Business and accounting exist in an environment in which many issues and events cannot be interpreted as absolutely right or wrong. Every decision or choice has pros and cons, costs and benefits, and people or institutionswho 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 businesspeople 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 Federation of Accountants (IFAS), and most large companies.
The 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 interest, professionalism, integrity, and technical and ethical standards. The IMA has a code of conduct that is similar to the AICPA's code. It addresses competence, confidentiality, integrity, and resolution of ethical conflict.
The IFAS is an independent, worldwide organization. Its stated purpose is to "develop and enhance a coordinated worldwide accountancy profession with harmonized standards." As part of its efforts, it has developed a code of ethics for accountants in each country to use as the basis for founding their own codes ethics. Because of the wide cultural, 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 competence, confidentiality, tax practice, cross-border activities, and publicity. It also addresses independence, fees and commissions, activities incompatible 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 text?
- 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.
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.
Corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. Such misdeeds typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities. In public companies, this type of "creative accounting" can amount to fraud and investigations are typically launched by government oversight agencies, such as the Securities and Exchange Commission (SEC) in the United States.
In 2002, a wave of separate but often related accounting scandals became known to the public in the U.S. Several leading public accounting firms - Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG, PricewaterhouseCoopers, and others - have admitted to or have been charged with negligence in the execution of their duty as auditors to identify and prevent the publication of falsified financial reports by their corporate clients which had the effect of giving a misleading impression of their client companies' financial status. In several cases, the monetary amounts of the fraud involved are in the billions of dollars USD.
3. Scan the text again and find the English equivalents of the following Russian collocations.
Разоблачение преступлений; злоупотребление денежными фондами; завышать доходы; занижать расходы, занижение сведений об обязательствах; манипуляции с бухгалтерской отчетностью; мошенничество; начать расследование; надзорный орган; предъявлять обвинение в халатности; давать искаженное представление; финансовое положение.
4. Work with a partner. Put the events in Enron's history into the correct order. Start with D.