Presentation on theme: "ACCOUNTANT’S ETHICS and the ETHICS PRONOUNCEMENTS"— Presentation transcript:
1 ACCOUNTANT’S ETHICS and the ETHICS PRONOUNCEMENTS Max LiphartCPA/ CFF, CMA, CFE
2 AICPAThe American Institute of Certified Public Accountants (AICPA), founded in 1877, is the world's largest association representing the accounting profession, with nearly 370,000 members in 128 countries. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting; membership is also available to accounting students and CPA candidates.It develops and grades the Uniform CPA ExaminationThe AICPA sets ethical standards for the profession through pronouncements and sets U.S. auditing standards for audits of private companies, non-profit organizations, federal, state and local governments.
3 AICPA ETHICS PYRAMIDThe AICPA Ethics Pronouncements Can be Thought of as a Pyramid.5. Your Behavior4. RulingsFor Special Circumstances3. InterpretationsInterpretations of Specific Rules2. RulesMore Specific than the Principles1. PrinciplesConceptual Framework for the Code
4 The AICPA Ethics Pronouncements 1. Principles (Doctrine)The six principles of the Code of Professional Conduct provide the conceptual framework for the code. They are the cornerstone of ethical behavior.2. Rules (Set of Laws)The rules of the Code of Professional Conduct are more specific than the six principles. Members must observe the rules.
5 The AICPA Ethics Pronouncements 3. InterpretationsInterpretations are issued by the AICPA to better explain the Code of Professional Conduct. Only the principles and rules are considered part of the Code of Professional Conduct. Interpretations explain the code but are not part of it.4. RulingsThe rulings apply the rules of conduct and interpretations to particular circumstances. AICPA members who depart from such rulings must justify their departures.
6 The AICPA Ethics Pronouncements 5. Your BehaviorThe code, interpretations and rulings are meaningless if they do not impact your behavior. For this reason, your behavior is at the top of the pyramid.
7 PRINCIPLES AICPA CODE OF PROFESSIONAL CONDUCT ResponsibilitiesThe Public InterestIntegrityObjectivity and IndependenceDue CareScope and Nature of Services
8 PRINCIPLES AICPA CODE OF PROFESSIONAL CONDUCT I. ResponsibilitiesIn carrying out their responsibilities as professionals, members (of the AICPA) should exercise sensitive professional and moral judgments (the ability to judge, make a decision, or form an opinion objectively, authoritatively, and wisely, esp. in matters affecting action; good sense; discretion: a person of sound judgment) in all their activities.
9 PRINCIPLES OF THE AICPA CODE OF PROFESSIONAL CONDUCT II. The Public InterestMembers should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to Professionalism. (Public trust in business is the degree to which the public believes that a CPA will act in a particular manner because the CPA has included the public’s interest into its own. It is a critical ingredient for social cooperation and market efficiency and a cause for deep concern when it is absent or threatened.)
10 PRINCIPLES OF THE AICPA CODE OF PROFESSIONAL CONDUCT III. IntegrityTo maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity (adherence to moral and ethical principles; soundness of moral character; honesty).
11 PRINCIPLES OF THE AICPA CODE OF PROFESSIONAL CONDUCT IV. Objectivity and IndependenceA member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities.A member in public practice should be independent in fact and appearance when providing auditing and other attestation (to affirm the correctness or truth of) services.
12 PRINCIPLES OF THE AICPA CODE OF PROFESSIONAL CONDUCT V. Due CareA member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.
13 PRINCIPLES OF THE AICPA CODE OF PROFESSIONAL CONDUCT VI. Scope and Nature of ServicesA member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.
14 PRINCIPLES OF THE AICPA CODE OF PROFESSIONAL CONDUCT The Principles Fundamental ThemeThese principles establish the basis for characterizing the responsibilities the CPA has to clients, colleagues and the public at large.The fundamental theme of the six principles is to be committed to honorable behavior, even at the sacrifice of personal advantage.
