Ethical Issues for Certified Public Accountants

In general, CPAs have enjoyed an untarnished image and have been known and respected for their honesty. Although CPAs have long and rightfully had a reputation for integrity and competence, recent scandals have damaged that reputation and diminished confidence in the accounting profession. nnCPAs working as comptrollers or nChief Financial Officers have received unfavorable recognition due to financial transgressions in recent times. The misfortune of David Duncan, the lead audit partner at Arthur Andersen on the Enron account, indicates the dire consequences accountants may face under professional responsibility guidelines. nnOther examples of not-so-notorious disciplinary proceedings can be found on the websites of the SEC, accounting societies, and licensing authorities. These scandals have had serious implications for the profession overall. nnEthical and professional responsibility issues present increasing challenges for CPAs and the Accounting Profession. This has been underscored by the creation of the Public Company Accounting Oversight Board (PCAOB), which was established to assume responsibility for providing auditing standards and rules governing ethics, independence, and quality control for registered accounting firms. nnnAccounting Firms should take ardent steps during the hiring and training of CPAs. Firms hiring accountants must ascertain if the CPAs they hire are adequately trained on issues of ethics and professional responsibility. The weak emphasis on ethics in both the new and previous versions of the CPA exam indicates that accounting graduates may have had limited exposure to ethics matters. nnAfter checking references, one method of judging an individual's moral compass might be to outline a scenario involving an ethics dilemma in conversation and present it to the candidate during the initial job interview. nnOnce hired, the new employee should receive extensive training with regard to the ethical environment of the firm and the profession. Guidance in the form of seminars and continuing education in ethics should be provided, ensuring that CPAs develop genuine understanding and expertise on issues arising under the Code of Professional Responsibility. Professional responsibility principles should be incorporated into every area of office operations and procedures. nnLarge accounting firms may even want to designate a senior member to be a specialist on issues of professional accountability. This specialist should take charge of all efforts to maintain competence in this area and can help colleagues recognize professional responsibility matters that may not always be obvious. nnAccounting Professionals must take it upon themselves to acquire ethics education and expertise. The Professional Ethics Division of the American Institute of Certified Public Accountants (AICPA) offers many helpful resources, including an ethics hotline and information about ethics enforcement. A focused approach to ethics issues according professional responsibility more attention than licensing or financial gain would be a positive step for CPAs to take voluntarily. nnCPAs in every state except Wisconsin must complete continuing education in order to maintain their licenses, with the usual requirement being 40 credits per year. However, only 10 states currently mandate continuing training on ethics and professional responsibility, usually requiring only two hours annually or four hours every two years. Conversely, 38 states mandating continuing education for lawyers have special ethics requirements and require a specified number of hours that must cover ethics exclusively. nnDespite the minimal attention paid to professional responsibility issues by most states for the purposes of both licensing and continuing education requirements, violations of ethics provisions can have significant consequences for an accountant's finances, livelihood, and future. nnThe accounting profession needs to take positive steps to undo the damage scandals of the past few years have done to its reputation. CPAs must support comprehensive ethics reform measures. The profession as a whole must endorse a sweeping approach to addressing professional responsibility principles. nnContinuing education with more focus on ethical precepts and guidelines set forth by individual corporations to maintain ethical standards may increase recognition of ethical dilemmas and help elicit behavior consistent with professional responsibility standards. Accountants have great responsibilities to their clients and to society and need to uphold the highest ethical standards in order to sustain the trustworthiness of the profession.nnFind More:nFinancial CareernnnnAbout us:nFinance Job Opportunities