Good Example Of Self Regulation Of A Profession Essay

Ethics is one of the most critical pillars of any profession. A profession is defined as a body of qualified individuals with specialized knowledge on a field or area. This specialized knowledge is acquired through training and the person who acquires it is referred to as a professional. “Professionals including accountants have the ethical duty of ensuring that they have the requisite training before they provide any professional service” (Mohammed and Mark 164) They are further required to enhance their knowledge in the profession through continuous professional education. More importantly, professional should serve the public with utmost truthfulness, honesty and commitment. It is the duty of the professional body to ensure that the professionals adhere to the professional code of conduct and standards set out by the body.
In United States of America, professional code of conduct for accountants has been traditionally been enforced by the American Institute of Certified Public Accountants (AICPA). American Institute of Certified Public Accountants’ main mandate is to develop ethical standards for the accounting profession in US. The standards according to AICPA are meant to protect public interest (Mohammed and Mark 164). AICPA is not the only institution that is involved in development and promotion of ethical standards in accounting profession. Others include Institute of Internal Auditors (IIA) and Institute of Management Accountants (IMA). Both IIA and IMA have developed set of professional code of conducts that are consistent with AICPA codes (Mohammed and Mark 164).
“Ethics in accounting, although not a new subject, has witnessed increased interest since the last decade “(Mele 97). According to Rockness, and Joanne (31), 20th century witnessed the growth of many public accounts firms, but also series of unethical managerial behavior and questionable financial reporting. The emerging controversies prompted the enactment of legislation to protect the monetary systems and financial institutions. In 1920s corresponded with industrial revolution that leads to the increase in stock prices. “It was during this time that attempts were made to develop standards that were usually poorly defined and regulated “(Rockness, and Joanne 31). Overtime, bodies such as AICPA refined the standards and codes to tackle emerging ethical issues in accounting.
AICPA derive its power to institute certain disciplinary actions against its members from the professional code of conduct. “A professional code of conduct is a document that outlines proper and expected behavior of a professional” (Mele 98). The code recognizes the social obligations of the profession. It also outlines rules and principles that the body ought to apply in decision making processes relating to professional conduct. According to Mohammed and Mark (98), the code provide stable standard for judging right and wrong within the profession. The other function of the code of conduct is specifying social responsibility of professionals. Codes of conduct are carved from human virtues and moral values. Consequently, their moral soundness is assessed by the extent of promotion of those virtues and values.
Accounting professional bodies are expected to develop code of conducts with sound moral foundation. The development of such standards requires the body to distinguish between what is allowed by law and what is right or wrong. For there is risk of people confusing ethics with legal standards, rules or regulations (Mele 98). Every behavior that is considered illegal is also wrong morally. For example, disclosure of confidential information without consent may be considered illegal but morally justified if it is meant to protect the public from potential disastrous effects including loss of thousands of jobs and money. Even though most bodies package their codes of conduct as ethical rules, the reality is that these codes pay keen attention compliance with technical accounting standards. The emphasis on technical standards does not imply that bodies such as AICPA have relinquished their responsibility to ensuring that their members observe ethical conduct. Indeed, these bodies are still involved in disciplining members whose conducts are considered unethical.
Accountants execute their responsibilities in various areas that include consulting, tax accounting, auditing and managerial accounting (Mele 98). In all these areas, opportunities for fraud emerge at every step of the processes. For example, an auditor may be prevailed upon by the management of a company to alter financial figures in order increase the firm’s assets and please investors and shareholders. This form of unethical behavior, fraudulent accounting, was committed by the auditors and management of Enron in early 2000s. The firm through the help of its auditors overstated income, assets and revenue (Rockness and Joanne 43). Sometimes the money involved in accounting fraud might be so big that an accountant may find it very difficult to reject the fraud even though it would result into an unethical behavior. Irrespective of magnitude of the potential gain, accountants should observe the codes set out by AICPA. These codes have a moral backing because they promote public interest.