15 QUESTIONS???AICPA membership is voluntary so why then do we study AICPA Ethics Pronouncements?Membership in the AICPA and State Societies is voluntary.Federal law does not explicitly state that CPA’s must follow the AICPA Code of Professional Conduct.Most state boards of accountancy pattern their regulations on the AICPA Code of Professional Conduct and then address specific instances where their regulations differ.Also, most state CPA societies pattern their code of conduct after the AICPA Code.
16 The Association of Certified Fraud Examiners Established in 1988, the Association of Certified Fraud Examiners (ACFE) is the professional organization that governs professional fraud examiners. Its activities include producing fraud information, tools and training. It also governs the professional designation of Certified Fraud Examiner.The ACFE is the world's largest anti-fraud organization and premier provider of anti-fraud training and education. Together with more than 55,000 members, the ACFE goal is to reduce business fraud world-wide and inspire public confidence in the integrity and objectivity within the profession.
17 The Association of Certified Fraud Examiners The Certified Fraud Examiner (CFE) credential denotes proven expertise in fraud prevention, detection and deterrence. CFE’s are trained to identify the warning signs and red flags that indicate evidence of fraud and fraud risk.To become a CFE, an individual must pass a rigorous test on the four major disciplines that comprise the fraud examination body of knowledge:Fraud Prevention and DeterrenceFraudulent Financial TransactionsFraud InvestigationLegal Elements of Fraud
18 The Association of Certified Fraud Examiners All Certified Fraud Examiners must meet the rigorous criteria for admission to the Association of Certified Fraud Examiners.Thereafter, they must exemplify the highest moral and ethical standards and must agree to abide by the bylaws of the ACFE and the Certified Fraud Examiner Code of Professional Ethics:A Certified Fraud Examiner shall, at all times, demonstrate a commitment to professionalism and diligence in the performance of his or her duties.A Certified Fraud Examiner shall not engage in any illegal or unethical conduct, or any activity which would constitute a conflict of interest.A Certified Fraud Examiner shall, at all times, exhibit the highest level of integrity in the performance of all professional assignments and will accept only assignments for which there is reasonable expectation that the assignment will be completed with professional competence.A Certified Fraud Examiner will comply with lawful orders of the courts and will testify to matters truthfully and without bias or prejudice.
19 The Association of Certified Fraud Examiners A Certified Fraud Examiner, in conducting examinations, will obtain evidence or other documentation to establish a reasonable basis for any opinion rendered. No opinion shall be expressed regarding the guilt or innocence of any person or party.A Certified Fraud Examiner shall not reveal any confidential information obtained during a professional engagement without proper authorization.A Certified Fraud Examiner will reveal all material matters discovered during the course of an examination which, if omitted, could cause a distortion of the facts.A Certified Fraud Examiner shall continually strive to increase the competence and effectiveness of professional services performed under his or her direction
20 The Institute of Certified Forensic Accountants The Institute of Certified Forensic Accountants is a not-for-profit professional body chartered under Letters of Patent granted by the Federal Government of Canada.The Institute is also registered under the Laws of the State of Delaware, USA.This is what they say it takes to become a good forensic accountant:Apart from a need for the same basic accounting skills that it takes to become a good auditor, to be a forensic accountant you also need to have the ability to:Pay attention to the smallest detail;Analyze data thoroughly;Think creatively;Possess common business sense;Be proficient with a computer and; have excellent communication skills;A "sixth sense" that can be used to reconstruct details of past accounting transactions is also beneficial;A photographic memory helps when trying to visualize and reconstruct these past events.
21 The Institute of Certified Forensic Accountants about ethicsMembers must be aware that in order to retain public confidence they should conduct their activities in such a way that they can demonstrate that these principles are being applied.A. I IntegrityA. 1. 1: It is essential for members to retain a reputation for integrity. This implies not merely honesty but trustworthiness, fair dealing and truthfulness.A. 1. 2: Opportunities arise to present information in varying ways, which can create entirely different financial pictures. Members must resist any pressure, for whatever reason, to misrepresent the facts. Where professional judgment is exercised in circumstances that might lead to challenge, such judgments and the reasoning behind them should be documented.A. 1. 3: Members are expected, in appropriate circumstances, to provide advice and comment on a financial matter of which they may become aware even if not invited to do so.A.2 ObjectivityA.2.1: Objectivity is exercised when members make judgments, based upon all the available evidence, not depending on, or influenced by personal opinions or prejudices, or by inappropriate pressure or influence.
