Magazine article The CPA Journal

The CPA's Guide to Professional Ethics

Magazine article The CPA Journal

The CPA's Guide to Professional Ethics

Article excerpt

THE CPA'S GUIDE TO PROFESSIONAL ETHICS By Dan M. Guy, Douglas R. Carmichael and Linda A Lach Published by John Wiley & Sons, Inc. [(800) 225-5945 or www wiley, 336 pages; $65; ISBN: 0-471-3803 7-7

Once again, Dan Guy and Douglas Carmichael, this time joined by professional development expert Linda Lach, have given the profession a much-needed, easy-to-follow guide. The CPA's Guide to Professional Ethics is a comprehensive compendium that covers every aspect of ethics for all of the services performed by CPAs. This book-a must for every CPA who performs professional services in public practice, works in industry, or teaches in academia-integrates the rules, regulations, and interpretations of the AICPA Code of Professional Conduct, SEC, Independence Standards Board (ISB), Department of Labor, and state CPA societies.

To facilitate the reader's search for information on any ethics topic, each chapter begins with an overview of the subjects covered. Each section begins with basic concepts and continues in sufficient detail to give the reader a good understanding of the ethics rule and its application. While they initially focus on the AICPA's code, the authors address the application of the ethics rules under the different ethics regulatory authorities' rules and explain any variance in the requirements. The authors provide helpful notes that clarify certain vague rules and interpretations, give additional background information, and reference other regulatory authorities' differing requirements. Throughout the book, examples and charts enhance the reader's understanding and evaluation of ethics issues.

While I did not review the book for technical accuracy, I encountered no technical deficiencies. I also agreed with all of the authors' advice and with their additional guidance when an underlying ethics rule or interpretation was vague or did not cover a specific situation.

The book is divided into five major parts with several chapters each:

A) Introduction to ethics

B) Overview of independence, integrity, and objectivity

C) Independence requirements for members in public practice

D) AICPA rules other than independence, integrity, and objectivity

E) Other ethics guidance.

A CPA charged with an ethics violation will find the chapter "Ethics Enforcement-What a Member Needs to Know" particularly helpful. It contains a good, concise description of the process, the possible outcomes, and a member's rights. More important, the authors give excellent advice on how to approach a disciplinary action.While I do not fully agree that a lawyer is necessary in all circumstances, I agree that the CPA should consider consulting with a lawyer before responding to an opening letter from the investigating authority and should accept the opportunity to appear for an interview with the investigators.

An important point made clear in Part B is that a CPA is always subject to the ethics rules of the AICPA or applicable state society whenever the member provides professional services. Professional services encompass all services performed by a member while holding out as a CPA. The member is also subject to the laws governing the practice of a CPA in a state where the CPA is licensed.

In the chapter "Basic Concepts of Rule 101, Independence, and Rule 102, Integrity and Objectivity," the authors succinctly and directly state the ethics responsibilities of CPAs not in public practice:

CPAs employed by others to prepare financial statements or to perform internal auditing, tax or consulting services are charged with the same responsibility for objectivity as those in public practice.

They must be scrupulous in the application of generally accepted accounting principles and candid in all their dealings with CPAs in public practice.

Chapter 6, "Requirements for Integrity and Objectivity (Including Freedom from Conflicts of Interest)," addresses nonattest services. …

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