Solve Ethical Dilemmas in the Accounting Profession
Solving ethical dilemmas in the accounting profession means making sure you are recording and interpreting financial data honestly and objectively. The practice of accounting is regulated both by government and by the accounting industry itself. To help accountants to guard against conflicts of interest and other forms of unprofessional conduct, the American Institute of Certified Public Accountants (AICPA) promulgates a Professional Code of Conduct, as well as a summary guide that outlines a "threats and safeguard" approach to assessing your compliance.
Instructions
Threats and Safeguards
1. Consult the AICPA's Code of Professional Conduct, the authoritative source of the rules that AICPA expects members to follow in the course of their professional dealings. Also consult its Guide for Complying with Rules 102-505, which provides advice for dealing with potential ethical dilemmas with respect to general standards, independence, integrity and objectivity, confidentiality, fees, solicitation, and other basic topics. Note, however, that the guide is not a substitute for direct consultation of the Professional Code of Conduct. In an article for Journal of Accountancy, CPAs Martin A. Leibowitz and Alan Reinstein point out that while it "helps CPAs comply with the code in unusual ethical relationships or circumstances, the guide can never justify noncompliance with the code."
2. Watch out for "threats" to your ability to conduct yourself ethically: threats to objectivity posed by inadequate self-review; the risk of wrongly advocating the interests of an employer or client (or wrongly opposing their interests because of one's own adverse interests); undue influence of a client, employer or third party; and intrusion of one's own financial interests or the financial interests of someone close to you (for example, owning stock in the firm you are auditing).
3. Assess the relative severity of potentially compromising situations. Not all ethical dilemmas are created equal. If the threat can be reduced or eliminated by installing safeguards with the result that a reasonable observer can agree that ethical rules are not being violated-i.e., the threat is moderate enough to be regarded as "acceptable"-you may be able to continue the activity posing the ethical dilemma. Examples of such safeguards include subjecting your decision-making to peer review to reduce the possibility of undue influence; steering clear of joint ventures with a client to reduce the threat of self-interest; and providing avenues of internal "whistle blowing" that employees can use without fear of reprisal.
4. If the ethical dilemma confronting you is clear-cut, severe, and impossible to ameliorate, escape the compromising situation posing the ethical dilemma. This can mean severing a relationship with a client or quitting your job at an accounting firm, after having clearly documented your concerns. While drastic, such a course may be the only way to conduct yourself ethically and protect yourself from legal liability.
