EDITORIAL

CPA Responsibilities

Article 1 of the CPAs’ Principles of Professional Conduct—Responsibilities reads:

In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.

As professionals, CPAs perform an essential role in society. They are responsibile to all those who use their professional services. They also have a continuing responsibility to improve the art of accounting, maintain the public’s confidence, and carry out the profession’s special responsibilities for self-governance. The collective efforts of all members are required to maintain and enhance the traditions of the profession.

One way in which a group of individuals in a profession distinguish themselves from others is to adopt ethical principles to form the basis of their profession’s culture. The essence of the first principle of the CPAs’ Code of Professional Conduct (the NYSSCPA and AICPA have conforming codes at the level of principle) is that the activities of individual professionals are the building blocks of a profession’s culture. This reminder is especially relevant when the public questions the ethical commitment of many actors in the businesses and professions of finance.

Individual Responsibility

Although Article 1 speaks about the responsibilities of individual professionals, rather than their employers, for maintaining and enhancing the traditions of the profession, most CPAs depend upon the firm where they are first employed to teach them the culture of the profession (firms’ most-often-cited reason for the experience requirement) and its ethical principles. The management of most firms understand auditor independence rules, and they make a good-faith effort to ensure that their staff is aware of these rules.

How many firms, however, actively teach and promote the principles of Professional Conduct to their young professionals? How many firms actively provide ethical development for their young professionals? One would not necessarily expect a business entity such as a CPA firm to provide such training. Even if the individuals in management take seriously their individual responsibility to maintain and enhance the traditions of the profession, time on the job will likely be spent on other activities.

The CPAs’ code, like many other, says up front that the responsibility for following the ethical codes rests with individual professionals rather than the businesses that employ them. Professionals are expected to follow their profession’s ethical codes even when these differ from their individual moral convictions or from the demands of their employers. Most professions develop ethical codes in order to protect the group reputation from the variability of subjective moral choices and to provide their members with a support system for decisions that might anger an employer or client. Professional ethical codes also place demands of a higher standard of conduct on subscribers than required by law. In other words, ethical codes for professionals are meant to connect the individual to a larger group than those working for a single employer, but to a smaller group than identified by law. A distinguishing mark of a profession is that its practitioners think of themselves as professionals first and as employees second, and that their ethical conduct is above reproach.

Traditions of the Accounting Profession

The phrase “maintain and enhance the traditions of the profession” has a somewhat haunting ring to it. It means different things at different times, depending on what is occurring in the environment in which CPAs work. I have been asking CPAs in a variety of circumstances how they would interpret this ethical responsibility in today’s environment. Some responses are predictable, but others are surprising. Here’s a short list of some of the things I’ve been hearing:

Self-Governance

The profession’s “special responsibility for self-governance” is undergoing considerable change right now. Federal regulators and the Public Company Accounting Oversight Board (PCAOB) are performing many regulatory duties for SEC engagements that the private sector used to perform. By all indications, the reforming thrust of the Sarbanes-Oxley Act and the PCAOB will lead to additional regulatory activities. The greater influence of federal and state regulators should not cause CPAs to lose heart in their own self-governance. Rather, we should acknowledge that our activities are critical to society, and that the public’s interest in our performance reflects our importance. The need for rigorous, farsighted self-governance has never been more pressing, at all levels of the CPA profession. Embracing self-governance beyond the expectations of the public remains the essence of our responsibility to our profession. That’s Article 1.