22 The Institute of Certified Forensic Accountants A. 2.2: Members may be exposed to situations which involve inappropriate pressure being exerted on them which can threaten their objectivity. Similarly, some relationships may allow the prejudice, bias or influence of others to threaten that objectivity,A.2.3: Members should not concurrently engage in any business occupation or other activity which impairs or might be perceived to impair their ability to carry out their public service role with integrity and objectivity.A.3 Competence and Due CareA.3.1: Members should refrain from agreeing to perform professional services which they are not competent to carry out, whether in terms of skill or resources, unless competent advice and assistance is obtained so as to enable them satisfactorily to perform such services.
23 The Institute of Certified Forensic Accountants A.4 ConfidentialityA.4.1: Members have an obligation to respect the confidentiality of information about an employer's or client's affairs in the course of professional services. The duty of confidentiality continues even after the end of the relationship with the employer or client.A.4.2: Members have an obligation to ensure that staff under their control and persons from whom advice and assistance is obtained respect the principle of confidentiality.Confidentiality is not only a matter of disclosure of information. It also requires that a member acquiring information in the course of performing professional services shall neither use nor appear to use that information for personal advantage or for the advantage of a third party.A.4.3: In particular, a member who discloses confidential information, or uses such information for her or his own purposes may in some circumstances be guilty of the offence of insider dealing.
24 The Institute of Certified Forensic Accountants A5 Proper ConductA.5.1: Members must not engage in conduct, whether in pursuit of their profession or otherwise, which would discredit, be prejudicial to or likely to diminish public confidence in them in their professional capacity, or the accountancy profession or the Institute. They should also promote the fundamental ethical principles through leadership and example.A.5.2: A member who has evidence of professional misconduct by another member should take necessary steps to protect the public, the profession, the Institute, the employer, and the other member. Before taking any action a member should establish the facts and any report of misconduct must be honest and sustainable.A.5.4: Proper conduct also encompasses behavior. Members should conduct themselves with courtesy and consideration towards all with whom they come into contact during the course of performing their work.A member shall carry out professional work in accordance with the technical and professional standards relevant to the work.
25 The California Board of Accountancy The mission of the California Board of Accountancy (CBA) is to protect consumers by ensuring only qualified licensees practice public accountancy in accordance with established professional standards.Since 1901, the CBA has been charged with regulating the practice of accountancy, with a special emphasis on consumer protection.The CBA licenses Certified Public Accountants (CPA), Public Accountants (PA), and accounting firms and corporations.The CBA also investigates consumer complaints.
26 The California Board of Accountancy Licensees are required to comply with Section 54.1 of the CBA Regulations. This regulation provides that no confidential information obtained by a licensee shall be disclosed without the client’s permission.
27 The California Board of Accountancy The CBA has adopted changes to the continuing education (CE) requirements : licensees are to receive more frequent exposure to ethics education while continuing to receive exposure to the California Accountancy Act and CBA Regulations.The following requirements took effect on January 1, 2010:To renew a license in an active status, four hours of ethics education must be completed in the two-year period immediately preceding license expiration.A two-hour Board-approved Regulatory Review course must be completed once every six years as a condition of active license renewal.As part of the total 80 hours of CE required to renew a license from an inactive status to an active status, a minimum of 20 hours of CE must be completed in the one-year period immediately preceding the time of license renewal, including a minimum of 12 hours in technical subject matter.The following requirement takes effect on January 1, 2012:As part of the total 80 hours of CE required to renew a license in an active status, a minimum of 20 hours of CE, including a minimum of 12 hours in technical subject matter, must be completed in each year of the two-year license renewal period.
28 The California Board of Accountancy CPA StandardsIf you engage in the practice of public accountancy, you must comply with all applicable professional standards related to the services performed.Conflict of InterestIn accordance with Section 57 of the Accountancy Regulations, you cannot concurrently engage in the practice of public accountancy and in any other business or occupation that impairs your independence, objectivity, or creates a conflict of interest in providing professional services.
