Importance of Professional Ethics in Accounting
In accounting, ethics represents the traits displayed by individuals preparing financial information. Accountants first have exposure to business ethics when taking college courses. Individuals looking to obtain professional certification will often need to pass an ethics exam prior to receiving their license. Ethics has a high importance due to the number of stakeholders relying on prepared financial information.
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Code of Conduct
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The American Institute of Certified Public Accountants creates standards all professionally licensed accountants must follow. Non-licensed accountants can also follow these standards. The AICPA is also responsible for working with state accountancy boards on creating an ethics exam taken in tandem with the certified public accountant exam. The AICPA also provides continuing professional education to keep accountants abreast of all accounting issues, ethics-related or otherwise.
Integrity
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The AICPA defines integrity as being honest and candid with clients. While accountants cannot divulge private information, standard financial data is often subject to review by multiple stakeholders. Accountants must not accept or condone any fraudulent activity or deceit from clients. Professional accounting ethics demand that accountants question their activities to determine the right action. Failure to do so can result in financial harm to stakeholders and professional loss for accountants.
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Objectivity and Independence
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Objectivity and independence are ethical traits that require accountants to conduct arms-length transactions with clients. Objectivity states accountants cannot have any conflicts of interest when conducting work for a client. For example, an accountant should not offer audit and consulting services to the same client, as this results in a conflict of interest. Independence states accountants should not have personal dealings with clients, such as owning stock or receiving direct benefits from a client.
Due Care
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Due care requires accountants to follow all technical and ethical traits found in the accounting industry. This is the purpose of continuing professional education. Refresher courses help accountants learn about new rules or issues in the accounting industry. Failure to maintain continuing education requirements can result in accountants losing certification. This ethical trait also has accountants focus on providing competent services. Areas outside of the accountant's technical ability require him to step away from a client.
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