At the heart of accountancy is a foundation of trust. Clients, both corporate and individual, must trust that the person to whom they are giving their confidential information will use it only for the client’s benefit rather than their own. Governments and economies stand on the foundation of trust that financial information is accurate. Without faith in the system, the financial stability of the entire economic structure could collapse.
Therefore, it is no exaggeration to say that accountants hold the financial health of their clients and the nation in their hands. They must work with absolute integrity, not looking out for their own best interests but those of their clients, and only in an honest and truthful manner. Because of this, accountants are required to keep current on ethical issues to maintain their licenses.
Different professional accountancy organizations have slightly different expressions of the fundamental ethical principles of accountancy, but they generally fall into several categories: integrity, objectivity, professional competence, confidentiality, and professional behavior.
While there is a certain degree of subjectivity in these principles, they can be defined as follows:
- Integrity – honesty in professional relationships
- Objectivity – free from bias, conflict of interest, or undue influence from others
- Professional competence – maintaining professional standards of knowledge and skill
- Confidentiality – nondisclosure of personal information for the benefit of the accountant or any third party
- Professional behavior – avoiding actions that discredit the profession
Besides these principles, or rather, interwoven throughout them, is the principle of independence. Does the accountant have any financial interest in the success or failure of the client, or do any of his or her business associates or family members? Has the accountant received any significant gifts from the client? Is there any financial pressure on the accountant that might compromise completing the work with accuracy, integrity, and objectivity?
Independence must be both “of mind” and “of appearance.” Not only must the accountant be actually free from any pressures that might compromise the accounting principles, but he or she must also be free from any appearance that might cause a reasonably informed third party to question professional independence.
For these and many other reasons, it is crucial that accountants remain vigilant and be regularly informed about current issues in Ethics. CPAs must take 4 CPE hours every two years in Ethics in order to complete requirements to maintain their license. PSTAP offers professional education opportunities throughout Pennsylvania to help you fulfill your CPE requirements in all categories. Please see our catalog to find the courses offered in your area.