Discuss About The Trust General Public Accountancy Profession?
APES 110 Code of Ethics for Professional Accountant is issued by the Accounting Professional & Ethical Standards Board Limited and is in effect from 1st July 2011. These codes and standards of ethics are issued to be followed by the professional accountants of Australia whether they are performing their professional services in Australia or outside the country. Code of ethics are the well-established standards of what is considered as ethically right or wrong in terms of obligations, benefits of the general public, truth and fairness etc. Accounting profession ethics is the application of moral principles in the accounting and auditing practices so as to act in the interest of all the stakeholders. The codes are to be followed in true sense by the accounting practitioners to avoid the disciplinary actions against them. The ethical compliance by the company is the key to gain the trust and confidence of the public.
The distinguishing feature of the profession of accounting is that the accounting professionals has the statutory duty to act in public interest. In order to act in general public interest the members of accounting profession have to strictly adhere to the APES 110 code. Accounting information is the organised arrangement of the raw accounting data relating to the business operations of the company presented in the financial terms (George, Jones & Harvey, 2014). The work of accountant the auditors has an important role for any organisation as the shareholders potential investors and the other stakeholders of the company put reliance on the financial reports of the company to a great extent to take informed decisions about the investments made or to be made in the concerned company (Duska, Duska & Ragatz, 2011). Therefore, the accounting and auditing professionals are required to maintain a higher level transparency while performing financial reporting functions. Accountants are the one who prepare and present the financial statements of the company and auditors are the professionals who provide their opinion on the true and fair view of financial statements (Kaidonis, 2008) (Rossouw et al., 2010).
APES 110 deals with the code of ethics accounting professionals are required to follow and the guidance there upon. All the professional accountants are mandatorily required to follow APES 110 while they are engaged in providing professional services (Accounting Professional and Ethical Standards Board (APESB), 2013). As the members while providing the services are required to satisfy the clients, at the same time they must also keep in mind their statutory obligations towards their profession. The codes of ethics prescribed under APES 110 requires a member from accountancy profession to follow the fundamental principles so as to act in public interest and to generate a greater degree of trust among them. These principle are explained in details as below:
Integrity: They must maintain the transparency and remain honest in all their professional relationships. The members should be fair enough while dealing with the external parties such as their clients and employers. The professionals must not be associated with any reports, returns and other forms of communication between company and the outsiders which they believe to be false or misleading. Rather, they must try to communicate the matter of concern with those charged with the governance to make the corrections in the statements so as to avoid the falsification of reports. If the management or those charge with governance are not willing to make the required changes the professional accountants must make necessary actions to disassociate their name from the reports.
Objectivity: The members must not allow the undue influence from any part of management to impact their professional obligations. They must remain unbiased whenever providing the professional services. The professional accountants must not, under any condition, compromise their professional judgements with the company’s judgements (Fan, Woodbine & Cheng, 2013). As their work can be relied upon only when there is an element of independence present in their services, they must not let their personal relationships with the management impair their independence and objectivity.
Professional Competence: The professionals are supposed to apply the requisite amount of their knowledge, skills and due care while performing their duties. The code of ethics requires the professional accountants to be highly qualified and to possess the required degrees and certifications of the specified institutions. They must make possible efforts to ensure that the clients are given the competent services (Trung, 2015). Also, they must ensure that the professional services they are providing are not breaching the trust of the public in general.
Confidentiality: The professional accountants must not disclose the confidential information in public which is acquired by them during the course of provisioning of services until or unless disclosure of such information is in public interest or it is requirement of laws and regulations. While appointing the professional accountants the company expects them to respect the principle of confidentiality to the full extent so that the sensitive information which may affect the company’s performance adversely is not revealed outside. However, when there is any requirement under any regulations to disclose certain matters which are of public interest the member must disclose them so that they could take informed decisions.
Professionalism in behaviour: The members of the accountancy profession must not bring disrepute to their profession while engaged in provisioning of professional services and must abide the rules and regulations about the professional behaviour as prescribed by the regulatory bodies (Bayou, Reinstein & Williams, 2011).
