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 an honest mistake or a lack of integrity it is imperative to associate the notion of independence with the objectivity and integrity.
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Globular envelope with a cluster of accounting tok...As part of the requirements by the Code of ethics, CPA should avoid any relationships that may result in the CPA's becoming dependent on the particular client. Such relationships include financial interests and client management. It is very important that the opinion of the CPA reflects the results of operating decisions taken by the client and not any underlying ideas which may be the case if a CPA takes part in the decision making process of the company.
Another important issue discussed in the Code of ethics is competence and responsibility of CPAs. It establishes a basic ethical obligation that a CPA shall not render any services, which he is not competent to render. Within this topic, the code mentions continuing improvement of the competence of CPAs in all areas in which they engage. The code of ethics assumes that in...