Code of Conduct

Code of Professional Ethics and Conduct

ACC 499

James N. Lewis

Instructor: David Repp

DATE: March 3, 2013

CPA violation of Rule 102 – Integrity and Objectivity

The expectation of the code and how the CPA violated it

AICPA Rule 102- Integrity and Objectivity, stipulates that a member should execute his or her professional responsibilities honestly an objectively; avoid situations that may create a conflict of interest; not knowingly misrepresent any facts or subordinate his or her judgment to that of others.

After an investigation, Mr. Paul T. Fink a Controller and CFO of a public company was charged with violating AICPA code of conduct Rule 102 - Integrity and objectivity.

According to AICPA’s Interpretation 102-1, a member must not knowingly make false representations in the financial statements or company records prepared by him or her, and he or she must not sign or allow someone else to sign any document that contains materially false or misleading information (Interpretations under Rule 102 - Integrity & Objectivity).

Mr. Fink was guilty of the following violations of Rule 102 when he: purposely backdated shipping documents; affixed his signature to a sales invoice supported by false information; admitted that he knowingly signed Form 10-QSB falsely attesting that the company’s financial statements were prepared in accordance with GAAP; he signed Forms 10-QSB falsely stating that the company would fulfill the terms of a sales contract; continued to recognize contract revenue under the percentage of completion method, even though he knew the company would be unable to fulfill all the terms. He was also guilty of violating Interpretation 102-4 regarding subordination of judgment by a member by failing to investigate suspicious transactions in a timely fashion, he accepted his supervisor’s argument that these transactions were legitimate.

To make matters worse, he was also guilty allowing too much time to pass before...