New Code of Professional Conduct for Ontario CPAs

In a June 2016 communication, the executive of the Chartered Professional Accountants of Ontario (CPAs) stated that: “As CPAs, we hold ourselves to a high standard in everything we do. We conduct ourselves at all times according to the shared values and ideals of our profession, regardless of position, sector or tenure, and we commit to our profession 24 hours a day, seven days a week. That’s why I am pleased to inform you of a new CPA Code of Professional Conduct  that was recently approved by CPA Ontario’s Council and is now in effect. It will be presented to members for ratification at the next Annual General Meeting in September 2016."

"While most members will not be impacted, the new CPA Code recognizes that our membership provides professional services beyond public accounting. Members providing these services may note a number of changes, such as in the Rules that govern relationships amongst professional colleagues and in Rule 210 Conflicts of Interest, as well as greater guidance provided to clarify common areas of confusion."

"As CPAs, we share common interests, ethics and concerns; now, we share a common philosophy, principles and, indeed, rules of the profession. The inclusion of all professional accountants under a common code — one that reflects the most stringent requirements of the legacy bodies — is one of the benefits of unification."

"Though the CPA Code is built upon foundational pillars — the fundamental principles of professional behaviour, integrity and due care, objectivity, professional competence and confidentiality — the whole is greater than the sum of its parts. Our commitment to its principles is not situational; it does not stop at the end of the working day. In short, as CPAs, we live our lives according to our personal values and professional code — the CPA Code of Professional Conduct. Its purpose is clear, its principles timeless, and its vision defines us not only as a profession but as a community."

For an overview of the new CPA Code, refer to the article, A New Code of Professional Conduct, on page 8 of the Spring 2016 issue of the publication Discussion and Analysis, available online.

Promoting high ethical standards in the profession

As the first state society established in the United States, the New York State Society of Certified Public Accountants (“NYSSCPA” or “Society”) continues to play a leading role in the development and promotion of high ethical standards within the profession. The Society’s bylaws state that the membership shall be bound by the Society’s Code; however, it is advisable for Society members who are also members of the American Institute of Certified Public Accountants (“AICPA”) to apprise themselves of the applicable laws and related regulations of governmental agencies that regulate certified public accountants in the United States.

One of the cornerstones of the profession of public accountancy is the high ethical standards of its members. Such standards are set forth in the AICPA Code of Professional Conduct (the “Code”). While high ethical standards are essential in achieving public trust and confidence, such trust can be maintained only if the public is confident that the profession can regulate itself and discipline those members who violate or ignore the Code.

The AICPA adopted a revised Code that became effective December 15, 2014. The Conceptual Framework for Members in Business and the Conceptual Framework for Members in Public Practice became effective December 15, 2015. For updates to the Code, see the Table of Contents, Appendix C - Revision History Table.

Professional Judgment: Perspectives on the Professions

An informative article on “Professional Judgment” was published in the periodical Perspectives on the Professions in 1992. According to the article: “Professionals offer (and, we hope, deliver) honest and competent judgment. Perspectives has devoted many issues to the first of these, honesty, what we tend to call “professional ethics:” We have had little to say about the second, technical competence, what makes honest judgment professional. We have, it seems, simply taken it for granted. Yet, an engineer without engineering judgment, a lawyer without a lawyer's judgment, or any other professional without the particular form of judgment distinguishing his or her profession from all others, would be an incompetent “layman” who could not honestly practice the profession in question.”

 

“What is professional judgment? It is, of course, good judgment-good enough at least to make us want it instead of lay judgment. But what makes judgment good (in the way professional judgment is supposed to be)? One witty answer is: Good judgment comes from experience; experience, from bad judgment.” “The pieces that follow suggest that we may not yet have a better answer. That, of course, is not all bad-if it leads us to think more about professional judgment. While we cannot walk well if we think about walking as we walk, we cannot learn to walk better if we do not think about walking at all. If good judgment comes from bad judgment, only through reflection can the transformation be accomplished.”

 

This article provides perspectives that address the following four professions: (1) Judgment in Police Work; (2) Professional Judgment in Engineering; (3) Balancing Risks and Benefits in Clinical Decision Making; and (4) How Do Judges Think?

 

To learn more, read the article on “Professional Judgement” by Michael Davis, Editor, Perspectives on the Professions, (Vol. 11, No.2, 1992). Perspectives is a periodical of the Center for the Study of Ethics in the Professions (CSEP), Illinois Institute of Technology, Chicago. CSEP was established in 1976 for the purpose of promoting education and scholarship relating to ethical and policy issues of the professions.