29 The California Board of Accountancy Contingent FeesAs specified in Section 62 of the Accountancy Regulations, you shall not:Perform for a contingent fee any professional services for a client for whom you or your firm performs:- an audit or review of a financial statement; or- a compilation of a financial statement when you expect or reasonably should expect that a third party will use the financial statement and your compilation report does not disclose a lack of independence; or- an examination of prospective financial information; or - any other attest engagement when you expect or reasonably should expect that a third party will use the related attestation report; or any other services requiring independence.Prepare an original tax return for a contingent fee.Prepare an amended tax return, claim for tax refund, or perform other similar tax services for a contingent fee.Perform an engagement as a testifying expert for a contingent fee.A contingent fee is a fee established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specific finding or result is attained. Fees are not contingent if fixed by courts or governmental entities acting in a judicial or regulatory capacity.
30 The California Board of Accountancy CommissionsYou may accept commissions in limited situations. Per Section 5061 of the California Accountancy Act, you may accept commission-based compensation for defined services - as long as the fees are disclosed in writing and various prohibited services are not performed.However, you still are prohibited from accepting any fee or commission solely for referral of a client to a third party.This provision is similar to the American Institute of Certified Public Accountants’(AICPA) Rule 503, but has significant exceptions. California’s disclosure rules are morestringent for consumer protection and must be in detailed written form. The disclosuremust:Be in writing and be clear and conspicuous.Be signed by the recipient of the product of service.State the amount of the commission or the basis on which it is computed.Identify the source of the payment.Identify the relationship between the source and the person receiving the payment.Must be presented to the client at or prior to the time the recommendation of the product or service is made.
32 AICPA RULES - QUESTIONS Rule 102: What is definition of Integrity and Objectivity?Rule 102 specifies that a CPA must not subordinate (placed in or belonging to a lower order or rank, of less importance; secondary) his or her judgment to others. There is no “safe harbor.”The AICPA Code of Professional Conduct does not list every possible violation and therefore does not even begin to list possible violations.Rule 102 applies to all CPA’s. CPA’s in industry must not subordinate their judgment to others.
33 AICPA RULES - QUESTIONS Rule 201 says a CPA must be competentExample: Nash CPA wants to provide services in an industry he has not previously served. Can he provide those services?A CPA should undertake only those engagements that the firm reasonably expects can be completed competently. Nash, CPA may accept this engagement if he believes he can attain competence prior to completing the engagement. Competence can be attained through training, consulting with colleagues or other methods deemed appropriate.Rule 201 clearly applies to all CPA’s.
34 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 101 IndependenceRule 102 Integrity and ObjectivityRule 201 General StandardsRule 202 Compliance with StandardsRule 203 Accounting PrinciplesRule 301 Confidential Client InformationRule 302 Contingent FeesRule 501 Acts DiscreditableRule 502 Advertising and Other Forms of SolicitationRule 503 Commissions and Referral FeesRule 504 Incompatible Occupations (Withdrawn)Rule 505 Form of Organization and Name
35 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 101 Independence Rule 101: A member in public practice shall be independent in the performance of professional services as required by the standards promulgated by bodies designated by Council. Independence is a highly subjective term because it concerns an individual’s ability to act with integrity and objectivity. Integrity relates to an auditor’s honesty, while objectivity is the ability to be neutral during the conduct of the engagement and the preparation of the auditor’s report. Two facets of independence are independence in fact and independence in appearance. The second general standard of generally accepted auditing standards requires that an auditor be independent in mental attitude in all matters relating to the engagement. In essence, the second standard embraces the concept of independence in fact. However, independence in fact is impossible to measure, since it is a mental attitude; the Code of Professional Conduct takes a more pragmatic approach to the concept of independence. Rule 101 is applicable to all professional services provided by a CPA that require independence.
36 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 101 Independence OBSERVATION: A CPA may conduct a compilation engagement when he or she is not independent, but the compilation report must be modified to disclose the lack of independence.
