Common Ethical Dilemmas As A CPA

Many licensed professionals are caught in uncomfortable situations, and CPAs are no exception. CPAs are often called upon to assist in tax preparation and other money matters. Some of these events, however, can lead to complexities and ethical dilemmas.

Should a CPA work with a specific person or company? Is it worth the risk? Is it worth it to hurt someone’s feelings?

A bad situation can not only be stressful, but also lead to disputes, lawsuits, and even license loss. It can also lead to loss of money and time and harm to one’s reputation. This is especially true in emotional situations such as divorces, bankruptcies, trusts, acquisitions, and mergers.

That’s why CPAs need to proceed with caution. Here are some common ethical dilemmas and how to approach them.

Divorce

A CPA may be close friends with a guy who is now getting a divorce. He has given the couple professional advice over the past decade or so. The couple wants the CPA to give them financial advice as they navigate their divorce. The CPA agrees since the couple is willing to divorce amicably.

However, this can turn into a conflict of interest if things change. What if communication breaks down between the couple? What if the husband asks the CPA to do one thing, while the wife wants him to do the opposite? Where does the CPA’s loyalties lie?

The bottom line is that CPAs need to treat all parties equally. The CPA will need to end his services with one or both parties. If he wishes to continue serving both parties, they will need to sign a conflict of interest agreement.

Business Partners

CPAs also need to treat business partners equally, even if one partner has a higher share of interest in the company than the other. If a business partner comes to a CPA with confidential information, they morally cannot share it with the other partner. But what if the partner tells the CPA about financial problems that the other partner is not aware of? What should the CPA do?

This is a tricky situation, but the CPA may advise appropriate disclosure to both parties. They may also decide to end their services to avoid liability.

Knowledge of Fraud 

What if a CPA has knowledge that a client’s new office manager was previously convicted of embezzlement? Do they tell the client or ignore the situation?

The easiest option is to stay mum if the CPA was not involved in the embezzlement. However, doing nothing exposes the client to risk. If the case were to go to court, the CPA could be held liable for not warning the client of any risks. The best option is to share enough information with the client to prevent future fraud but not so much that they breach client confidentiality.

Keep Your License With Help From a Tampa Certified Public Accountant Licensing Lawyer

CPAs work with money and therefore need to stay ethical at all times. They may want to do clients a favor, but there is often a lot of risk involved in these situations.

Unethical behavior can lead to fines and license loss. Get help from Tampa certified public accountant licensing lawyer David P. Rankin. He has helped CPAs and other licensed professionals hold onto their licenses. Schedule a consultation by calling (813) 968-6633 or filling out the online form.

Resource:

cpajournal.com/2017/10/12/icymi-ethical-dilemmas-facing-cpas-three-case-studies/