1. The Role of a Professional Accountant
Why is understanding it critical?
Scandals Rededication
Public expectations of:
All professionals
Professional accountants
Fiduciary relationships
Implications for services offered
Judgements and values
Sources of ethical guidelines

2. Understanding the Role Answers Questions
Who really is our client: the company, the management, current shareholders, future shareholders, the public?
Do I owe primary loyalty to my employer, client, boss, profession, myself, or the public?
Am I a professional accountant bound by professional standards, or just an employee?
Is professional accounting a profession or a business - can it be both?
When should I not offer a service?
Can I serve two clients with competing interests?
Is there any occasion when breaking the profession's guideline against revealing confidences is warranted?

3. Lang Michener Affair
Are expectations for professional standards above non-professionals?
Lawyers actions not up to expectations, or obligation to clients, prof., law society, public?
Is self-regulation effective?
Is an honest mistake “of no consequence?”

4. Dilemma of an Accountant
Pressure for a “clean opinion”
Problem is not material
No one read or cared about those statements anyway
Removal of working papers
Action???

5. Public Expectations of a Profession
Essential Features: (Bayles)
Extensive training
Provision of important services to society
Training and skills largely intellectual in character
Typical Features:
Generally licensed or certified
Represented by organizations, associations, institutes
Autonomy
Foundation of Ethical Values: (Behrman)
Significantly delineated by and founded on ethical considerations rather than techniques or tools
FIDUCIARY RELATIONSHIPS

6. Features, Duties, Rights & Values Of the Accounting Profession… Table 4.2
Duties essential to a fiduciary relationship
Rights permitted by most jurisdictions
Values necessary to discharge duties and maintain rights

7. Features and Duties Features:
Provision of important fiduciary services to society
Extensive knowledge and skill are required
Training and skills required are largely intellectual
Overseen by self-regulating membership organisations
Accountable to governmental authority
Duties essential to a fiduciary relationship:
Continuing attention to the needs of clients and other stakeholders
Development & maintenance of required knowledge & skills
Maintenance of the trust inherent in a fiduciary relationship by behaviour exhibiting responsible values
Maintenance of an acceptable personal reputation
Maintenance of a credible reputation as a profession

8. Rights Permitted, Values Necessary
Rights permitted in most jurisdictions:
Ability to hold oneself out as a designated professional to render important fiduciary services
Ability to set entrance standards and examine candidates
Self-regulation and discipline based on codes of conduct**
Participation in the development of accounting & audit practice
Access to some or all fields of accounting & audit endeavour
Values necessary to discharge duties & maintain rights:
Honesty & Integrity (i.e. truth & the whole truth)
Objectivity - based on independent judgement
Desire to exercise due care
Competence
Confidentiality
Commitment to place the needs of the public, the client, the profession, and the employer or firm before the professional's own self-interest

9. Important Implications
Dominance of ethical values vs. technical competence
Priority of duty
Public
Profession
Client/employer
Professional
Confidentiality: strict vs assisted

10. Important Implications
For Services offered
Critical value-added
Standards for behaviour

11. Importance of Values To Value-added & Development of Judgement
Kohlberg’s Six Stages of Moral Reasoning
Preconventional Self-interest Motivation
1. Fear of punishment & authorities
2. Self-gratification
Conventional Conformity Motivation
3. Approval from others
4. Adherence to moral codes, law & order
Principled Interests of others
5. Concern for others, broad social welfare
6. Concern for moral or ethical principles

12. Sources of Ethical Guidance
Codes of conduct
Laws & jurisprudence
When codes & laws don’t count

13. Legal Liability Developments
Personal liability: history, rationale, partnership
Joint & several liability……deep pockets sued
Self-insurance plus $ mil external ins.
Burden getting too high……how to limit?
Lawsuit trend - Victoria Mtge - GAAP but misleading
Limited Liability Partnerships (LLP,LLC, PSLLC)
1994 New York State Law protects innocent partners from personal liability for the negligence and malpractice of other partners, not from commercial losses, or from their own misdeeds, or from losing their invested capital.