Accountants Legal and Ethical Responsibilities

The Personal Financial Planning Executive Committee has issued this Statement on PFP Service Standards as an authoritative guide for members who have provided PFP services to assist them in fulfilling their professional responsibilities. According to the Public Company Accounting Oversight Board (PCAOB), accountants who conduct external audits are responsible for obtaining reasonable assurances as to whether the client`s financial statements are free from material misstatement, whether caused by error or fraud. The Sarbanes-Oxley Act of 2002 (SOX) added new audit responsibilities related to fraud. External auditors must now certify that a client`s internal controls are adequate, in addition to providing an opinion on the financial statements. The ethical responsibility of accountants is so important because the financial impact of ethical misconduct and lack of judgment can be enormous. The intentional or accidental disclosure of a client`s or business`s financial information in violation of a CPA Code of Ethics can have far-reaching consequences for all parties. When CPA ethics and CPA ethics standards are violated, the effects can be devastating, ranging from losing business to an accounting firm to losing a CPA losing their job to law enforcement. 1. Compare the potential liability of accountants with that of other professions, including pharmacists, engineers, architects and other professions. The CPA`s Code of Ethics is essential to the accounting profession for a variety of reasons, so much so that the governing body of accounting, AICPA, has established a written set of principles that outline the key ethical responsibilities that accountants should adhere to in order to maintain their CPA licenses.

Integrity is often tested in the absence of clearly defined rules or expectations. The integrity of a CPA or businessman is measured by doing what is “right”: a CPA must adhere to both the form and spirit of technical and ethical standards. In an effort to practice strict integrity, it is important for a businessman to live by the norm: do what is right, do what you think is right, do not do what you know is wrong. Ethical professionals should constantly try to improve themselves and their profession by providing high-quality services that meet the needs of the client. It is also important that accountants continue to improve in their training to keep abreast of the latest trends and best practices that allow them to work at an appropriate level. The new professional standards and ethics are rich, but implementation and the imperfect professional should be punished according to the code. The local community of affiliated organizations around the world is expected to adopt the new ethical standards by June 2019. Accountants who work in companies are often subject to information that the rest of the company is not aware of. For example, payroll accountants may have information about salaries in different departments, sales accountants can learn about new products before others, and expense accountants may have inside information about profit margins.

In some cases, accountants are among the first to learn about possible layoffs. Accountants need to remember that they are bound by both their own ethics and their professional standards not to share this information with anyone. This responsibility also extends to disclosure to individuals within the company. A CPA is usually in a contractual relationship with a client in which both parties have obligations to each other. The CPA undertakes to provide certain services and the client undertakes to pay for these services and to cooperate fully. It is preferable that a contract be written to avoid misunderstandings and serve as a basis for performance. However, verbal contact is legal and enforceable. Explicit obligations are expressly described in the contract. Although not expressly mentioned in the contract, implied obligations are generally considered by the courts to be an integral part of the contract. The contract between a CPA and his client is usually written and is called a letter of commitment. The contract letter specifies the services to be provided, the deadline, the fees and other essential conditions. This is a legally binding contract for both parties.

If one of the parties does not fully comply with its obligations under the contract, the other party may apply for judicial recovery. Accountant responsibility is the ethical responsibility an accountant has to those who rely on their work. According to the American Institute of Certified Public Accountants (AICPA), accountants have a duty to serve the public interest and maintain public confidence in the profession. An accountant has a responsibility to his clients, managers, investors and creditors of his company, as well as to external supervisory authorities. Accountants are responsible for the validity of the financial statements on which they work and must perform their duties in accordance with all applicable principles, standards and laws. Section ET 55 – Article IV – Objectivity and Independence A member shall remain objective and be free from conflicts of interest in the exercise of his or her professional responsibilities. A member of public practice should be independent in real and external terms in the provision of audit and other assurance services. The IRS also accepts complaints about registrants who have committed fraud, and anyone with a problem can file a complaint using Form 14157, Complaint: Tax Return Preparer.