Shall observe the law and make disclosures expected by the law and the profession. 3. Shale not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the profession of internal auditing or to the organization. 4. Shall respect and contribute to the legitimate and ethical objectives of the organization.
The AICPA is recognized as an authoritative source used to clarify accounting principles by offering guidance on official standards, new developments, and specific advice for accountants. According to our text, the Principles of the AICPA Code are responsibilities; the public interest; integrity; objectivity and independence;
ACC2366 Auditing Principles and Procedures | Accounting/Auditing Scandal Part #2 | The Downfall of Nortel Networks | 2/9/2014 | Many professional bodies employ various methods to ensure that the profession and those members that belong to it have a framework within which to operate. The most common techniques include employing an ethical principles framework as well as rules of professional conduct. The accounting scandal that befell Nortel could have been avoided had certain ethical principles not been violated. As well, certain rules of professional conduct were not followed with regard to the audit of Nortel’s financial statements. While Deloitte & Touche were not charged with criminal wrongdoing, perhaps their integrity would not have been questioned if better care had been taken to observe the guidelines set out for the auditing profession.
The executives at WorldCom knowingly misstated capital spending moving funds from one account to another to hide the reasons for the expenditures, and manipulated financial reporting. Moving large amounts of money from the company’s income statement to the balance sheet with the intent to hide the true nature of the expenditures is the beginning. This fraudulent accounting activity resulted in costing investors billions of dollars. These actions clearly conflict
I.e. :- to avoid any conflict of interest and not to be biased to any party. Diligence (Professional competence and due care): To maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation, and techniques and act diligently and in accordance with applicable technical and professional standards. (Albert D. Spalding Jr., 2012) Confidentiality: Professional accountant should respect the confidentiality of information that they acquired from business relationships with their clients and, therefore, not to disclose any such information to third parties without proper legal authority, nor to use such information for the personal advantage of the professional accountant or third parties. Professional behavior: Any professional accountant should comply with all the relevant laws and regulations and not to make any actions that would discrete the profession.
Ethics play a role in everyday business. Company executives attempt to build a profitable organization but unethical decisions lead to the demise of organizations because of greed and power. Penn Square Bank and Dow Corning both made decisions in their business that started out making millions of dollars but in the end cost the companies more than possibly imagined. Because of the unethical decisions made by both companies they acquired large losses of money by one filing bankruptcy, and the other closing down. Not only were there large losses of money for both companies, but the loss of reputation as well.
SDM Audit’s responsibility is to express an opinion on the financial statements based on the information found in our audit. The audit will be conducted in accordance with generally accepted accounting standards in the United States of America. Under these standards we are required to obtain reasonable assurance that the statements provided are free from material misstatements whether by fraud or error. We are also required to obtain reasonable assurance that the financial statements are not misleading. Please be advised that this audit will not necessarily find all errors or fraud especially if the error or fraud is immaterial.
These aggressive targets were not supported by historical data or strategic assessments. - In order to meet these targets, WorldCom began boosting its revenue through a wide range of accounting measures, including drawing down on reserves set aside for expenses. The economic situation at the time was not taken into account when implementing these aggressive accounting measures. Other similar companies were reporting declining revenues. - It was identified that the management who were making the aggressive accounting decisions, were also posting the journals to the general ledger, and reviewing and approving the reporting.
As Occupy Wall Street targets the antiquated policies of the richest 1% of the nation, they are exposing the imbalance in the global economy that is controlled by the mentioned demographic. It may have only begun a few years ago in an upsurge of the middle class, but many citizens have been feeling this mistreatment for decades (Occupywallst.org,
Enron was accused of misrepresenting the earning reports. Enron lied about its profits as well as rumors of a number of shady dealings. Enron was also accused of concealing debts so that these debts did not show up on the company's accounts records. There were also rumors of embezzlement of funds from the executives. Shares from Enron dropped from over $90 in the United States to $0.30.