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Code Of Ethics

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Code of Ethics Paper

One thing that accountants take very seriously in our job training as an accountant is the rigorous code of ethics of the American Institute of Certified Public Accountants (AICPA). This code suggest that accountants maintain independence from clients and they bear equal responsibility for reporting unlawful or misleading information when normal accounting practice would show to the accountant that such information was questionable or false.

Ethics has been defined as the study of moral judgment and standards of conducts while personal ethics vary from individual to individual, at any point in time, many citizens within a society are able to agree as to what is considered ethical and unethical behavior. In fact a society passes laws that define what its citizens consider to be the more extreme form of unethical behavior.

But much of what is considered unethical in a particular society is not specifically prohibited. So, how do we know whether or not we are acting ethically? Who decides what standards of conduct are appropriate? Is any type of behavior "ethical" as long as it does not violate a law or a rule of one's profession?

A good starting point for consideration ethics is to examine the context in which most ethical question arise, relationships among people. Any relationship between two or more individuals carries with it sets of expectations by each of the individuals involved.

Certainly, the relationship between accountant/CPA and a client offers a number of interesting challenges. While price fixing conspiracies, bribery, fraud and business collusion are not the norm of contemporary business practice, they occur far more frequently than we care to acknowledge and clearly more often than is permissible to gain the level of public trust and support that business requires to thrive.

What is most puzzling about instances of business wrongdoing is that they clearly contradict both the values that are held by most of us as individuals and the collective standards we have established for appropriate business behavior.

How do we help honorable men and women confront and address the ethical challenges they case in the everyday world of work? If we asks these five questions: (1) how many of you consider yourselves to be ethical people? (2) How many of you believe that it's important for business to function in an ethical manner? (3) How many of you believe that you know an ethical dilemma when you see it. (4) How many of you feel there are clear answers to ethical problems? (5) How many of you believe that you know an ethical dilemma when it arises and always know how to solve it.

There are three very different approaches to dealing with ethical dilemmas that characterize how companies approach these ethics. These are: (1) neglect or the absence of any formal ethical program; compliance-based program; and, values oriented program.

We learned that you can't force ethical conduct into an organization. Ethics is a function of the collective attitudes of our people and these attitudes are cultivated and supported by at least seven factors:

1. Commitment to responsible business conduct;

2. Management's leadership;

3. Trust in employees;

4. Program and policies that provide people with clarity about the organization's ethical expectations;

5. Open, honest and timely communications;

6. Tools to help employees resolve ethical problems; and

7. Reward and recognition system that reinforce the importance of ethics.

The communications between accountants/CPA and their clients are confidential, but they are not privileged under common law, as are communication with attorneys, clergymen, or physicians. The difference is that disclosure of legally privileged communication cannot be required by a subpoena or court order. Thus, auditors may be compelled to disclose their communications with clients in certain types of court proceedings. Some individual states, however, have adopted statutes providing that public accountants cannot be required by the state courts to give evidence gained in confidence from clients. Such state laws, however, do not apply to federal courts.

Working papers are the connecting link between the clients's accounting records and the auditors' reports. They document all the work performed by the auditors and provide the justification for the auditors' report. The sufficient, competent evidential matter require



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