The general public invest their funds in the business of the company but they are not involved in the business functions of the company. Due to the non-participation in the internal business activities they do not possess the knowledge of company’s actual functioning and performance (Bampton & Cowton, 2013). It is of utmost importance for the investors of the company to know about the company’s financial performance and standing in which they have invested their funds. Financial reports is the only source of information available with the investors. Therefore, the financial statements must represent the true picture of company’s actual position in the market. The auditors are appointed to raise the credibility in the eyes of the investors about the company through the independent opinion on the fairness of the financial statements (Bennie, Cohen & Simnett, 2011). The auditors while conducting an audit engagement must ensure that the financial statements that are prepared and presented by the company are not misleading and are not prepared with the objective of deceiving the potential investors.
APES 110 provides the code of conduct to the professional accountants whether they are in practice or not. While performing the assurance services it is the basic requirement for all the professional accountants to apply the highest degree of knowledge in their work. They must not be negligible towards their professional duties so as to maintain the confidence and greater level of reliance the external parties put in their professional work. If any failure is committed in adhering to these codes of conduct by the professional accountants, it may invite serious disciplinary proceedings against them.
Acting in public requires the professional accountants to respect the legitimate interests of all the stakeholders of the company such as the client, government and other regulators, shareholders and other investors, the providers of finance such as the banks and the financial institutions, employees of the company, business community etc. As all the stakeholders heavily rely on the objectivity and the integrity of accountancy profession to properly support the operation of commerce (Houghton & Campbell, 2013). The extreme reliance over the professional accountants makes it necessary for the members of accountancy profession to take into account the consideration about the interest of general public before accepting an appointment as a professional accountant for any company. They must also bear in mind before acceptance of any accountancy or auditing engagement the level of public interest in the entity. APES 110 also sets out the guidance for the assurance providers on the independence which is the prime requirement of every review and assurance practices as it enables the maintenance of transparency and truthfulness of the accounting information delivered by the company in the form of financial reports (Chapple et al., 2010).
It can be well concluded from the above research on the role of ethics in generating the trust of general public in the accounting profession. Not only to gain the confidence of public in general, the code of ethics are necessarily required to be adhered to comply with the regulatory requirements. If the ethical codes are followed strictly this will not only enhance the confidence of public in accounting profession but also will enhance the quality of professional services by the members. As financial reports of the company is the only effective way of acknowledging the stakeholders of the company about the company’s financial performance, it is highly recommended to the professional accountants to prepare and present the financial statements in the best possible manner in order to avoid the falsification of the information in the reports. The assurance providers shall follow the fundamental principles prescribed in APES 110 in providing the professional services.
References
Accounting Professional and Ethical Standards Board (APESB). (2013). APES 110 Code of Ethics for Professional Accountants.
Bampton, R., & Cowton, C. J. (2013). Taking stock of accounting ethics scholarship: A review of the journal literature. Journal of Business Ethics, 114(3), 549-563.
Bayou, M. E., Reinstein, A., & Williams, P. F. (2011). To tell the truth: A discussion of issues concerning truth and ethics in accounting. Accounting, Organizations and Society, 36(2), 109-124.
Chapple, L., Crofts, P., Ferguson, C., & Hronsky, J. (2010). Professional independence and attachment bias: An exploratory study.
Duska, R., Duska, B. S., & Ragatz, J. A. (2011). Accounting ethics. John Wiley & Sons.
George, G., Jones, A., & Harvey, J. (2014). Analysis of the language used within codes of ethical conduct. Journal of Academic and Business Ethics, 8, 1.
Han Fan, Y., Woodbine, G., & Cheng, W. (2013). A study of Australian and Chinese accountants’ attitudes towards independence issues and the impact on ethical judgements. Asian Review of Accounting, 21(3), 205-222.
Houghton, K., & Campbell, T. (2013). Ethics and auditing (p. 354). ANU Press.
Kaidonis, M. A. (2008). The Accounting Profession: Serving the public interest or capital interest?. Australasian Accounting Business & Finance Journal, 2(4), 1. Kaidonis, M. A. (2008). The Accounting Profession: Serving the public interest or capital interest?. Australasian Accounting Business & Finance Journal, 2(4), 1.
Martinov-Bennie, N., Cohen, J., & Simnett, R. (2011). Impact of the CFO’s affiliation on auditor independence. Managerial Auditing Journal, 26(8), 656-671.
Rossouw, D., Prozesky, M., du Plessis, C., & Prinsloo, F. (2010). Ethics for Accountants & Auditors. OUP Catalogue.
Trung, N. K. (2015). Ethics Education In The University. International Journal of Scientific & Technology Research, 4(8), 5-10.
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