Accounting Ethics: Sources and General Applications (Portfolio 5508)

  • This Portfolio discusses the ethical obligations of accountants in the performance of professional services.


Tax Management Portfolio 5508, Accounting Ethics: Sources and General Applications, discusses the ethical obligations of accountants in the performance of professional services. These obligations apply to all accountants engaged in providing professional services, including certified public accountants (“CPAs”), as well as other accountants who perform external audits, internal accounting, tax, or consulting services. The applicable professional standards, including those of the AICPA and PCAOB, are also discussed within the context of the accounting and auditing obligations of accountants.

Other rules also affect accountants in the performance of professional responsibilities, including stock exchange listing requirements, state regulatory requirements, and state accountancy laws. Accountants who perform internal accounting and auditing services are also governed by the rules of conduct of the Institute of Management Accountants and the ethics standards of the Institute of Internal Auditors.

The fundamental ethical mandates for accountants are objectivity and integrity. In addition, for those accountants in public practice, another basic ethical requirement is independence. The principle of objectivity imposes on an accountant an obligation to be impartial, intellectually honest and free of conflicts of interest. The principle of integrity requires that an accountant be honest and candid within the constraints of client confidentiality. The principle of independence requires that the public accountant maintain independence from an attest client as required by standards promulgated by professional and regulatory bodies.

Most importantly, because of the accounting profession’s role in providing information used in public commerce, the accountant has a responsibility to the public, including clients, credit grantors, governments, employers, investors, the business and financial community, and others who rely on the objectivity and integrity of certified public accountants. The ethics rules require that service to this public trust must not be subordinated to personal gain or advantage.

The Sarbanes-Oxley Act of 2002 changed the landscape in the accounting profession by ending the era of self-regulation for public company audits. The Act imposes internal control requirements and other ethics expectations that are also discussed in this Portfolio.

This Portfolio may be cited as Tax Management Portfolio 5508, Tracey, Salter, and Mintz, Accounting Ethics: Sources and General Applications (Accounting Policy and Practice Series). Within the Accounting Portfolio Series, however, references to the Portfolios will include only the Portfolio numbers and titles

Table of Contents

I. Background and Scope of Portfolio
II. Ethics Foundations and the AICPA Principles
III. Ethics in the Preparation of Financial Statements
IV. Ethics in the Audit of Financial Statements
V. Ethics in Tax Practice
VI. Ethical Obligations in Performing Consulting Services
VII. Ethical Obligations of Accountants Performing Other Roles

Dennis Tracey, III
Hogan Lovells US LLP
George Salter
Hogan Lovells US LLP
Steven Mintz
Professor, Orfalea College of Business
California Polytechnic State University
Paul Pierson
Paul Pierson
Senior Director, Peer Review & Professional Standards
Illinois CPA Society
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