Ethics

First Written Assignment: Professional Ethics

1. Professional ethics has become increasingly more important over the years. For example, the recent financial scandals involving Enron, Tyco, WorldCom and other companies have raised concerns about ethics in business. Given these recent scandals it has become more and more essential that all professionals behave ethically to prevent events such as these and restore the public’s trust in their corresponding profession.

2. The ethical requirements of CPA’s and all professionals in general is that they are expected to be competent in their fields, execute their jobs in a professional manner, and understand their responsibility to act ethically to their clients. However, the ethical requirements of CPA’s differ from other professionals is that they must remain independent from their clients even though they are the ones who are paying them. Since CPA’s have a duty to verify the company’s financial statements and ensure their users are well informed about the company, it is imperative that auditors remain independent in fact and appearance—meaning their opinion is unbiased to themselves and to others.

3. The purpose of an audit is to enhance the credibility of a company’s financial statements to its users by providing reasonable assurances from an independent source. If financial statement users believe that the company or other parties influenced the auditors, their audit report become worthless and fails to achieve its objective. Therefore, it is essential for an auditor to be independent from the company in order for them to issue an unbiased opinion.

4. Independence of mind (independence in fact) is a state of mind that permits the formulation of an opinion, without being affected by influences that compromises one’s professional judgment., allowing a person to act with integrity, exercise objectivity and professional skepticism. Independence in appearance, on the other hand, is the avoidance of facts and...