Public trust in the Accounting Profession Essay

Restoring of the frequents confidence in the accounting affair is of paramount importance and rightly so. This profession has suffered major drawbacks in the level of combining and confidence the semipublic holds in its work because of major international corporate collapses. The accounting profession is a profession akin no other, and one of the most noble in the market place. With that precious franchise come about unique pressures and ch altoge in that locationnges.There is increased scrutiny of financial reporting deficiencies and corporate disclosure requirements. This has had a disallow and cumulative impact on the perceive credibility of financial reporting. The issue is now at the headland of public debate about the accounting profession and its effectiveness. The decline in reporting credibility is general across capital markets worldwide, with the scale of the problem partly attributable to the unprecedented level of sh atomic number 18 prices in many markets. Res toring public trust and confidence in a manner that quite a little be uphold over the long term requires concerted actions by a various parties in order to channelise some very real systematic weaknesses plaguing our current corporate governance, accountability and related systems. The ramifications of Enron, WorldCom and Parmakt are far, reaching. The hallmarks of public accountancy are objectively, ethics and independence. The public engages an accountant because they trust ability of that individual to provide demand function consistent with high maestro standards. Likewise, the public reasonably expects that if an accountant is negligent or incompetent, he or she get out be held professionally accountable. Accounting professionals must comply with respectable standards regardless of the undertaking they are performing. It is to the sincere advantage of the accounting profession if in all fields of activities it exercises care to go along scrupulously all professional a nd ethical standards-competence, independence, integrity, and a professional attitude. The accounting professionals must not precisely avoid a conflict of interests, but also the appearance of a conflict of interest. Forces of change much(prenominal) as escalating competition to obtain and hold on to auditing clients and potential conflict of interest as accountants offers a literal supermarket of non audit services, presents new challenges to auditor independence. Principles of professional conduct are meant to guide accountants not unless when offering traditional services, but also when conducting any professional service on behalf of clients.The accounting professionals responsibility to the public is not only carryd in their professional code, but it is an implicit in(p) component of our existence and, most importantly, what differentiates public accounting as a profession from merely a business or occupation. The professional standards of the AIcertified public accountant state clearly that any profession shows its worth by evaluate its responsibilities to the public. (AICPA, 1992) The cornerstone of the guidance provided by AICPA remain as todays foundation of ethical behavior- objectivity, integrity, trust and most importantly independence-independence is not only a condition of mind, but one of character as well. As a professional, a CPA cannot subordinate his professional judgment to the views of his client and must not assume any interest in the outcome. Additionally, he must be free of any bias. This is so important that the independence is question must not only be independence in point but also in appearance. In environments where thither are focused opinions, vested interests and partial analysis there is need for unrelenting objectivity. The ability of an accounting professional to maintain objectivity is at the heart of the implanted respect for assurance provided during an assignment. (AICPA, 1992) On integrity the AICPA code of prof essional conduct states that, Uncompromised integrity is a theatrical role from which the public trust derives and the benchmark against which a member of the profession must ultimately test all decisions. This is all meaningless unless trust has been established. And this trust is earned status and must be nurtured and guarded by the CPA as his most precious investing. For when the publics trust wares the CPA is not yearlong the unique accounting professional. (AICPA, 1992)Virtues are properties which predispose a protagonist to act in a indisputable way. There is need for virtues in accounting as these enable accountants to balance conflicting responsibilities and pressures. Requirements of the professions code of conduct are related to relevant virtues. Those virtues identified include trustworthiness, benevolence and altruism, honesty and integrity, right and open-mindedness. Benevolence is characterized by the true goodness of the spirit and mind. Accounting professionals are required to show deaf(p) kindness when they are carrying out their work. This enhances the trust and confidence in them. Biasness shows that a CPA cannot be indisputable and this is one character that true accounting professionals should avoid.Ethics are truly the cornerstone of the accounting profession and have a great impact on corporate America. Unethical activity can have harmful effects such as the junk bond debate, and the loans and savings catastrophes. Traditionally, the accountant has been placed in the role of watchdog, however, in todays business environment a trusted consultant can provide more by guiding a business to live up to its own ethical standards and leading the way to increased cost savings, profits, and new business.A discussion of independence cannot be make do a comment on the crucial important of the state of being independent in both appearance and fact. Therefore an accounting professional must really have two kinds of independency. Independence i n fact refers to objectivity, to the quality of not being influenced by regard to personal advantage. An auditor must mensurate his relationship with a client in order to determine whether his opinion would be considered objective and deaf(p) for one who has knowledge of all the facts.AICPA Rule 101 on independence indicates that independence cannot be guaranteed if there is any directly monetary interest or material interest in the company for which the services are provided. Therefore it would be safe to assume that if an auditor had any financial interest in a firm or served as an officer or director, his judgment could appear to be overcast and independence would be considered impaired. Unswerving independence and impartiality is the peer beyond price and the indispensable guard for the profession. (AICPA, 1992) Economic development is directly linked to the credibility of financial information. The public is discouraged from making investment when it is not confident in the financial reporting process, or in the financial information released as part of that process. This in turn prevents capital market growth. The accounting professionals, together with financial institutions, regulators, and others face on uphill battle in building confidence in financial information in the diminish of recent crises around the globe. .In recognition of the public trust afforded to public accountants in the USA, each state recognizes public accountancy as a profession and issues the certificate of Certified Public Accountant (CPA). The CPA certificate symbolizes technical competence. The licensing of CPAs in the USA by the states reflects a belief that public interest will be protected by an official identification of competent professional accountants who offer their accounting services, which are also provided by non-CPAs. The various states generally restrict the auditing of financial statements to CPAs.ReferenceAICPA, Code of Professional Conduct, as amended Jan uary 14, 1992. (New York AICPA), 1109.David A. Costelo.1994. Accounting, Ethics and the Public Interest. New man Library.