Acc 211

TO: Lori Hatchell, Professor

FROM: Amanda Shepard

DATE: November 13, 2014

SUBJECT: Ethics in Accounting

Introduction

Ethics are extremely important when working in the accounting world. When dealing with ethics you must really think about what is right or wrong. Most businesses have codes in place to help identify the ethics policies they want you to adhere to. Since ethics can be a “grey” area for some it can be crucial for accountants to have ethical codes in place to insure they are behaving ethically. There are many codes of ethic policies that are written rule in accounting.

Conflict of Interest and Code of Conduct are powerful ethical dilemmas that can be faced in accounting.

Conflict of Interest

A Conflict of Interest is defined as a relationship or action that possibly can impair an employee’s ability to make a fair and objective decision.

In accounting the IESBA, International Ethics Standards Board for Accountants, section 220.1, states a professional accountant will not undertake any professional service for two or more clients who have a particular matter that may be in conflict. It is also states that a professional accountant cannot have a conflict of interest for a particular matter that they are representing their client for. For example, a professional cannot advise two clients who are in a legal dispute with each other.

The IESBA, section 220.6, requires a professional account in public practice to take reasonable steps to identify circumstances that might create a conflict of interest. Included, but not limited to identifying the nature of the relevant interests and relationships between the parties involved and the nature of the service and its implications for relevant parties.

The AICPA, American Institute of CPAs, has three ethical rules for Conflict of Interest, .02-102-1, when handling financial statements. These rules are essential for anyone in the accounting field to be familiar with. The rules could be...