Accounting Ethics

The CPA Journal published an article titled Incorporating Professional Ethics Throughout an Accounting Curriculum. This article was published in the September 2005 edition and focuses on the dilemma the educational community is facing in trying to incorporate ethics teaching in higher education classes. Educators are concerned about ethics classes taking away from the technical classes that are a necessity in the accounting curriculums. The authors of this article propose and have been practicing a modular approach to this dilemma. (Carnes, 2005)

The modular approach that the authors have been practicing incorporates ethics instruction into two technical courses. The ethics instruction parallels the technical instruction of the course and therefore does not detract from technical courses but provides the necessary ethics knowledge. The authors have created a program that provides very little in class instruction. The instruction is just a brief overview while the knowledge comes more from teamwork and outside class-work with that team. (Carnes, 2005)

Ethics in accounting is a major issue. Ethics in accounting has been very much in the public eye as of late. Many large corporations are struggling and failing because of a lack of ethical decision making in their accounting practices. Having complete and accurate accounting is paramount in ensuring a solid future for any organization. The government is very aware of the importance of ethics in accounting as well and passed the Sarbanes-Oxley Act in 2002 to ensure that accurate accounting activities are practiced.

The Sarbanes-Oxley Act provides three major categories of protection of financial data accuracy. First it develops the Public Company Accounting Oversight Board (PCAOB). “This board is required to: register all public accounting firms that provide audits for public companies, establish standards relating to the preparation of audit reports for public companies, conduct inspections (reviews) of accounting firms, conduct investigations and disciplinary proceedings and impose appropriate sanctions on public (sic) accounting firms whose performance is inadequate, and enforce compliance with the Sarbanes-Oxley Act” (Albrecht, 2005, p. 271). Next the act provides constraints on auditors. These constraints are determined by the following requirements of the act: “accounting firms who audit public companies are prohibited from providing any non-audit services to their clients, including: (1) bookkeeping or other services related to accounting records or financial statements, (2) financial information systems design and implementation, (3) appraisal or valuation services, (4) actuarial services, (5) internal audit outsourcing services, (6) management functions or human resources, (7) broker or dealer, investment adviser or investment banking services, (8) legal services and expert services unrelated to the audit, and (9) any other service that the Board determines is impermissible, requires that audit partners on engagements be rotated off the audit every five years, and requires that auditors report to the audit committee rather than the CFO or other members of the company’s management” (Albrecht, 2005, p. 271). Finally, constraints on management are provided by the act. Requirements for management are as follows: “the