37 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 102 Integrity and Objectivity Rule 102: In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others. Rule 102 is very broad on purpose. The Code of Professional Conduct could not possibly proscribe every action that is to be avoided. Thus, Rule 102 could cover a variety of misconduct.
38 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 201 General Standards Rule 201: A member shall comply with the following standards and with any interpretations thereof by bodies designated by the AICPA Council:Professional CompetenceDue Professional CarePlanning and SupervisionSufficient Relevant Data
39 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 201 General Standards Professional Competence Rule 201: Professional Competence - Undertake only those professional services that the member or the member’s firm can reasonably expect to be completed with professional competence.
40 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 201 General Standards Due Professional Care Rule 201: Due Professional Care - Exercise due professional care in the performance of professional services.
41 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 201 General Standards Planning and Supervision Rule 201: Planning and Supervision - Adequately plan and supervise the performance of professional services.
42 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 201 General Standards Sufficient Relevant Data Rule 201: Sufficient Relevant Data - Obtain sufficient relevant data to afford a reasonable basis for conclusions or recommendations in relation to any professional services performed.
43 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 201 General Standards In general, these standards are applicable to all professional services rendered by an accounting firm. For example, an accountant who performs a consulting services engagement must properly plan and supervise the job (ET ). Rule 201 requires that a firm have a certain level of expertise before an audit, tax or consulting engagement is accepted. This does not suggest that an accounting firm must have complete knowledge in an area before the engagement is accepted -- a lack of competence is not apparent just because an accounting firm accepts a client knowing that additional research may be necessary to complete the job.
44 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 202 Compliance with Standards Rule 202: A member who performs auditing, review, compilation, management consulting, tax, or other professional services shall comply with standards promulgated by bodies designated by AICPA Council. Rule 202 requires members to observe technical standards promulgated by bodies designated by the AICPA Council. To date, the bodies designated by the Council are the Auditing Standards Board (ASB), Accounting and Review Services Committee (ARSC), Management Consulting Services Executive Committee (MCSEC), and Tax Executive Committee.
45 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 202 Compliance with Standards OBSERVATION:The Code of Professional Conduct does not refer to Audit and Accounting Guides that may be issued by a committee or task force established by the AICPA. Although each Audit Guide contains a preamble that states that a Guide does not have the authority of a pronouncement by the ASB; it does note that a member may be called upon to justify departures from the Guide if the member’s work is challenged. The Code of Professional Conduct 2-6.
46 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 203 Accounting Principles OBSERVATION:The AICPA Council has designated the FASB, GASB, IASB and FASAB as bodies to promulgate accounting principles. In addition, several AICPA committees have been designated to promulgate standards in their respective subject areas.
47 AICPA – Accounting Principles These folks promulgate Accounting Principles:FASBGASBIASBFASAB
48 RULES OF THE CODE OF PROFESSIONAL CONDUCT FASB Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting that govern the preparation of financial reports by non-governmental entities.
49 RULES OF THE CODE OF PROFESSIONAL CONDUCT GASB The Governmental Accounting Standards Board (GASB) is the independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments.Established in 1984 by agreement of the Financial Accounting Foundation (FAF) and 10 national associations of state and local government officials, the GASB is recognized by governments, the accounting industry and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments.
50 RULES OF THE CODE OF PROFESSIONAL CONDUCT IASB The International Accounting Standards Board (IASB) is an independent, privately-funded accounting standard-setter based in London, England.The IASB was founded on April 1, 2001 as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (the new name for International Accounting Standards issued after 2001) and promoting the use and application of these standards.
51 RULES OF THE CODE OF PROFESSIONAL CONDUCT FASAB In October 1990, three officials responsible for federal financial reporting established the Federal Accounting Standards Advisory Board (FASAB or "the Board") as a Secretary of the Treasury, the Director of the Office of Management and Budget and the Comptroller General of the United States.They created FASAB to develop accounting standards and principles for the United States Government. They are referred to as the Board’s sponsors because they possess legal authority under various laws to establish accounting and financial reporting standards for the Government.The three agencies they head fund the FASAB. In October 1999 the American Institute of Certified Public Accountants (AICPA) recognized FASAB as the board that promulgates generally accepted accounting principles (GAAP) for federal entities.
