A code of conduct is defined as a set of guidelines designed to set out the acceptable behaviors expected for members of a particular profession, group or association. Ethical codes help employees maintain levels of discipline that go beyond the laws and regulations requirements. By joining professional organizations, people who work in accounting and finance fields agree to uphold high ethical standards of their profession.
All the leading professional associations have a code of ethics: AICPA-The code of Conduct of the American Institute of CPAs sets out ethical principles and rules for its members. AIPCA positively states and provides guidelines that the CPAs and other professionals should strive to follow, and the rules of conduct are explicit to the specific actions that should be or should not be taken. IMA-The Institute of Management Accountants Standards of Ethical Conducts applies to all of financial management and management accounting, and the IIA code of ethics that is applicable to Certified Internal Audits (Duska, 2003).
The AICPA depicts the accounting profession’s public consists of credit grantors, governments, clients, investors, employers, the business and financial communities. Management accountants, financial managers and internal auditors most commonly work in organizations to which they provide accounting, editing and other services; but they too, as professionals, must be mindful of their obligations to the general public (Fitch, 2007).
Several people use the services of accounting and financial managers, especially the decision-makers using financial statements. Therefore, they are expected to be highly reliable, competent and objective; they should be well qualified, possessing a high degree of professional integrity. The IMA and ACPA codes require that confidential information known to accounting professionals should not be disclosed to outsiders. The accounting profession is self-regulated through the various professional associations and is rather not regulated by the government.
Those associations have internal means of enforcing the code of ethics. Violations of ethical standards may lead to a person being publicly expelled from the professional organization; and ethical violations can lead to further consequences for accountants and financial managers because of state and federal laws (Fitch, 2007).
Through an organization called the state Board Accountancy, the government issues a permit to practice. The Code gets a lawful enforceability because the laws that oversee the practice of accountancy comprise of the crucial parts of the AICPA Code. As a result, the violation of these ethics can lead to the government’s canceling of the CPA’s permit to exercise either for a short or a long time. Inquiries on ethical violations are undertaken cooperatively by the state society, State Board of accountancy and the AICPA because the permitted CPA belongs to the AICPA (Duska, 2003).
The CPA in public exercise audits the financial reports of the public companies, and conditional on federal securities regulations and laws. This also includes the Securities Exchange (Act of 1934. These laws are also administered by the Securities Exchange Commission (SEC), which controls the organizations that sell their products to the community (Fitch, 2007). However, the SEC has a condition that these companies’ financial records be audited by a separate CPA. This commission also has the authority to determine and administer inspecting ideals and measures, even those that comprise of the CPA’s individuality.
Although the SEC has delegated the setting of standards to the private sector, it is still in charge of the execution duties. The SEC and the AICPA together formed an independent private body in 1998. The body’s work was to enhance the inspection independence measures. It also stressed on the importance of the independence of CPA (Duska, 2003).
The management accounting and financial management specialists has a duty to the profession, public, themselves and to their organizations, to uphold the top standards of the ethical conduct. Therefore, the Institute of Management of Accountants has come with certain standards of ethical conduct for the experts. Failure to follow these standards, the management accounting will not achieve its objectives (Fitch, 2007).
One of the ethical standards is competence in that it requires the practitioners to uphold a suitable level of competence with the enhancement of their skills and knowledge (Fitch, 2007). Also, it requires them to execute their professional duties according to the set rules and regulations. They are also expected to prepare a full and clear recommendations and reports after the analysis of the dependable and appropriate information.
In addition, integrity is another standard of the ethical codes that the practitioners ought to possess. The practitioners are responsible of avoiding apparent conflicts and advise the warring parties on certain issues (Duska, 2003). They also have a duty to minimize any form of corruption in their organizations. Moreover, practitioners ought to avoid engaging in activities that could compromise their service in their organizations.
Confidentiality is another important standard by the ethics of conduct in that it requires that the specialists keep the company’s information confidentially (Fitch, 2007). Also, they are required to only use certain information when authorized by the organization. Practitioners also should refrain from using the company information for their illegal purposes.
Objectivity is also a significant standard in the Codes of Ethics and Conduct (Duska, 2003). This standard requires that the practitioners convey information objectively and fairly. Also, the ethical conducts expects that the practitioners also disclose completely relevant information that could affect the targeted user’s comprehension of comments, reports and recommendations.
In conclusion, the Code of Ethics in Management and Financial Management are very essential in every organization. They help the practitioners perform their duties effectively in order to achieve their set goals and objectives.