CPAs' Responsibilities: Article IV Objectivity and Independence

By Colson, Robert H. | The CPA Journal, June 2004 | Go to article overview

CPAs' Responsibilities: Article IV Objectivity and Independence


Colson, Robert H., The CPA Journal


According to the CPA's Code of Professional Conduct

A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.

What does it mean to be objective? Is it possible to be truly objective? Or is everything we see, do, or say affected by our values, beliefs, and our preferences for certain outcomes? When someone says, "I'm going to be totally objective ...," how many of you, like me, prepare for an expression of personal feelings, prejudice, or interpretation obviously (at least to us) meant to persuade us to the speaker's subjective point of view?

When I have asked CPAs to recount instances of objectivity in their careers, most have identified situations where they felt compelled to deliver bad news to a client or employer based on an analysis they had performed. I cannot recall a single occasion when a CPA classified delivering happy news to a client or employer as an exercise in objectivity.

Our experiences condition us to think that audit or accounting failures occur because of a lapse in objectivity, a conflict of interest, or a breach of independence. In other words, accountants and auditors must be able to say no when faced by overwhelming pressure to say yes.

Another clue to the meaning of objectivity lies in its link to conflicts of interest and auditor independence. Although conflicts of interest and independence in fact deal with a person's state of mind, which is usually unknowable, we generally gauge whether we have a conflict or have lost independence by assessing the conclusions that others would draw from the appearance of the situation. While objectivity may be a state of mind, what really count are the perceptions in the minds of others.

The 'Fingerpost' Concept

The late-16th-century English philosopher Sir Francis Bacon, vexed by the bias in applied scientific experimentation, advocated a class of people to act as "fingerposts." The English government supported legitimate scientific research through the Royal Academy of Sciences, but had difficulty ascertaining whether aspirants' claims were of legitimate scientific merit. Fingerposts were financially independent gentlemen with no interest in the success or failure of a scientific endeavor or the scientist conducting it. Their role was to observe experimentation objectively and report independently to the funding committee. Established scientists eventually sought fingerposts with impeccable reputations for objectivity and honesty to observe their work in order to build credibility with the committee. Charlatans also sought to purchase credibility in order to receive even more lucrative funding. …

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