Integrity & Objectivity - Support the Accounting Professio

Lovely Gupta

Anirudh Ravisankar

Hani Nimr

February 1st, 2016

1.100: Integrity & Objectivity

Integrity and Objectivity are two of the major ethical principles that support the accounting profession. It requires accounting professionals to prevent all bias and prejudice from entering into the preparation of financial statements and reports, and to execute the utmost scrupulousness to ensure that nothing infringes upon these duties.

An accounting professional that knowingly presents “materially false and misleading entries”, or one who does not sufficiently modify a statement that is known to be incorrect would be in clear violation of these principles. This also includes accounting professionals who may direct others, either explicitly or implicitly, to do this.

To prevent and safeguard against committing such errors, an accounting professional must ensure that they avoid all conflicts of interest that may exist from within their own organization and those that exist between their organization and other entities. Identification and Evaluation of Conflict of Interest is one of the most important function of a Member. It is nearly impossible in today’s interconnected world to completely avoid all conflicts of interest, but when conflicts of interest are known to exist, it is absolutely imperative that they be immediately disclosed and examined. If it is determined that accounting services can be adequately performed where there exists a known conflict of interest without violating the principles of integrity and objectivity, then organizations can proceed to conduct business. If not, then their contract must be terminated.

        102.4 of the AICPA Code recommends certain steps to be taken to ensure accounting professionals do not subordinate their judgment in the face of external pressure of their supervisors and/or other top management. These recommendations are summarized as follows:

1. Before concluding that a supervisor’s request is unethical, it must be determined if perhaps it falls under an acceptable alternative and legitimate professional difference of opinion which is within professional guidelines.
2. If a member strongly believes that a recommendation from a supervisor would result in a material misrepresentation of actual data, then it is incumbent upon the member to document their findings and present it to other senior management officials before going outside the organization.
3. If after this is done and appropriate action is not taken by senior-level management, then the member may terminate their employment and communicate with other third-parties, including regulatory agencies and external accountants that deal with their employer, of alleged misstatements and inaccuracies. At this time the concerned member may also want to consult with their own independent legal counsel to ensure their own rights are safeguarded.