Independence is one of the six ethical principles of the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct. The other principles are responsibilities, the public interest, integrity, objectivity and independence, due care, and scope and nature of services. More specifically, audit team members are required to be objective and independent with regard to the audit by maintaining objectivity and being free of conflicts of interest in discharging professional responsibilities and by being independent in fact and appearance when providing auditing and other attestation services. The SEC has power to establish rules for any CPA associated with audited financial statements submitted to the commission. In here the influence of the SEC is very obvious.
AICPA Code of Professional Conduct ETH/376 November 26, 2012 AICPA Code of Professional Conduct The American Institute of Certified Public Accountants is a professional, but voluntary, association that provides memberships to Certified Public Accountants. It outlines a CPA’s ethical and professional responsibilities through its Code of Conduct (Vitez, 2012). It is considered the foundation of ethical reasoning in accounting because of the principles that it outlines and it links professional conduct to moral judgment. The AICPA outlines six principles of conduct that accountants and CPAs can follow to remain professional in their dealings with their own clients or companies that they work for. These principles include Responsibilities, Public Interest, Integrity, Objectivity and Independence, Due Care, and Scope and Nature of Services.
What exists when budgeted costs exceed actual results? A. A budgeting error B. A favorable difference C. An unfavorable difference D. An excess profit 2) The conceptual framework developed by the Financial Accounting Standards Board __________. A. was approved by a vote of all accountants B. are rules that all accountants must follow C. is viewed as providing a constitution for setting accounting standards for financial reporting D. is legally binding on all accountants 3) In what situations will a static budget be most effective in evaluating a manager's effectiveness?
AICPA Code of Professional Conduct Certified public accountants (CPAs) perform a role that is essential to society. Because of the importance of that role, CPAs have responsibilities to anyone who employs their professional services. CPAs also have a responsibility to assist one another in enhancing the accounting profession, maintaining the public's confidence, and consistently fulfilling the profession's exclusive responsibilities. The voluntary association of CPAs, better known as the AICPA, has proposed a code of conduct that CPAs have chosen to adhere to. Now it is time to discuss the purpose for AICPA’s code, why it is considered the foundation of ethical reasoning, and its most important purposes.
Corporations rely on the functions of law to protect their business dealings while managing business connections. Legal counsel, arbitrary agreements, order, safety, establishing good rapport with consumers, vendors, etc. are a few functions of business law (ehow.com, 2015). Like you or I, businesses have to pay taxes on income they earn, and tax law determines how businesses pay taxes. Business owners can choose from one of several business options that the Internal Revenue Service’s offer in regards to tax (nbea.org, 2007).
Each situation and each person must be assessed on their own merits (Thiroux, 2004, p. 42). Since we cannot look at each client individually to determine whether or not Dr. Smith’s confidentiality policy is morally justifiable (it may be for one client, but not for another), we cannot properly answer this question using act-based utilitarianism. Rule-based utilitarianism, on the other hand, changes the basic utilitarianism’s principle from “everyone should always act to bring about the greatest good (i.e., “happiness”) for all
As an auditor, understanding and testing internal control over financial requires knowledge of standards applicable to the corporation established by GAAP or IFRS. Section 404 of the Sarbanes-Oxley Act requires mandatory reporting on internal controls by management and independent auditors. To obtain a system of internal control as mandated by Section 404 of the Sarbanes-Oxley, policies and procedures designed to provide reasonable assurance of the companies’ effort in achieving its objectives and goals. Committee of Sponsoring Organizations of the Treadway
Accounting Principles & General Financial Ethical Standards Mark Bullock Acc/291 11-18-2013 John H Olarte Accounting Principles & General Financial Ethical Standards [pic] “Accounting and financial professionals must abide by ethical standards that regulate what kind of business they conduct, who they serve and how they use their skills. Ethical standards are determined largely by professional accounting and finance organizations and the Financial Accounting Standards Board. Small-business owners who plan to perform their own accounting services or hire accountants should be aware of accounting principles and general financial ethical standards so they can maintain a positive reputation for their businesses.” Ethics should always play a role in the businesses everyday life. Without ethics you really should think about closing your doors because it will eventually catch up with your company. Most companies live by the standards that G.A.A.P.
The two intersect working together as sometimes something ethical is legally enforceable (Wisegeek, 2014). Sometimes what is ethical in business may not be legal, and what is legal may not be ethical. The Sarbanes-Oxley Act of 2002 requires companies to establish a code of ethics (Manias, 2013). Ethics transcends everything; organizations that adhere to their ethics will not break any laws. Laws are important, and they do change over time.
CHAPTER 4 - Internal Controls, Accounting for Cash, and Ethics ANSWERS TO QUESTIONS 1. The accounting scandals of WorldCom and Enron are partially responsible for the passage of the Sarbanes-Oxley Act. SOX requires public companies to evaluate their internal control system. 2. Internal control is the process designed to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations.