Ethical Necessary For Certified Public Accountants

Improved Essays
Ethical behavior is a necessary requirement for professionals for purposes of maintaining public confidence on their profession and the services they offer. Certified Public Accountants have similar ethical requirements to those found in other professions. There is a need for all professionals to be responsible, competent and provide services with great professional care. Since certified public accountants have a responsibility to users of financial statements, it is necessary for auditors to be independent both in appearance and fact. An auditor should be capable of upholding an impartial attitude throughout the auditing process and gain the faith and confidence of others on his or her independence. It is therefore, necessary for auditors …show more content…
(2011) argue that financial markets are poised to work well when the shareholders have a “true picture” of the financial statements of a company. Auditors ought to maintain some distance between them and their clients to preserve independence in appearance. A familiar and friendly working relationship between an auditor and client is likely to raise some ethical issues in terms of the independence of their actions during the auditing process. In such a situation, it is possible for the client to unduly influence the auditor thereby raising questions regarding the objectivity, integrity and capability of using professional skepticism (William, 2003, p.444). It is true that the auditor-client relationship could make the audit more effective and efficient since the auditor could be having prior knowledge concerning the operations of the company, past transactions, process, personnel and the systems of the company. However, the assessment of the independence of an auditor in most cases lies on the interpretation of the public, so most often than not the audit report is likely to be disputed or lack integrity. It is therefore important for the auditors demonstrate an ethical behavior in dealing with their clients to instill the confidence and integrity of their audit …show more content…
The third parties therefore rely on the independence of auditors in assessment. It is evident that the public confidence on public on entities and financial markets parts depends on the credibility of the audit reports availed by the auditors. In situations whereby the independence of auditors is compromised, the financial statements lack credibility, objectivity, integrity and the confidence of both the public and third parties who intend to use the audit report. Ensuring auditor independence therefore plays a crucial role in validating financial statements in both the public and private sectors thereby the need for acting

Related Documents

  • Great Essays

    First, during an audit, an auditor should ensure that they obtain the appropriate assurance to tackle the audit risk. Many people assume that the information gathered from the third party is more reliable than the evidence collected by the audited company. However, in the case study, the company had already colluded with its suppliers to provide false information to the audit team, and this jeopardized the review process. Therefore, it is advisable for an auditor to ensure that they maintain a professional skepticism by considering previous audit reports and the relationship between the audit client and the third party. Consequently, over-reliance on a third party during an auditing process, although proven to be efficient since it is free from adjustment or influence by the client audit.…

    • 1475 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Every organization has their own set of rules, guidelines, values, and procedure on how they want to manage their business. However, organizations question the importance of ethical coding. Are they beneficial to the corporation? Can they help raise and bring in profits? Or does it have the potential to cause risk to the corporation?…

    • 1533 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    PCAOB Lawsuit

    • 681 Words
    • 3 Pages

    There are a lot of many different companies in many different industries across the globe. One of those industries is the accounting industry. Which has many different careers and titles; there is tax accountants, forensic accountants, financial advisors, and auditors. This essay will discuss what the PCAOB does, some consequences if firms do not do their audit correctly, a recent lawsuit, and what they did in result after the lawsuit. Like other accounting firms, the PCAOB has several duties.…

    • 681 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    A few different actions could be beneficial in ensuring that Ponzi schemes like the one perpetrated by Mr. Madoff do not happen in the future. One of these actions is to ensure that professionals and organizations working in the financial sector receive education regarding ethical behaviors and common pitfalls. Ensuring that individuals working in this important industry are ethically competent is important to the health of the nation as ethical issues erode the trust that Americans have in financial services. As America depends on these financial services for its economic output, maintaining this trust is vital. Pohling, Bzdok, Eigenstetter, Stumpf, and Strobel (2016) point out that ethical competence involves not the ability to recognize when an ethical dilemma exists and the ability to identify the correct ethical actions.…

    • 538 Words
    • 3 Pages
    Improved Essays
  • Decent Essays

    Leslie Fay Case Summary

    • 498 Words
    • 2 Pages

    Paul Polishan, CFO and Vice President-Finance, ran the office of Leslie Fay like a dictator. Paul had control over the accounting and finance departments. He was responsible for finalizing the financial statements and ordering his subordinates to record those figures that he deemed fit or thought would window-dress the financial statements. Every transaction in the company had to pass through Paul. This implies that he had control over all the three factors of internal control, i.e. custody, authorization and recording.…

    • 498 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    It is important that the CPAs preform services in accordance with the GAAS that they must do attestation with integrity, objectivity, professional competence, due care, and confidentiality, but it’s more important for them to recognize the goal of serving public interest. Auditors must ensure that they have independent judgments for the financial reporting and avoid being compromised by third parties or their clients. Only if they concur the ethical conflicts between their self-interest and public interest can the public be beneficial from their services…

    • 1021 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    The article chosen for this presentation is called “More than 3,000 Canadian names in the Paradise Papers”. Paradise Papers is electronic documents containing offshore investments of the wealthiest people and companies worldwide. This article talks about how hundreds of people’s information was leaked from one the largest offshore law firm called Appleby. This involved many Canadians who set up trusts in other countries where they will legally avoid paying taxes in Canada. This is called a tax haven, where you take your money in Canada, have someone set up a “shell company” or trust which is a public company with nominal assets rather than money, then pay someone to act as the director or trustee.…

    • 638 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    The purpose of the board is to supply independent oversight of public accounting firms providing audit services. Furthermore the board registers auditors, terms the specific processes and procedures for compliance audits, inspects and polices conduct and quality control, and enforces compliance with the exact dictates of the Sarbanes-Oxley act. Title II institutes auditor independence in order to limit conflicts of interest. It also delivers new auditor approval obligations, reporting requirements, and restricts auditing companies from supplying non-audit services for the same clients. In Title III corporate responsibility is established; this means senior executives take individual responsibility for the accuracy and completeness of corporate financial…

    • 580 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    But if the auditor still insisted on letting the public know what was going on, then the auditor should use the economic power bested upon them. An auditor can leverage this supposedly uneven relationship with an economic power that is only bestowed upon them. The power to write auditor’s opinion, qualified, and resignation is what helps an external auditor to perform their duties and to maintain certain leverage against a client. One can debate that resignations is not as effective as the other options stated…

    • 622 Words
    • 3 Pages
    Improved Essays
  • Great Essays

    Audit Law LLC

    • 604 Words
    • 3 Pages

    Auditors determine whether a company’s financial statements are presented fairly and accordance with the financial reporting framework. When providing auditing and other attestation services, an auditor should be independent. Amanda was assigned to audit LAW LLC financial statements. Amanda was faced with an ethical dilemma when LAW LLC’s audit report showed little evidence of the different assets on its balance sheet. Also, LAW LLC violated their loan covenant which due whether it was on the financial statement.…

    • 604 Words
    • 3 Pages
    Great Essays
  • Improved Essays

    Independence In Auditing

    • 1290 Words
    • 6 Pages

    Independence ensures that the public is confident in the integrity of the financial statements. Without this confidence, the public could not feel confident participating in financial markets which would greatly harm the economy. Auditors must further ensure to honor the public’s trust which underlines the importance of being independent in appearance. Auditors have the responsibility to exercise professional judgements when auditing financial statements and the public must trust that their professional judgement is without bias otherwise the reports would be potentially materially misleading. 2.…

    • 1290 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    Significance of ethics in managerial accounting is obvious: if managerial accountants don’t follow four ethical principles which include Honesty, Fairness, Objectivity, and Responsibility, the data provided by them to business owners and decision makes won’t be factual and objective. Disclosed information by an accountant might lead a business to serious problems and legal implications. Everyone within an organization is required to follow the four IMA’s overarching ethical principles and adhere to them. In the described situation that happened in Hi-Power Mower Company, the following stakeholders are affected by Marcus’s actions: Marcus Lum (the cost accountant for Hi-Power Mower Company), Marcus’s friend Ray Pon (the production manager for…

    • 767 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Auditor Case Study

    • 732 Words
    • 3 Pages

    It is noted that the product of accounting became served several parties of the society and this is based on the product to take a series of decisions, and this is not done unless it can be trusted in this product, since this trust will not be completed unless it was approved these lists party neutral external body which examines critically orderly and accurate data on the phenomenon of these rules and give an impartial professional opinion about the validity of such data and the legitimacy and…

    • 732 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Case 11.1: Accounting/Finance Ethics Scenarios Main Ethical Issue(s) Financial professionals are often confronted with fiduciary issues which challenge their integrity, honesty, and ability to be transparent with stockholders and customers. They may be pressured to make decisions or participate in accounting practices that are clearly against company policy, financial or accounting rules, regulations, and code of ethics. In all three scenarios, employees are asked to make such decisions. Concepts and Theories Relevant to Case Economics and the bottom line are often the driving force behind decisions that are made within the organization.…

    • 1208 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Ethics In Accounting

    • 1044 Words
    • 5 Pages

    Ethical dilemmas exists when accountants or auditors must make choices among the alternative course of actions but the right choice is not absolutely clear. For instance, accountants often face the conflicts of interest, pressure for management to manipulate the client’s financial data or involve in illegal activities. Thus, it is important to have professional ethics and conduct for the profession in accounting and auditing field when confronted with the ethical dilemmas issues. The code of conduct in professions define what is the ethical behavior for its members. The ethical decision process help accountants to overcome ethical dilemmas and make the right choice which will benefit to the public or other users that depend on the accounting report (Wikipedia, 2016).…

    • 1044 Words
    • 5 Pages
    Improved Essays