Everyone is subject to numerous standards of behavior, but their significance in specific cases depends on their source or authority. Awareness of the distinctions and commonalities of different behavioral standards is helpful in understanding the role and importance of professional ethics. I have found, based on years of fielding professional ethics questions, that behavioral standards experienced by CPAs can be sorted into five general groups.
Legislation. CPAs' behavior is standardized through federal and state legislation. Some of that legislation is aimed specifically at CPAs because they are a regulated profession and some of their services are regulated, but CPAs are also subject to general legislation. For example, CPAs are not exempt from the requirements of the U.S.A. Patriot Act, which could compel a CPA to reveal information ordinarily covered by client confidentiality.
Rules and regulations. CPAs are also subject to the rules and regulations of the state and federal agencies that authorize their practice. Examples include the SEC, the Department of Labor, the General Accounting Office, and the IRS at the federal level, and the New York State Education Department and the Regents of the State University of New York at the state level. Like laws, rules and regulations are required behaviors.
Standard operating procedures. Every employer requires the strict observance of certain standard operating procedures. For example, CPAs are typically subject to completing a time card, even when they find it inconvenient or troublesome. There are many other behavioral standards established by employers to limit or specifically guide behavior.
Professional ethics. CPAs who are members of the AICPA or NYSSCPA voluntarily subscribe to a code of professional conduct that limits or prescribes their behavior as a group. Even if a CPA is not a member of a professional association, the courts would look to the prevailing ethical standards in the profession if questionable behavior were in litigation. Moreover, legislation or regulation usually encompasses fundamental aspects of a profession's ethical standards. For example, independence and confidentiality, two pillars of CPAs' ethical standards, have the authority associated with legislation and regulation.
Ethical systems can rarely function well only as sets of rules that must be followed. Circumstances are continually changing, causing specific rules to be out of date. Professional ethics usually take the form of principles whose application in specific cases may differ. When professionals fail to apply ethics principles in areas important to public confidence, legislators or regulators intervene with laws or rules to compel greater care. Although most codes of professional ethics either state or imply adherence to laws and rules, mere compliance with governmental authority rarely forms the basis of a profession's ethical principles.
Personal morality. …