52 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 301 Confidential Client Information Rule 301: A member in public practice shall not disclose any confidential client information without the specific consent of the client.This rule shall not be construed:to relieve a member of his or her professional obligations under Rules 202 and 203;to affect in any way the member’s obligation to comply with a validly issued and enforceable subpoena or summons, or to prohibit a member’s compliance with the applicable laws and government regulations; orto prohibit review of a member’s professional practice under AICPA or state CPA society or Board of Accountancy authorization.
53 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 301 Confidential Client Information Rule 301: Members of any of the bodies identified in (4) above and members involved with professional practice reviews identified in (3) above shall not use to their own advantage or disclose any member’s confidential client information that comes to their attention in carrying out those activities. This prohibition shall not restrict members’ exchange of information in connection with the investigative or disciplinary proceedings or professional practice reviews.
54 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 302 Contingent Fees Before 1991, Rule 302 prohibited contingent fees for all professional engagements (with the exception of certain fees fixed by the judicial or quasi-judicial process). In 1985, The Federal Trade Commission (FTC) challenged the position of the profession concerning contingent fees on the basis of restraint of trade. After prolonged negotiations between the AICPA and the FTC, Rule 301 (as reproduced above) was issued to modify the prior prohibition against contingent fees. Rule 302 prohibits contingent fees for all additional professional services when the CPA has performed an attestation engagement, which includes audits, reviews, and examinations of prospective financial information. Also, the CPA may not perform any services for a client on a contingent fee basis when the CPA has performed a compilation engagement if the compilation report is expected to be used by a third party and does not disclose that the CPA is not independent with respect to the client.
55 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 501 Acts Discreditable Rule 501: A member shall not commit an act discreditable to the profession.NOTE: Rule 501 is very broad. It is basic to ethical conduct, and only through its observance can the profession expect to win the confidence of the public. What constitutes a discreditable act is highly judgmental. There has been no attempt to be specific about what constitutes a discreditable act; however, the AICPA bylaws (Section 7.3) state that the following actions will lead to membership suspension or termination, without the need for a disciplinary hearing:If a member commits a crime punishable by imprisonment for more than one year.If a member willfully fails to file an income tax return that he or she, as an individual taxpayer is required by law to file.If a member files a false or fraudulent income tax return on his or her behalf, or on a client’s behalf.If a member willfully aids in the preparation and presentation of a false and fraudulent income tax return of a client.If a member’s certificate as a certified public accountant, or license or permit to practice as such, is revoked by a governmental authority as a disciplinary measure.The Code of Professional Conduct 2-14
56 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 502 Advertising and Other Forms of Solicitation Rule 502: A member in public practice shall not seek to obtain clients by advertising or other forms of solicitation in a manner that is false, misleading, or deceptive. Solicitation by the use of coercion, overreaching, or harassing conduct is prohibited. OBSERVATION: Members who are not in public practice are exempt from much of Rule 502.
57 RULES OF THE CODE OF PROFESSIONAL CONDUCT Rule 505 Form of Organization and Name Rule 505 Notes:Over the past several decades, the character of the practice of accounting has broadened to include a variety of activities that are beyond the scope of accounting. These activities include, among others, environmental auditing, executive recruitment, and the design of sophisticated computer systems that are not part of the client’s accounting system. With the expansion of the types of services provided by accounting firms, there is an obvious need to recruit personnel who do not have an accounting/auditing background. For many accounting firms, these nontraditional professionals are increasingly important to their growth and development. However, because of the rules adopted by the AICPA, a nontraditional professional, no matter how competent or important to the firm, could not be an owner of the firm. These rules changed about ten years ago, and the updated rules follow.The Code of Professional Conduct 2-16
58 How Does all of this Translate to Your Behavior ???????????
59 SO WHO CARES ABOUT ALL THIS STUFF??? ACCOUNTANT’S ETHICS and the Various ETHICS PRONOUNCEMENTSSO WHO CARES ABOUT ALL THIS STUFF???Banks – in making loansRegulatory Agencies – during enforcement of their rules
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