July 8, 2013
Purpose of the AICPA Code of Professional Conduct
In the business world, the accounting area of a business is one area in which a great deal of risk resides. An individual can easily transpose numbers (inadvertently or intentionally), revenue or expenses can be misstated, or financial documents can easily be destroyed. These are but just a few examples in which there is risk in accounting. The AICPA Code of Professional Conduct (AICPA) is a very detailed book prepared by the American Institute of Certified Public Accounts that addresses the principles and rules that accounting professionals, more specifically certified public accountants (CPA), should abide by when working with financial data owned by their employer and/or clients (American Institute of Certified Public Accountants, 2012).
While CPA’s and other accounting professionals are not required to adhere to the rules stated within the AICPA, it is highly recommended that these individuals follow the AICPA rules as the rules go hand-in-hand with the testing for CPA’s as well as the generally accepted accounting principles (GAAP). The AICPA creates the foundation by which accounting professionals practice, whether they practice in public practice, in government, in industry or in education (American Institute of Certified Public Accountants, 2012). Within the AICPA, the principles provide the framework for the rules which accounting professionals should follow in their day-to-day work-related duties.
Ultimately, the AICPA is considered the foundation of ethical reasoning in accounting as one of its’ purposes is “to maintain and broaden public confidence, whereas all members should perform all professional responsibilities with the highest sense of integrity” (American Institute of Certified Public Accountants, 2012). Integrity is a character trait that is paramount to professional recognition and is the quality from which the public trust derives and provides the benchmark against which must ultimately test all decisions made by accountant professionals (American Institute of Certified Public Accountants, 2012).
The Three Most Important Purposes of the AICPA
In the accounting profession, there is a wide audience that pays close attention to the data collected and presented by accountants. This audience includes, but is not limited to, company leadership, company employees, investors or shareholders, Wall Street analysts, and creditors that provide backing for a company to function. For each of these audience members, how a particular company functions, in terms of revenue growth and ability to operate with positive cash flow, is highly regarded and therefore identifies whether or not the company is financially successful. It is my opinion that the three most important purposes of the AICPA are to protect the accounting employee (and the profession as a whole), to protect the investors of the company and to protect the creditors of the company.
When an accounting professional follows the principles and rules set forth within the AICPA, he is practicing in the best interests