 

The Art of Ethical Leadership (2013)

In October 2012, Praesta Ireland and Chartered Accountants Ireland (CAI) surveyed leading business executives on their ethical approaches, as well as their organization’s ethical codes and attitudes. The survey results provide encouraging news that many organizations are responding to the emerging and increasing risks that arise from unethical behaviour and the consequent adverse impact on an organization’s reputation.

The survey demonstrates that those charged with governance within organizations are expected to play a key role in establishing expectations relating to ethical behaviour. The example needs to be set by senior management by the way in which they behave and by ongoing monitoring of the effectiveness of their ethics policies and programs. An appropriate code of ethics remains the primary tool for guiding staff on corporate standards of behaviour and on how to respond to ethical dilemmas which they may encounter in their day-to-day work.

Having confidence that businesses, directors and professionals adhere to the highest ethical standards is critical to ensuring public trust in financial reporting and business practices and even to ensuring the future sustainability of businesses themselves. Those organizations that have developed ethics programs which include training about their values and how these are implemented, as well as ‘speak up’ policies, demonstrate they are actively trying to decrease their integrity risk. Business ethics are under the spotlight as never before. Therefore, it is anticipated that this 44-page report, The Art of Ethical Leadership, released in 2013, will stimulate further informed debate about the role of ethics and ethical decision-making in business.

Praesta Ireland is a member of Praesta International, the global leader in senior executive coaching, working in more than 20 countries. Since its foundation in 2001, Praesta Ireland has established a track record of professional, discreet and confidential service to major companies and organizations in support of the leadership development of their Chairs, CEOs, Senior Executives and Non-Executive Directors. Chartered Accountants Ireland is the largest and longest established accountancy body in Ireland. It has over 21,000 members and 6,000 students, and it is the leading voice of the accountancy profession in Ireland. Chartered Accountants Ireland was established as the Institute of Chartered Accountants in Ireland by Royal Charter in 1888. Its activities and those of its members are governed by its Bylaws and by Rules relating to professional and ethical conduct.

Additional information on ethics, including case studies, is available at the Chartered Accountants Regulatory Board (CARB). The case studies provide practical guidance for resolving ethical dilemmas on topics such as conflicts of interest, confidentiality and questionable accounting and business practices.

User-friendly AICPA ethics code on horizon

Ethical decisions often need to be reached quickly, but the AICPA’s Code of Professional Conduct (ethics code) is not structured for quick and easy navigation. A proposed reformatted ethics code is meant to change that. The current ethics code started as eight rules that fit on one sheet of paper and was adopted April 9, 1917, by the American Institute of Accountants, predecessor of the American Institute of Certified Public Accountants (AICPA). Over time, the rules evolved, and in 1973 they were codified into the current Code of Professional Conduct. Almost 100 years later, the ethics code and related guidance are ripe for reorganization.

The AICPA’s Professional Ethics Executive Committee (PEEC) has restructured the Institute’s ethics standards to improve the AICPA Code of Professional Conduct (Code) so that members and others can apply the rules and reach correct conclusions more easily and intuitively. To achieve this, the PEEC restructured the Code into several parts each organized by topic, edited the Code using consistent drafting and style conventions, incorporated a conceptual framework for members in public practice and in business, revised certain Code provisions to reflect the "conceptual framework" approach (also known as the "threats and safeguard" approach) and, where applicable, referenced existing non-authoritative guidance to the relevant topic.

The Proposed Revised AICPA Code of Professional Conduct was exposed for comment on April 15, 2013. Comments on the 237-page Exposure Draft will be accepted until August 15, 2013.  The April 17, 2013 Journal of Accountancy article “User-friendly AICPA ethics code on horizon” explains the new format and the substantive changes to the existing ethics standards.

Professional Ethics for CPAs in Business

“The AICPA Code of Conduct applies to all CPAs and the aftermath of accounting scandals has created new expectations and federal compliance issues. Those working in business face unique problems and are sometimes faced with ethical decisions that affect their only source of income.”

“The goal of this course is to promote ethical behavior and ethical reasoning and to give CPAs working in business the tools they need to resolve ethical dilemmas in compliance with the AICPA and government regulations. Case studies are the primary learning tool to allow participants to practice their ethical decision-making skills and their knowledge of AICPA rules.”

The AICPA course Professional Ethics for CPAs in Business is available for online access and as a CD-ROM. Choose the best format that best meets your self-study/on-site group study needs. In addition, review other available professional ethics research and guidance.