Code of Professional Ethics by American Institute of Certified Public Accountants.

Essay by KrisBGUniversity, Bachelor'sA+, May 2004

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'A code of professional ethics is a voluntary assumption of self discipline above and beyond the requirements of the law. The Code of Ethical Conduct serves the highly practical purpose to notify the public that the profession will protect the public interest' (Carey, Doherty: p 3). When people need a doctor, a lawyer or a certified public accountant, they seek someone whom they can trust to do a good job, not for himself but for them. People assume that the hired professional is qualified since they cannot appraise him. They must take it on faith that he is competent. That is why professionals are distinguished from businesses and why there is a need for ethical regulations.

The Code of Professional Ethics

The Code of Professional Ethics for public accountants was developed by the American Institute of Public Accountant and includes four different categories. The first, Concepts of Professional Ethics, establishes major requirements for CPAs in different areas of their day-to-day professional activities.

The main parts of the Code are: Independence, Integrity and Objectivity in the practice of public accounting, Competence and technical standards, Responsibilities to clients, Responsibilities to colleagues and Other responsibilities and Practices.

Independence has always been the fundamental concept to the accounting profession. In fact it is the most essential to the practice of all professions. The financial reports produced by CPAs would be of little value to the public unless CPAs maintain their independence. Independence has always been associated with integrity and objectivity. Since faults on financial statements may be the result of either a honest mistake or a lack of integrity it is imperative to associate the notion of independence with the objectivity and integrity.

As part of the requirements by the Code of ethics, CPA should avoid any relationships that may result in the...