Refocus on professional ethics

Editor's note: The following quotes and thoughts about professional ethics have been compiled by Carol W. Kirwan, CPA, the MACPA's director of technical services and regulatory affairs.

"America is ushering in a new era of responsibility, and that ethic of responsibility must extend to America's boardrooms. I want every American to know that the vast majority of businesspeople are honest individuals who do right by the employees and their shareholders. The unethical actions of a few should not be allowed to call into question our whole free enterprise system."
— George W. Bush, in a radio address on June 29, 2002

"Every day people invest in the stock market relying on public company financial statements. The SEC and public investors rely on the competence, ethics and independence of accountants who certify those financial statements."
— SEC Chairman Harvey L. Pitt, in a speech on June 20, 2002

"These findings show an absence of ethical leadership, and a culture of 'anything goes as long as it makes a buck' will prevail over even the best training, code of conduct or hotline," said Steve Priest of Ethical Leadership Group. "This emphasizes the critical importance of building integrity into the essence of the corporation."
— Article by Stephen Taub, CFO.com, June 19, 2002

"In sum, auditors have lost touch with the principle of independence, their sole justification for existence."
— Editorial in The Washington Post, May 22, 2002

"As strongly as I believe in a new role for government in the new economy, government action alone cannot provide most of the answer. That's because what happened at Enron wasn't just a failure of regulations and law, it was a failure of corporate culture, a failure of values, a failure of heart."
— Sen. Carl Levin, D-Michigan, on his planned Bill of Rights for Shareholders

Integrity and objectivity are core values of the CPA profession. CPAs need to refocus on those core values and how we can incorporate them into our day-to-day business. It's not just enough to hang the plaque on the wall. Those values must be a part of your decision-making process.

Members of the staff should not only know and understand ethical behavior; it should be part of their performance evaluations. Paying lip service to ethics is not enough. The behavior that reaps the greatest reward will govern actions. Leaders of the company need to not only demonstrate sound ethical behavior, they must demand it — of themselves, the officers and the directors.

The profession is facing the biggest crisis in its history. It will be the true measure of our profession how we come out in the end. With a focus on core values, the integrity and objectivity of the CPA profession will prevail.

The Code of Professional Conduct of the AICPA and the MACPA is made up of principles and rules. The principles provide the framework for the rules, which govern the performance of professional services by all members — whether in public practice, industry, government or education. Those principles include integrity, objectivity and independence, and due care. These principles are reflected in the core values of the profession.

"The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage."
— Preamble, Code of Professional Conduct

Principles of Professional Conduct *

I. Responsibilities

In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.

II. The Public Interest

Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.

III. Integrity

To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity.

IV. Objectivity and Independence

A 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 services.

V. Due Care

A 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.

VI. Scope and Nature of Services

A 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.

The 11 rules

There are currently 11 rules in the Code of Professional Conduct and numerous interpretations of those rules. *

Rule 101: Independence
Rule 102: Integrity and Objectivity
Rule 201: General Standards
Rule 202: Compliance
Rule 203: Accounting Principles
Rule 301: Confidential Client Information
Rule 302: Contingent Fees
Rule 501: Acts Discreditable
Rule 502: Advertising and Other Forms of Solicitation
Rule 503: Commission and Referral Fees
Rule 505: Form of Organization and Name

Consult the AICPA's Web site for more complete information and a "plain English" guide to ethics: http://www.aicpa.org/members/div/ethics/index.htm

* Consult the Code of Professional Conduct for complete information.

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