Code of Professional Conduct, Research Paper Example

The AICPA Code of Professional ethic lays down the foundation rules that will guide the accounting profession. It is made up of two main sections; (1) the principles (2) the rules. The principles form the conceptual framework on which the rules function (American Institute of CPAs, 2013).  The AICPA code of professional conduct is meant to protect the accounting professional in many ways. It is divided into different sections that prescribe the principles and rules that are to be observed by its members. It is vital that one understands the application of these different sections of the code.

Every section is supported by a list of ethics rulings that have been done in the recent past. These rulings are means to provide a benchmark upon which future arguments and disputes can be settled within a uniform and generally accepted standards. This is how AICPA creates a uniform field for all accountant and clients alike. The introductory bit of the document gives a concise explanation on the composition, applicability and compliance to the code of professional conduct.

ET Section 50: Principles of Professional Conduct

This section states the ethical and professional standards that are required of any individual practicing accounting. They uphold honour even at the disregard of personal advantage. This section has 6 articles (American Institute of Certified Public Accountants, 1975). Each article has its own distinct principle.

Article 1: Responsibilities

This article records the responsibilities of any individual who is a member of AICPA. These responsibilities are to everyone who uses their services. Members are expected to exercise self-governance and execute their professional duties in an honourable manner as required in the profession (American Institute of CPAs, 2013). All members are expected to practice sensitive moral and professional judgements in all activities they carry out pertaining to the accounting profession.

Article 2: The Public Interest

All members of the AICPA are expected to execute their functions and responsibilities in a manner that will uphold the interest of the public. They are expected to maintain virtues of honour and commitment to the public. This should also be carried out in a professional manner. A member should carry out their activities while upholding the public trust and honouring the interest of the public.

Article 3 – Integrity

The highest level of integrity should be applied when performing or executing professional responsibilities. This provides AICPA members with the required level of professionalism when executing their functions and responsibilities. It concentrates on what is right and just before the law, requiring a member to consider the form and spirit of the ethical and technical standards. This section underpins character as a fundamental and important part of membership. The members are required to realize their constraints when it comes to executing their professional duties and responsibilities (American Institute of Certified Public Accountants, 1975). Members are supposed to observe all the principles, rules and regulations that are entailed within the AICPA code of professional conduct.

Article 4: Objectivity and Independence

This article requires an AICPA member to observe impartiality, intellectual honesty and free themselves from situations that may cause a conflict of interests. A member is therefore required to only engage in relationships that may not affect a member’s objectivity when rendering their services. When executing their professional duties, all members are supposed to be independent, both in appearance and fact. This is essential in averting the conflict of interest. A member is also required to continually assess their relationships with their clients and their responsibility to the public. This will aid in operating within the set and prescribed relational boundaries, also averting any potential conflict of interest that may arise.

Article 5: Due Care

This article requires a member to observe all the technical and ethical standards and continually strive to improve the quality of their services.

Article 6: Scope and Nature of Services

A member is required to execute their professional services as defined by the standards. It essentially draws the boundaries for any given accountant under AICPA.

ET Section 90: Rules: Applicability and Definitions

This defines the applications of the rules and conditions within the AICPA standards. It provides the guidelines that a member is expected to adhere to in executing their professional functions and duties. The definitions provide the accepted description of commonly used terms within accounting. These definitions are crucial in dispelling misunderstandings or misconceptions of a given term. The section also entails the ethics rulings pertaining to independence, integrity and objectivity.

ET Section 100: Independence, Integrity and Objectivity

This section clearly explains what independence under the AICPA standards entail. They define the kind of relationships that a professional should cultivate. It entails a description of the boundaries and limits of functionality with regards to the interpretation and application of independence. It also underpins the scope and depth of integrity and objectivity required of an AICPA member. It also entails the requirements of performing certain services for a client. The section also entails the ethics rulings pertaining to independence, integrity and objectivity.

ET Section 200: General Standards Accounting Principles

This provides the overall principles of accounting that a member should follow. It states the principles that an AICPA member has to adhere to when executing specific functions such as the delivery or submission of financial statements. This section defines the accounting principles that have to be adhered to by members. The section also entails the ethics rulings pertaining to the general and technical standards

ET Section 300: Responsibilities to Clients

This section defines the duties that AICPA members have to any given client. They define the boundaries of the tasks that an accountant can perform for their respective client. This is essential to define and protect the roles of a registered accountant. They also define how a member should treat a client and their information. This section is also defines the issue of contingent fees in relation to professional services. The section also entails the ethics rulings pertaining to the members’ responsibilities to clients.

ET Section 400: Responsibilities to Colleagues

This section has not been defined and has been reserved. This section would otherwise define the obligations that members are required of by their coleagues.

ET Section 500: Other Responsibilities and Practices

This defines all the other important responsibilities and accepted practices within the profession. It defines the acts that can discredit the profession, which a member is not expected to perform. It sets out the rules of advertising and other forms of solicitation. It also defines the referral and commission fees that can be levied by a member. This section also highlights previous rulings on ethics and other responsibilities and practices of a members. The accounting practice is limited to within an organization that has been permitted by the law whose characteristics adhere to the resolutions Council. This means that accounting cannot be performed under a firm that has a misleading name.

Personal Opinion

Important Sections

There are numerous sections within the AICPA code of professional conduct. I believe that the principles provide the broad guidelines for members, the rules of conduct are more important. This is owing to the undeniable fact that the rules of conduct are both specific and enforceable. The principles formulate a conceptual framework for the rules of conduct. This can be seen in the fact that a rule is considered enforceable while a principle is a conceptual guideline for way one acts or thinks. The rules are more important as they imply given factual; conditions and provide a definitive answer. This means that the rules are more or less tangible as compared to the principles.

XBRL (eXtensible Business Reporting Language)

XBRL is meant to change business reporting by providing a unique tag that is readable electronically for every item of disclosure in a business report. This enables the accountant to proactively and professionally fulfil its mandatory duty of protecting the interest of the public by allowing investors the access to capital markets. Section 50: Principles of Professional conduct therefore, in my opinion, pertains to XBRAL.

In conclusion, the AICPA code of professional conduct is essential to the accounting profession and AICPA members. It ensures that professionalism, ethical and moral uprightness is upheld within the accounting profession. This in turn creates a level playing field within which constructive competition can thrive. Furthermore, it creates protection for the different stakeholders by clearly defining the scope and depth of their relationships and responsibilities to one another. AICPA standards creates a conducive environment for favourable, fair and just performance of accounting activities.

References

American Institute of Certified Public Accountants. (1975). AICPA professional standards. Chicago: Commerce Clearing House.

American Institute of Certified Public Accountants. (2008). AICPA professional standards. New York: American Institute of Certified Public Accountants.

American Institute of CPAs. (2013, October 31). AICPA Code of Professional Conduct. Retrieved April 5, 2014, from AICPA: http://www.aicpa.org/research/standards/codeofconduct/Pages/default.aspx