CPAs' Attitudes Toward Advertising and Its Professionalism
In 1978 the American Institute of Certified Public Accountants (AICPA) revised its Code of Professional Ethics to allow advertising and solicitation. The AICPA decided to revise the Code after pressure was applied by the Federal Trade Commission (FTC). Initially CPAs were reluctant to utilize their new freedom to advertise. Apparently many CPAs were waiting to see how the public, clients, and fellow practitioners would react. Haggai  found only 7 percent of accountants surveyed were planning to advertise. A major factor contributing to this initial reluctance was the entrenched belief that advertising by CPAs was unprofessional . Some additional concerns were: (1) larger firms would benefit from advertising at the expense of smaller firms ; (2) advertising of fees would lead to competitive bidding between firms and ultimately result in compromising the quality of accounting services  - otherwise advertising might increase fees ; and (3) advertising would create a highly competitive "anything goes" environment.
In a recent development, the AICPA's governing council voted on August 30, 1988, to accept an agreement calling for further changes in the Institute's Code of Professional Ethics. Subject to approval by the FTC, the agreement will culminate an inquiry initiated by the agency in 1985. As part of the agreement, the council will remove the Code's interpretations currently prohibiting advertisements containing self-laudatory or comparative claims, testimonials and endorsements, and advertising that lacks dignity and good taste . Are CPAs in agreement with the Code's position and believe that such advertisements should not be used?
This year marks the eleventh year in which CPAs have been allowed to advertise. Have CPAs attitudes toward advertising and solicitation changed during this period? Are CPAs concerned that large firms will benefit more from advertising than will small firms, and do CPAs approve of advertisements containing fees? From the standpoint of professionalism, what types of advertising do CPAs approve? This research will answer these questions, as well as others, concerning advertising and solicitation by CPAs.
A 1976 study by Arndt and Hanks  revealed only 30 percent of the respondent CPAs approved of advertising by individual CPA firms. In contrast, 79 percent of the respondents approved of institutional advertising by state societies, and 87 percent approved of institutional advertising by the AICPA. If advertising were permitted, 84 percent of the respondents judged advertising by individual firms should be limited to services only.
Although the issue of advertising and professionalism was a major concern of many CPAs, a 1976 study by Sellers and Solomon  revealed that a majority of the respondents judged advertising would not have an adverse effect on the professional image of CPAs. In addition, a majority of the respondents thought that advertising could be conducted in a professionally tasteful manner and advertising could improve the consumer's awareness of accounting services. The respondents were divided over the issue of whether large or small firms would benefit most from advertising.
Scott and Rudderow  found in a 1982 study that 52 percent of the CPAs surveyed agreed that advertising by public accounting firms was inconsistent with professionalism, whereas of the business people surveyed, only 23 percent agreed. Traynor  found 63 percent of the CPAs surveyed agreed that advertising would be harmful to their image.
OBJECTIVES OF THE STUDY
The objectives of this study are to determine: (1) if CPAs believe advertising and solicitation can be used without creating an unprofessional image, (2) if local and regional CPA firms believe national and Big Eight firms will benefit from advertising and solicitation at their expense, (3) from the standpoint of professionalism, what types of advertising and solicitation do CPAs approve, and (4) if CPAs agree with the AICPA's Code of Ethics concerning advertising that is considered false, misleading, or deceptive. …