The American Institute of Certified Public Accountants (AICPA), formerly known as the American Association of Public Accountants (AAPA), was established in 1887 to set rules and regulations for the reporting of financial data. For over 100 years, there have been committees governing the legality and morality of accounting principles. In 2001, after Enron was found guilty of accounting fraud, the business world took a closer look at ethics in accounting and has since then implemented many ways to curtail fraudulent financial reporting. Due to poor reporting of financial numbers, businesses have to adhere to a code of conduct (GAAP) issued by the AICPA and their constituents.

The AICPA, with collaboration from the Business & Industry Executive Committee (BIEC), has therefore, presented accountants with an “Ethics Decision Tree” to give guidance to professionals that encounter immoral business behavior and gives them a step by step way of dealing with such issues. The first step is to identify the issue with the preparation of financial documents and then to see if the issue is in violation of AICPA ethical standards. If it is, then it is your duty to ask for your company’s guidance, if you are unsatisfied with the answer, you then need to talk to your manager. If you are continuously unhappy with the answer your manager gives or upper management gives, go directly to the Board of Directors. If you are still unsatisfied with the answer you are receiving, the “Ethics Decision Tree” states that you should seriously think whether or not it is in your best interest to be employed by the company. There are many different ways that the “Ethics Decision Tree” could pan out for a professional that is facing ethical implications at the workplace. For example, if you receive a satisfactory answer or result from your skepticism, then the “Ethics Decision Tree” states that you should document everything so that you have it for any future issues that may arise. Hopefully, these problems never arise; however, many businesses have been exposed as fraudulent financial reporting firms over the years.

In the “Ethics Decision Tree” brochure presented by AICPA there are also eight bullet points that serve as a general set of rules to go by when faced with ethical implications. The 1st bullet point states to do your best to resolve the situation internally adding that most issues can be easily resolved. If the issue is not easily resolved, then other bullet points maintain that you should document everything, consult an attorney (if necessary), and leave the company. Of course, this is the worst case scenario involving accounting fraud, however it of utmost importance to be prepared for the worst.

Ethics classes have really become an annual mainstay for CPA’s, in guaranteeing that their licensure stays current, for good reason. For too long in the business world, accountants and financial reporters have consciously falsified financial documents for the betterment of their business. Falsifying financial data not only deceives the shareholders, but also puts those responsible or conscious of it at great criminal risk. In the bigger picture, false financial reporting done on a massive scale would accordingly hurt the nation’s economy. It is with good reason that the AICPA is still around 120 years after its establishment for they work hard to ensure the validity of financial reporting and put together a strict code of conduct for all public accountants to follow; along with the resources to deal with such situations as they arise.

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