Standard Issues: Aicpa

Standard Issues AICPA The Ameri cigaret play of Certified Public Accountants has created a command of passe-partout comport that all cognizant usual accountants essential follow. This enroll of contain lists the responsibilities CPAs require when functional with a fellowships monetary information. The AICPA withal includes information go steadying the uprightness, objectiveness, freedom and refer competent care that CPAs must use when springing in the account statement industry. The AICPA offers an morality billet for accountants to refresh their understanding of explanation ethics.The AICPA professional legislation of mete out is designed to nourish the exclusive and users of the comp whatsoevers pecuniary information. The business relationship scandals of Enron, WorldCom and Sunbeam during the early 2000s high shineed some(a) real deficiencies regarding soul history ethics. In order to combat the negative perceptions of the account statement indus try arising from these scandals, the AICPA began focusing more care on developing the respectable types of several(prenominal) accountants.The professional code of conduct requires CPAs to reveal unwavering ethical behavior in the business environment. Although the AICPA code of professional conduct is an ethical standard governing the earthly concern accounting industry, private companies whitethorn also choose to develop an accounting ethics manual. Companies can choose to use the AICPA code of conduct as the basic mannequin for their internal accounting ethics manual. They may also choose to create or develop specific standards for their employees to follow when treatment sensitive fiscal information.This manual can help companies prevent significant court-ordered liabilities from employee actions. A written ethical code of conduct for accountants benefits more than just the individual company or public accounting firm. Companies operating under strict accounting ethical standards may be able to increase their relevance or frugal footprint in the business environment with the positive goodwill generated through strong accounting ethics.A strong ethical stance can set an warning that a company is unwilling to move on its business through the use of impertinent employee actions. Rule 101, one of the approximately in-chief(postnominal) aspect of the AICPA is that a member in public practice shall be unconditional in the performance of professional operate as required by the standards promulgate by bodies designated by Council. Independence is a highly subjective term because it concerns an individuals ability to act with integrity and objectivity.Integrity relates to an listeners honesty, while objectivity is the ability to be neutral during the conduct of the engagement and the preparation of the auditors report. Two facets of freedom are freedom in fact and independence in bearing. The second general standard of largely accepted auditi ng standards requires that an auditor be main(a) 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 lord Conduct takes a more virtual(a) approach to the concept of independence. Being self-reliant in fact and in appearance means that one non all is unbiased, impartial, and objective only also is perceived to be that way by others. mend applicable to all accounting professionals, independence is especially important for CPAs in public practice. The AICPAs rules pertaining to independence for CPAs who perform audits are elaborate and technical.For instance, a CPA lacks independence and thence may non audit a company if he or she (or the fellow or dependents) owns stock in that company and/or has certain other financial or employment relationships with client. In regard to Rule 102, in the per formance of any professional service, a member shall obligate objectivity and integrity, shall be free of deviations of interest, and shall not knowingly misrepresent facts or pendent his or her judgment to others. Rule 102 is very(prenominal) broad on purpose. The Code of professed(prenominal) Conduct could not possibly blackball every action that is to be avoided.In light of the strict principles and rules of the AICPA, accounting ethics has been deemed tricky to control as accountants and auditors must apportion the interest of the public which relies on the information gathered in audits while ensuring that they remained utilise by the company they are auditing. They must consider how to best apply accounting standards even when faced with issues that could cause a company to face a significant bolshie or even be discontinued. Due to several accounting scandals deep down the profession, critics of accountants have stated that when asked by a client what does both plus two equal? the accountant would be liable(predicate) to respond what would you like it to be? . This mind process along with other criticisms of the professions issues with conflict of interest, have led to unlike change magnitude standards of professionalism while stressing ethics in the work environment. From the 1980s to the present there have been multiple accounting scandals that were widely account on by the media and way outed in device charges, bankruptcy protection requests, and the closure of companies and accounting firms.The scandals were the result of creative accounting, misleading financial analysis, as well as bribery. For example, various companies had issues with fraudulent accounting practices, including Enron, WorldCom and AIG. One of the most widely-reported violation of accounting ethics complex Enron, a multinational company, that for several age had not shown a true or fair view of their financial statements. Their auditor Arthur Andersen signed off on the validness of the accounts despite the inaccuracies in the financial statements.When the wrong activities were reported, not only did Enron dissolve but Arthur Andersen also went out of business. Enrons shareholders lost $25 billion as a result of the companys bankruptcy. Although only a fraction of Arthur Andersons employees were mixed with the scandal, the closure of the firm resulted in the loss of 85,000 jobs. This is a perfect example of the consequences of not abiding by the AICPA code of conduct.