Ethics and the CPA in Industry
- In 2003, he Society’s Board of Directors created the
Quality Enhancement Policy Committee (QEPC) to ensure that
peer review and ethics are meeting the needs of the accounting
profession and the public that it serves. Now that the board
has approved the final draft of the QEPC’s white paper
on peer review (it was published in the March CPA Journal)—and
implementation of the white paper’s concepts is being
discussed—the committee has begun to consider the next
item on its agenda: ethics.
QEPC has already gathered some interesting historical information
on the profession’s ethics process. For example, did
you know the profession’s original ethical standards
were written at a time when CPAs working in private industry
were few and far between?
times have changed! These days, CPAs are working in public
accounting firms, major corporations, schools, government
agencies … almost everywhere. CPAs in industry now
constitute approximately one third of our membership and
half of the AICPA’s. This professional evolution led
the QEPC to the following question: Do the profession’s
ethical standards place enough emphasis on the issues currently
faced by members in industry?
Role, Different Dilemmas
of the ethical dilemmas faced by CPAs in industry are very
different from those faced by CPAs in public accounting
firms. For example, let’s say you are a CPA working
at a publicly traded corporation and, after seeing disappointing
financial results, your boss, the CEO, instructs you to
book a transaction differently so the company meets income
expectations. What do you do? If complying with the request
would result in the fraudulent recording of a transaction,
you should disclose the situation to your audit committee
and, hopefully, your boss would be fired. But what if the
CEO asked you to do something “on the edge,”
but not clearly illegal or in violation of professional
standards? Under what circumstances would complying with
your boss’ instruction be unethical?
a public accounting firm’s client were to consider
doing something unethical, the public accounting firm should,
of course, counsel against that course of action and then,
if the counsel is rejected, resign from the engagement.
But would you, as a CPA in industry, be expected to resign
in the earlier example? What about your salary, your career,
and your family? You could consider going public with your
situation, and whistleblower laws protect employees to some
degree. But doesn’t a CPA in industry also have a
duty of confidentiality to his or her employer?
major difference between a CPA working in a public accounting
firm versus one in private industry is how each defines
the “client.” While public accounting firms
work for, and are paid by, the company that hired them for
an independent audit, their ultimate client is always the
public. The public accounting firm’s purpose is crystal
clear: to protect the public interest. It is their raison
d’etre. But who is the ultimate client for a CPA working
in private industry? The CPA’s employer, or the public?
The profession’s ethical literature provides little
the NYSSCPA is just beginning to scrutinize the profession’s
ethics process and gather information, I’d like to
ask our members and readers the same question the QEPC asked:
Do you think the profession’s national and state ethical
standards are sufficiently broad to cover CPAs working in
private industry? Let me know your thoughts at email@example.com.
Your input will help guide the QEPC and the Society as we
seek to explore what, if any, changes should be made.
Publisher, The CPA Journal
Executive Director, NYSSCPA