American Institute of Certified Public Accountants’ code of conduct has many provisions. There are numerous actions and behaviors that are considered as violation of the code. For example, an accountant who prepares and audits the financial statement of a company violates the rule of independence (Mohammed and Mark 170). Again, an accountant who engages in providing professional services without essential skills required to perform the services violates the rule of competence (Mohammed and Mark 170). In addition, any accountant who prepares fraudulent tax return or fails to release documents to a client violates AICPA rules. Those who violate the rules are asked to go before the Trial Board of AICPA where there cases are heard and determined. The board can take disciplinary actions that include suspension of membership, termination and admonishment (Mohammed and Mark 172). The penalties given by the board may be including taking remedial action against the member or permanently expelling the member from the body.
Professional accounting bodies including AICPA confer legitimacy to accounting profession (Mohammed and Mark 165). The bodies are credited for making accounting profession acceptable. Today, the authority of the profession is recognized in the financial field. The profession has also emerged as specialized occupation in commerce. These milestones have been achieved because bodies such as IMA have been working extra hard to develop standards, guidelines and rules for accountants. Without these rules, it would be very difficult to define what accountants do. Besides, there could have been many unethical cases involving accountants as it happens in other unregulated professions including gambling. To this end, the legitimacy bestowed on accounting profession through regulation has many ethical dividends. The legitimacy puts forth accounting as a profession that engages in acceptable, professional and ethical services to humanity. Consequently, any unethical behavior exhibited by an accountant is not considered as general group characteristic of the profession. Instead, it is viewed as an individual problem that cannot bring the entire profession down.
The main responsibility of professional bodies in accounting field is to protect the public or client from getting professional services that are not satisfactory (Mohammed and Mark 165). For example investors in corporations have a right to get correct financial information about the company. Although, some auditors may find it very easy to provide honest disclosure of financial information, others are coerced to modify reports by people who are opposed to any form of transparency. AICPA is the body that is responsible for dealing with such integrity issues. AICPA in its codes has a number of values that include professionalism, independence, objectivity and integrity (Mele 101). These values are meant to guide accountants in executing their work. Both the existence of values and codes are not enough. The professionals within the accounting field have to make ethical judgments about situations and ensure that behave in a correct manner. According to Mele, accountants must evaluate the significance of every situation while employing professional competence, independence, objectivity and confidentiality. Rules standards, codes alone cannot be used to determine the actions to take in every situation, but their principles can be used for making judgments.
United States has attempted to impose ethical behavior in accounting through legislation for over 100 years. However, the regulations have not had tangible success in stemming out ethical failures (Rockness and Joanne 47). Accounting professionals including auditors have devised new ways of defrauding shareholders and conceal failure. According to Rockness and Joanne, there is another belief sophisticated technology can limit unethical behavior by accountants. The purpose of IT control is to ensure integrity of data and information. The two assumptions are untrue given the kind of financial frauds that have happened in US history. They include frauds at WorldCom, Health South and Enron. The frauds have raised questions about corporate ethical provisions that are not enforced by AICPA or accounting professional bodies. Some of the frauds are orchestrated by corporations’ boards and management who may not be accountants.
Accounting profession has been regulated in United States of America since the formation of AICPA in 1887. The regulation has brought tremendous benefits to the profession. These benefits include the development of professional code of conduct and accounting standards. The standards have been used to make accounting procedures more transparent and also to protect public interest. These standards are not perfect. They have been used to unfairly discipline accountants and end their careers. Nonetheless, the existence of flaws in professional code of conduct of accountants does not implies that the code have no ethical function. Indeed, the standards and codes are applied to ensure that clients receive satisfactory services from accountants. At some points in history of accounting profession, accountants have failed to adhere to abide by their code of conduct. Hence, the Congress felt it was necessary to anchor some aspect of the code of conduct in law called Sarbanes-Oxley Act of 2002. The main aim of this act was regulate business conduct with an intention of promoting ethical behavior and preventing fraudulent financial reporting. The law touches every personnel who have control over accuracy of financial statements (Rockness and Joanne 45).Whether professional code of conduct is legitimized or not, professional accounting bodies must encourage its members to adopt a culture that emphasizes on moral uprightness.

Works Cited

Melé, Domènec. "Ethical Education In Accounting: Integrating Rules, Values And Virtues." Journal Of Business Ethics 57.1 (2005): 97-109. Print.
Mohammed, Abdolmohammadi and Mark Nixon. Ethics in public accounting proffesion in Frederick, Robert. A Companion to Business Ethics. Malden, Mass: Blackwell Publishers, 1999. Print.
Rockness, Howard, and Joanne Rockness. "Legislated Ethics: From Enron To Sarbanes-Oxley, The Impact On Corporate America." Journal Of Business Ethics 57.1 (2005): 31-54. Print.