Earlier this week, organizations and individuals recognized the role of ethics as part of #GlobalEthicsDay. This was the fourth year of the event, founded by the Carnegie Council for Ethics in International Affairs. Participants included business, education, government and not-for-profit groups around the world.
The Carnegie Council says that it modeled Global Ethics Day after Earth Day, and in our mobile and social-media driven world, hashtag-friendly days are frequently used to build community, awareness, and sometimes, action.
Every day is GlobalEthicsDay
In reality, for auditors and financial executives, every day is Global Ethics Day.
“Auditing is a business built on trust, so ethical behavior is a foundational aspect of the job,” says Marty Baumann, Chief Auditor of the Public Company Accounting Oversight Board. “The PCAOB supports this notion in a number of ways, including with specific requirements around the independence, integrity, and objectivity of auditors under its oversight.” (See the PCAOB’s Ethics & Independence Standards)
Ethics also underlies corporate governance and internal control, as evidenced in Principle No. 1 of the updated Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO IC framework) in 2013:
- The organization demonstrates a commitment to integrity and ethical values.
The word ‘demonstrates’ is important in COSO’s Principle 1 above: maintaining an ethical environment or conducting an audit in accordance with ethics and quality control standards is not just about posters on the wall, or checking ‘yes’ to all the boxes in an online survey, but about demonstrating the commitment to integrity and ethical values – not only in the best of times, but also in the worst of times.
The American Institute of CPAs (AICPA), National Association of State Boards of Accountancy (NASBA), and state boards of accountancy also maintain ethics standards for CPAs.
In 2014, the AICPA’s Revised Code of Professional Ethics became effective. The revised code consisted of a codification, together with the incorporation of two conceptual frameworks, one for members in public practice and one for members in business and industry.
The revised code also reflects efforts for international harmonization. As noted by the Journal of Accountancy, “As a member body of the International Federation of Accountants (IFAC), the AICPA agrees to have ethics standards that at a minimum meet the ethics standards issued by the International Ethics Standards Board for Accountants (IESBA).”
Recent developments in standard-setting by the AICPA’s Professional Ethics Executive Committee (PEEC) include:
- PEEC approves NOCLAR proposals for exposure. The proposed interpretations provide guidance for CPAs when they encounter an actual or suspected act of non-compliance with laws or regulations (NOCLAR) from a client or within the employing organization. (Exposure Draft issued March 10; comment deadline May 12; comment letters)
- Leases (Exposure Draft issued October 20; comment deadline December 20)
- State and Local Government Entities (Exposure Draft issued July 7; comment deadline October 16)
Learn more at Four for Fall
In financial reporting and auditing, the need to stay up-to-date on technical standards of the Financial Accounting Standards Board (FASB) never ends; neither does the need to stay current on and comply with the latest ethics standards of the AICPA, PCAOB, and as applicable, IFAC and IESBA.
The MACPA offers a wide-ranging, two-day program covering FASB developments, AICPA ethics rules, outsourcing, cybersecurity and more, at its Four for Fall program, taking place on Nov. 16-17 in Columbia, Md. Led by Prof. Ray Thompson and Daniel Bradley, eight courses in total are offered, and participants can sign up for up to four courses a la carte.