Ethical Accounting Protects Consumers and Encourages Growth

Ethics seem to be in the news a lot these days. Another article on this topic, and posted in Bloomberg Tax on November 4, 1011, written by James Brackens, confirms that, “as gatekeepers of the financial market, certified public accountants are professionally obligated to provide investors with trustworthy and reliable information. Communities around the world rely on accountants to keep companies and governments honest through tax filings, audits, sustainability reporting, and fraud investigations, among many other services. Individuals also rely on CPAs for tax preparation, financial planning, and strategic advice.”

There will always be examples of individuals who fail to uphold the profession’s ethical standard, Brackens says,  “highlighted by recent audit deficiencies and firm cheating scandals. But these cases are not the norm and reinforce why ethical standards are so important. They set clear expectations on what the profession stands for, enable stakeholders to hold bad actors accountable, and promote transparency within our financial ecosystem.”

Recognizing an accountant’s responsibility to protect the public’s interest, CPAs everywhere must comply with some sort of Code of Professional Conduct. The codes outline key principles that guide accountants in their day-to-day work, and underscoring the profession’s foundation in ethics:

  • Carrying out responsibilities with professionalism and moral judgment.
  • Operating with the highest sense of integrity.
  • Serving the public interest and upholding trust in the profession.
  • Maintaining objectivity and being free from conflicts of interest.
  • Performing all services with due care and striving for continuous improvement.

This framework, says Brackens, “generates trust in markets by arming consumers and policymakers with the data they need to make informed decisions.

Unfortunately, pressure to act unethically can happen to anyone in any profession, he adds, even in businesses with highly effective control systems. While noncompliance with accounting standards is uncommon, accounting bodies have stringent processes in place to investigate, monitor and sanction members.

As one standard-setting body for the accounting profession, for example, the AICPA takes deviations from ethical behavior very seriously. “Disciplinary matters are investigated by the Professional Ethics Division, and we work closely with US licensing boards and regulatory agencies to encourage uniform compliance.”

Bracken stresses that “our financial ecosystem hinges on accountability. Transparency strengthens markets and expands opportunities for sustainable growth. But as the business environment, government regulations and consumer beliefs evolve, so too must the accounting profession.”

Bracken points out that, according to Edelman’s trust research, more than six in 10 stakeholders invest based on their beliefs and values, and people want businesses to play a larger role in addressing societal issues. “Charged with analyzing the flow of essential business information, CPAs have a reputation for spotting emerging trends – such as growing demand for sustainability reporting, workplace wellness programs and cryptocurrency accounting.”

Bracken concludes that, “by leaning into the profession’s foundation in ethics, CPAs can help communities find solutions to these challenges, among many others. Accountants’ expertise, and the ethical frameworks that guide them, has the potential to help drive value for all stakeholders.”