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WHEN AN ACCOUNTANT FAILS Next in line is misappropriation of funds, bribery, and securities transactions.
The AICPA's Code of Professional Conduct is considered to be a binding agreement for every CPA in America.
As with other professions most accountants are ethical and honest in their dealings with their clients, however every so often a problem arises that must be disciplined. This can happen in a purposeful attempt to be deceitful, or it can happen by an error in judgment or an error in practice. Regardless of how or why it happened a review is called for and a sanction or discipline course of action is decided upon (Badawi, 2002).
Most of the violations that occur are ethical dilemmas that are relatively easy to solve but some of the problems become quite in depth and resolution is more difficult to reach.
A study of conduct violations in a ten-year period produced the following result.
The most violations -- 41 -- were in the area of technical standards (Rules 202-203)
37 related to a failure to cooperate with the investigation or comply with its requirements
28 were for "acts discreditable" (Rule 501)
21 were violations of "general standards" (Rule 201), and seven were for "independence" violations (Rule 101) (Badawi, 2002). "
Anothger study was conducted in 1995 that located 171 ethics cases across more than 30 states in America. They were then classified into the type of rule that they broke for the purpose of the study. The results were as follows:
Rule 202 -- Compliance with Standards (57 cases, 34%)
Rule 203 -- Accounting Principles (32 cases, 19%)
Rule 501 -- Acts Discreditable (24 cases, 14%)
Rule 201 B -- Due Professional Care (18 cases, 11%);
Rule 201 A -- Professional Competence (14 cases, 8%) (Badawi, 2002)."
Out of the above cases it was determined that 38 of them were crime based. They ranged from mail fraud violations to bank fraud violations. Theft, bribery, and concealed funds as well as laundering were also discovered during the study (Badawi, 2002).
When an accountant is found to have violated the code of professional conduct he or she not only faces possible criminal fines and incarceration but he is also faced with the possibility of being fined by the AICPA. The organization holds its own trial using a trial board to determine guilt or innocence and intent. There are several actions that the board can take including:
acquit the CPA admonish the CPA suspend the CPA's membership in the state society and the AICPA for up to two years expel the CPA from the state society and the AICPA (Badawi, 2002)."
In addition to the code of conduct punishments, the AICPA bylaws mandate the automatic expulsion of any CPA found to have not filed their returns, or helped to prepare of file a false return (Badawi, 2002).
CONCLUSION
The Accountant Code of Professional Conduct is an instrument that provides guidance to accountants and protection to the clients. Whether the accountant works in a corporation, private practice or another venue the same code of professional conduct applies. Accountants provide a valuable service to clients and the majority of them take pride in doing an honest and competent job for those who hire them. For the few who are either dishonest or incompetent the code provides relief for clients by way of criminal punishment or fines. It is a code that stands as strong and tall as the Hypocratic Oath for physicians and one that is held to an equally strict standard so that the field of accounting will remain above reproach.
References
Badawi, Ibrahim M.(2002) Accounting codes of conduct, violations and disciplinary actions. Review of Business; 1/1/2002;
Carey, J.L. The CPA Plans for the Future. New York, NY: AICPA, 1965.
Demski, J.S. And J. L Zimmerman.(2000) "On Research vs. Teaching: A Long-Term Perspective." Accounting Horizons
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