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Code of Conduct - Intermediate Accounting

In: Business and Management

Submitted By rsanche9
Words 1130
Pages 5
A code of professional conduct is an essential factor that contributes to an effective business environment, and overall business success. In accounting, a code of conduct is vital due to the sensitivity and exposure of confidential information. When there’s a lack of compliance to the code of ethics, there is a greater chance/opportunity for crimes to begin to engage. Some examples of the biggest crimes in regards to businesses involve the Enron case, a case concerning an energy company declaring bankruptcy after keeping huge debts off their balance sheet (para. 10). This also caused a lot of chaos in the stock market. Another case is the one involving WorldCom, where assets were inflated, which eventually lead to the internal auditing department uncovering fraud (para. 17). These cases display why a code of conduct is essential in the business environment.
The American Society of CPA’s (AICPA) has a professional code of conduct that Certified Public Accountants (CPA) must abide by while engaging in their practice. The code of conduct consists of rules a CPA should adhere by when engaging in services with their respective client(s). It also explains how to appropriately handle certain situations. If a CPA violates the code of professional conduct, they are subject to disciplinary actions, which in include being terminated as a CPA, suspension, and having your wrongful action posted to the website for a certain amount of time allowing people of the public to view.
The AICPA has a senior committee known as the Professional Ethics Executive Committee (PEEC), and they are charged with enforcing the professional code of conduct for the AIPCA. According to the AICPA, in order for an investigation against an AICPA to occur, a letter of complaint must be mailed to them (para.1). In my opinion, there should be a better way for individuals to contact the PEEC if they have any complaints. There should be a quicker way for individuals to communicate with representatives to inform them about any wrongdoing activity. According to the Securities and Exchange Commission (SEC), “The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million” (2014, para.4). This program allows individuals the opportunity to contact them via hotline and share any important information that may help them in stopping fraudulent behavior. I believe the AICPA should implement something similar instead of individuals mailing complaints. I believe having a hotline, and a rewards system will make people more incline to call if they notice a CPA engaging in behavior that violates the code of conduct. I also think it would be easier for someone to make a phone call rather than mailing a letter. The process has to be as easy as possible for the individual that way they feel more inclined to take action. The SEC has had success implementing this program.
The AICPA has several ways in which it can implement its code of conduct. They can implement the code of conduct through consistent trainings and having booklets of the information available to the CPA’s at all times. In my experience working at SunTrust bank we had to go through numerous trainings that involved learning the code of conduct prior to actually working. In these trainings, they gave us many real life examples, which were made easier to relate too. In addition to these discussion-based trainings, they also made us engage in computer trainings that involved the code of conduct of the company. These trainings were also mandatory. A combination of these things not only helped me remember the code of conduct, but also helped me remember the ramifications to any violations. I believe the AICPA should implement periodic trainings similar to this; to consistently remind the CPA’s of what to abide by when engaging in their practice. In addition to making these trainings in person and online, they should be mandatory, which would be a step in the right direction. The in person trainings should be discussion based requiring them to participate. Providing CPA’s with these opportunities would make them more conscious when making decisions.
George Mason University’s code of conduct requires students to attend a hearing regarding their case if they’ve committed a violation (para. 47). I believe the AIPCA should implement something similar to this for violators, in addition to their regular court hearings. The hearing should determine what the ramifications of the violation would be. At George Mason University, this system proves to be effective as it makes students very aware when making decisions because they know if they commit any sort of violation, they will have to attend a hearing for it and face the consequences to their actions.
Measuring the effectiveness of the code is important to determining the implementation of the code. A way to measure the effectiveness would be to conduct examinations to determine the CPA’s knowledge on the actual code of conduct. George Mason University has a lockdown browser which prevents students from going on other internet browsers to cheat, therefore preventing students from cheating on exams. This is something that can be incorporated to ensure CPA’s know their information. Another way to measure the effectiveness is keeping track of how many CPA’s are involved in fraudulent activity and are disciplined for it. Seeing the results on a year by year basis shows you whether the statistics are increasing or decreasing, and more importantly shows you whether or not CPA’s are adhering to this code of conduct.
In conclusion, in my opinion, you can have the best system of conduct available but ultimately it is up to that individual to make sure they have the self-restraint to not engage in fraudulent activity. The opportunity may arise, and although the code of conduct can help aid in stopping someone from involving himself or herself in that activity, ultimately there will always be some sort of temptation or influence. Ultimately it is up to that person to know right from wrong and it is solely up to them to take the proper and necessary actions to separate themselves from being a part of the fraudulent behavior.

References
• The 10 Worst Corporate Accounting Scandals of All Time. (n.d.). Retrieved from http://www.accounting-degree.org/scandals/
• Retrieved from http://www.aicpa.org/InterestAreas/ProfessionalEthics/Resources/EthicsEnforcement/Pages/howto.aspx
• Retrieved from http://www.aicpa.org/research/standards/codeofconduct/Pages/default.aspx
• Retrieved from https://www.suntrust.com/docs/pdf/EmployeeCodeOfConduct.pdf
• Code of Student Conduct | Student Conduct. (n.d.). Retrieved from http://studentconduct.onmason.com/university-policies/code-of-student-conduct/
• SEC.gov | SEC Announces $300,000 Whistleblower Award to Audit and Compliance Professional Who Reported Company’s Wrongdoing. (n.d.). Retrieved from http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542799812#.VG-dxrSKCZQ

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