Professional Ethics and the CPA in Industry

Article excerpt

Do the profession's ethical standards place enough emphasis on the issues currently faced by members in industry?

In 2003, he Society's Board of Directors created the Quality Enhancement Policy Committee (QEPC) to ensure that peer review and ethics are meeting the needs of the accounting profession and the public that it serves. Now that the board has approved the final draft of the QEPC's white paper on peer review (it was published in the March CPA Journal)-and implementation of the white paper's concepts is being discussed-the committee has begun to consider the next item on its agenda: ethics.

The QEPC has already gathered some interesting historical information on the profession's ethics process. For example, did you know the profession's original ethical standards were written at a time when CPAs working in private industry were few and far between?

How times have changed! These days, CPAs are working in public accounting firms, major corporations, schools, government agencies ... almost everywhere. CPAs in industry now constitute approximately one third of our membership and half of the AICPA's. This professional evolution led the QEPC to the following question: Do the profession's ethical standards place enough emphasis on the issues currently faced by members in industry?

Different Role, Different Dilemmas

Some of the ethical dilemmas faced by CPAs in industry are very different from those faced by CPAs in public accounting firms. For example, let's say you are a CPA working at a publicly traded corporation and, after seeing disappointing financial results, your boss, the CEO, instructs you to book a transaction differently so the company meets income expectations. What do you do? If complying with the request would result in the fraudulent recording of a transaction, you should disclose the situation to your audit committee and, hopefully, your boss would be fired. But what if the CEO asked you to do something "on the edge," but not clearly illegal or in violation of professional standards? …