The Importance of Ethics in Accounting
Ethical issues surround almost every aspect of accounting, forensic accounting, and valuation engagement. The American Institute of Certified Public Accountants (AICPA) plays a critical role in outlining the rule-making and standard-setting for which all CPAs must adhere to. In doing so, AICPA commits to serving the public interest through a strict code of professional ethics. The Professional Ethics Executive Committee (PEEC) was established in order to interpret and enforce the AICPA Code of Professional Conduct. Outlined by the Committee’s bylaws, their objectives include:
- Investigate potential disciplinary matters involving members
- Present a case before the join trial board where it finds prima facie evidence of infraction of the bylaws or the Code
- Interpret the Code and propose amendments thereto
Since its inception in 1887, AICPA has represented the CPA profession on a national scale. As such a highly-regulated profession, CPAs are tasked with the great responsibility of adhering to specific rules, standards, and regulations at all times. Nevertheless, ethical dilemmas confront CPAs frequently. Members of AICPA maintain a high level of integrity, competence, and professionalism that is critical to ensuring trust amongst the accounting community and its counterparts. Being a member helps to lay the foundation of trust from the outset of any relationship between client and professional. In fact, the most well-known and essential accreditation are issued by AICPA, they include but are not limited to:
- ABV: Accredited in Business Valuation
- CFF: Certified in Financial Forensics
- CPA/PFS: Personal Finance Specialist
- CITP: Certified Information Technology Professional
- CEIV™: Certified in Entity and Intangible Valuations
Not only do these accreditations give professionals an advantage in the field, but they offer a sense of confidence and reliance in a critical code of ethics. Recent research suggests that ethical environments inside public accounting firms is far greater compared to ethical environments inside accountants employed in industry. The International Federation of Accountants (IFAC) was formed with a mission to “strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high quality professional standards”.
Generally speaking, all accountants are to act in the public interest. In this regard, accountants are to avoid exclusively satisfying the needs of an individual employer or individual client, but rather to comply with the ethical requirements in upholding respect for public interest. The fundamental principles include integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. These fundamentals are critical to maintaining the high ethical standards of the accounting industry as a whole. To sum up, the importance of ethics in accounting cannot be stressed enough, as ethical standards lay the foundation for which the entire industry must be held accountable to and thrive upon.