Common Ethical Issues For CPAs
If you are a licensed professional, you will likely have to deal with an ethical issue at some point. Certified public accountants (CPAs) are no exception. Because they deal with money, ethics come into play on a daily basis. Do they report the truth? Should they fudge the numbers to make a client happier?
CPAs face many issues during the course of their day, but some of the most common ones include conflicts of interest, aggressive tax practices, and “cooking the books.” Cooking the books refers to altering official accounting records in order to deceive or mislead.
These are all major breaches in the accounting code, and issues around conflicts of interest are the most common ones. Aggressive tax practices often involve coercion by senior employees in their company in order to make numbers look better.
This is where cooking the books comes in. This often involves manipulating numbers to increase revenue and decrease expenses to show higher earnings or profit. Some examples include:
- Not recording all expenses that occurred
- Manipulating accounts receivable records in order to obtain loans
- Using credit sales to exaggerate revenue
- Buying back stock to disguise earnings decreases
CPAs may also engage in other forms of accounting fraud such as:
- Creating payroll records for nonexistent personnel
- Forging signatures to authorize payments
- Illegally diverting payments by creating false bank accounts and financial records
Workload demands are a common cause of these ethical issues. Capacity constraints can cause a person to feel overwhelmed and this can cloud their judgment. This is often due to a lack of staff. Companies are cutting back on hiring, causing existing employees to feel the pressure.
It’s also important for accountants to understand that they have an obligation to disclose misbehavior. If they see something fraudulent going on in their organization, there may be a temptation to turn a blind eye to it, but it needs to be reported. That may be a difficult thing for accountants to do, especially when it involves a colleague or manager, but it is part of their obligations as a professional accountant.
Accountants as professionals have an obligation to act in the public interest. This means complying with five fundamental principles: integrity, objectivity, professional competence, confidentiality, and professional behavior.
To prevent unethical behavior, it is important to take a step back and look at a situation with that professional lens. Don’t let the day-to-day pressures influence you and make you forget about some of these broader obligations.
Keep Your License With Help From a Tampa Certified Public Accountant Licensing Lawyer
Dealing with money and numbers comes with a lot of ethical issues. CPAs need to ensure their calculating and reporting is true and accurate.
If you are dealing with licensing issues, a Tampa certified public accountant licensing lawyer from The Law Offices of David P. Rankin, P.A. can help. I can help you resolve your licensing or disciplinary matter so you can resume your practice. Schedule a consultation by calling (813) 968-6633 or filling out the online form.
Source:
accountantsdaily.com.au/regulation/18939-conflicts-of-interest-workloads-put-accountants-in-ethics-spotlight
