Solved by verified expert:Kranacher, M. (2009). Accounting and regulation and ethics,
oh my!. The CPA Journal, (11). 80.300 word essay answering the following questions:·Who is the intended audience for the article?·Do you think the article will be helpful to this audience?Article attached as docx.
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Minimum of 300 word essay answering the following questions.
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Who is the intended audience for the article?
Do you think the article will be helpful to this audience?
Kranacher, M. (2009). Accounting and regulation and ethics, oh my!. The CPA Journal, (11). 80.
EDITORIAL
a message from the editor-in-chief
As NYSSCPA staff members traveled around New York State informing CPAs and other financial professionals about
recent legislative reform, they began each session by explaining the history of the accounting profession. It went
something like this:
In the late 1800s, the United States transformed from an agricultural society to an industrial one. Equity and debt
financing became an integral part of larger corporate entities whose managers were not necessarily the owners. To
enhance the integrity of the value of the stocks and bonds, detailed record-keeping systems were devised. As a result,
individuals with specialized accounting knowledge were needed to help third-party investors rely on the financial
information. And so the CPA profession was born.
This history points to the accounting profession’s raison d’être–the public trust. Yet if we examine our recent history,
we can see that this noble cause sometimes gets lost in the rush to a different set of values and priorities–a fatter
bottom line. Every time unscrupulous behavior deals a blow to our financial markets, our leaders vow to implement
stronger regulations. It wasn’t long ago that the Sarbanes-Oxley Act was passed in response to the Enron and
WorldCom scandals, supposedly marking the end of sell-regulation for CPAs.
Over the past several years, the accounting profession has attempted to refocus on the purpose that initiated our
professional existence. Ethics content has been added to college-level accounting courses and in most states CPAs
are required to complete continuing professional education (CPE) in accounting ethics. But how should a CPA handle
an ethical dilemma in the real world? Let’s discuss some practical guidelines to follow when confronted with such a
situation.
Steps to Resolution
The first step to resolving a problem is to recognize that an ethical question exists. This may sound simplistic, but ethical
standards are dynamic and not always intuitive. For example, years ago CPAs were not permitted to advertise their
services, but today this is readily accepted as a standard business practice. Keeping abreast of current rules and
regulations is critical to knowing if a situation may present a problem.
Next, consider what approaches you as a CPA could take to resolve the issue. You’ll want to ensure that you have
access to all the relevant facts and can identify who may be affected by your decision. The stakeholders could be
anyone who will be impacted–positively or negatively. Think about how each party might be affected in the scenarios
under consideration. Then, drawing on your education and experience, use your best judgment to make a choice with
which you can feel comfortable. Apply the following test: How would you feel if your decision were printed on the front
page of your daily newspaper?
Lastly, before choosing one of your options, check to ensure that it is in compliance with current rules, regulations, and
laws. Keep in mind Rule 102-4 of the AICPA Code of Professional Conduct, which “prohibits a member from knowingly
misrepresenting facts or subordinating his or her judgment when performing professional services.” The rule goes on
to state: “if, after discussing his or her concerns with the appropriate person(s) in the organization, the member
concludes that appropriate action was not taken, he or she should consider his or her continuing relationship with the
employer.”
Difficult Decisions
Even if you answer one ethical question, there may be other lingering issues that make it impossible to continue with
the employer or client. Resigning from the job or engagement is certainly not something to be taken lightly, especially
when the unemployment rate is almost at 10%. Maintaining documentation as the situation unfolds is essential, and
you should also consider whether you need to consult with an attorney on the matter.
Legislative reform has expanded the scope of public accountancy to include accounting, tax, financial planning, and
management advisory services; the public is expecting CPAs to be objective and professionally competent, and to
exhibit integrity in all their work, whatever the context.
It’s unrealistic to expect that roles and laws will anticipate every possible situation. When it comes to resolving ethical
dilemmas, CPAs have the brains and heart to know, and do, the right thing–if only we can muster the courage.
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By Mary-Jo Kranacher, MBA, CPA, CFE, Editor-in-Chief, mkranacher@nysscpa.org
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