Ethics in Business and Accounting

Business and accounting exist in an environment in which many is-

sues and events cannot be interpreted as absolutely right or wrong. Every

decision or choice has pros and cons, costs and benefits, and people or

institutions who will be affected positively or negatively by the decision.

In a setting where many issues and events fall between the extremes of

right and wrong, it is very important that accountants and business-

people maintain high ethical standards. Several groups have established

codes of ethics that address ethical behavior to help accountants and

their business associates work their way through the complicated ethical

issues associated with business issues and events. These groups include

the American Institute of Certified Public Accountants (AICPA), the

Institute of Management Accountants (IMA), the International Fed-

eration of Accountants (IFAS), and most large companies.

Members of the AICPA adopted a code of professional conduct

that guides them in their professional work. It addresses such issues as

self-discipline, honorable behavior, moral judgments, the pubic inter-

est, professionalism, integrity, and technical and ethical standards. The

IMA has a code of conduct that is similar to the AICPA’s code. It ad-

dresses competence, confidentiality, integrity, and resolution of ethical


The IFAS is an independent, worldwide organization. Its stated pur-

pose is to “develop and enhance a coordinated worldwide accountancy

profession with harmonized standards.” As part of its efforts, it has de-

veloped a code of ethics for accountants in each country to use as the

basis for founding their own codes of ethics. Because of the wide cul-

tural, language, legal, and social diversity of the nations of the world, the

IFAS expects professional accountants in each country to add their own

national ethical standards in the code to reflect their national differences

or even to delete some items of the code at their national level. The code

addresses objectivity, resolution of ethical conflicts, professional compe-

tence, confidentiality, tax practice, cross-border activities, and publicity.

It also addresses independence, fees and commissions, activities incom-

patible with the practice of accountancy, clients’ money, relations with

other professional accountants, and advertising and solicitation.

2. Read the text again and answer the following questions:

– What professional accounting organizations are mentioned in the


– What have these organizations done in terms of professional ethics?

– What major issues do accountants’ codes of ethics address?

3. In each paragraph of the text find the key topic sentences that carry

the main load of logic and a few of those that are closely related to them. On

this basis prepare a summary of the text consisting of 5–7 sentences.

4. Find in Supplementary Reading the excerpts from AICPA Code of

Professional Conduct and render their main idea in Russian.

Text 6

1. Before you read the article below, exchange information with your

partners on the following question:

· Have you heard anything about the scandal associated with the

American energy giant Enron or any other business scandals in the

United States or Europe involving accounting?

2. Read the text and learn about recent developments in the accounting

profession in the USA.