Aicba Code Of Ethics

In any professional field, there are codes of conduct put in place that are meant to discourage unethical behavior. These rules are commonly retaught or reinforced so people within a field are continuously aware of what society expects of them. Usually people get tired of being reminded of these rules as some of them seem like basic curtesy or something anyone with decent parent was taught during youth, but that attitude is what lead to one of America’s biggest financial scandal, Enron. Enron is a perfect case of what happens if you ignore the ethics of accounting and just do anything for profit. This scandal is full of examples of disobeying the basic ethical standards set up by the American Institute of CPAs or better known as the AICPA code.
In IESBA there are multiple fundamental principles that describe the ideal accountant. These principles dictate the accountant’s integrity, objectivity, competency, confidentiality, and overall professional behavior. (IESBA, 100.4) These match the standards set in the AICPA code, but IESBA does alter in approach for some other areas of ethics. For example, IESBA code uses the conceptual framework approach to evaluate various ethical conduct problems while the AICPA code uses that approach if their rules don’t apply to the situation an accountant is in. In IESBA independence requirement are more detailed with two separate sections, one focusing heavily on the independent standard of audits and financial statement reviews and the other focusing on the independents standards of other accounting engagements. Accountants in public practice also have a few additional provisions under IESBA including professional appointment, which details the acceptance or continuation of engagement with a client if there is a possible threat because of the engagement. (Allen) There are other minor differences between the two, but they essentially serve the same role. They both instruct accountants on what they are responsible for, but why did these code go unnoticed at
For example, in the case of AICPA if an accountant feels victim to possible conflict of interest they must identify the conflict, evaluate it, and based on the evaluation must disclose it if the threat is at an acceptable rate. If the threat isn’t at an acceptable level then the application of safeguard must be done by the accountant to diminish or remove the potential results of the threat. (AICPA, 1.110.010.01-.18) In the case of Dennis Moberg as the CEO of Enron his conflict of interest must not only follow the process detailed in the integrity and objectivity rule, but also follow the confidential client information rule. This rule details how a director must not only be aware of general accounting principles, but also be accurate in the practice of the principle when looking over the financial statements. Jeffery Skilling showed a lack of capacity for either as he tampered with the financial statements and gave no notice to those changes. Enron’s accountants also showed an inability to fulfill the standard set in AICPA or IESBA. According to IESBA they failed to show integrity and objectivity as their conflict of interest is abundantly clear. They also showed lack of confidentiality as member of Enron board including Skilling provided info to auditors that wasn’t needed for them to do their job and was meant to provide incentive. Their professional behavior in public was also not up to