPAs
Code of Professional Conduct (Principles and Rules), which has been in
existence for more than 100 years. Additionally, each state has its own
regulatory body that sets professional and ethical standards that govern CPAs
licensed to practice in that state.
Proper ethical behavior can be defined according to three
basic characteristics: independence, objectivity, and integrity.
With regard to independence and objectivity, CPAs
must be free of conflicts of interest both in appearance and in fact when
providing public accounting services to clients. CPAs provide multiple
services- auditing, financial planning, consulting, international, and
technology services- to a variety of clients in a multitude of industries.
Therefore, it is imperative that CPAs continuously assess their client
relationships and public responsibilities.
Maintaining the highest degree of integrity is
necessary to sustain and broaden the publics confidence in CPAs and the
accounting profession. Integrity requires CPAs to be honest and candid in their
work and to maintain client confidentiality without seeking personal gain.
Measured in terms of what is right and what is wrong, integrity is the
benchmark against with all decisions and actions by a CPA must be assessed.
In order to act ethically, a CPA must be independent,
objective, and act with the highest degree of integrity. If a CPA violates any one of these
characteristics, the action is deemed to be unethical.
Compliments of AICPA.