Dr. Brian K. Steverson John L. Aram Chair of Business Ethics School of Business Administration Gonzaga University

 General review of relevant sections of Public Accountancy Act and rules and policies of WA SBOA  Detailed look at three areas of concern (integrity, objectivity, and independence) from the “Ethics and Prohibited Practices” section of WAC 4-30  Do both in the context of thinking about accounting as a “profession”

 Social Need  Vulnerability of Individuals  Impact on Common Good  Technical Skills  Ethical Values  Dignity of the Person  Rights  Social Contract  Need for Trust  Autonomy & Self-Policing  Development of Codes/Standards of Ethics

 Koehn’s “frequently cited traits”  They are licensed by the state to perform a certain act.  They belong to an organization of similarly enfranchised agents who promulgate standards and /or ideals of behavior and who discipline one another for breaching these standards.  They possess so-called “esoteric” knowledge or skills not shared by other members of the community.  They exercise autonomy over their work which is not well understood by the larger community.  They publicly pledge themselves to render assistance to those in need and as a consequence have special responsibilities or duties not incumbent upon others who have not made this pledge Daryl Koehn, The Ground of Professional Ethics, 1994

 Most often cited as THE distinguishing feature of professions “One distinguishing feature of any profession, unlike other occupations that may be equally respectable, is that membership entails an ethical obligation to temper one's selfish pursuit of economic success by adhering to standards of conduct that could not be enforced either by legal fiat or through the discipline of the market.” -- Justice Sandra Day O’Connor, 1988

 General Purpose  “The Washington State Board of Accountancy is a consumer protection agency that initially qualifies and continues to monitor the professional performance and ethical behavior of CPA’s.” (  Two Key Features: (1)Public Protection (2)Maintenance of Standards

 Public interest protected by requiring things such as:  A public authority be established that is competent to prescribe and assess the qualifications of certified public accountants, including certificate holders who are not licensed for the practice of public accounting  A public authority be established to provide for consumer alerts and public protection information to be published regarding persons or firms who violate the provisions of chapter 294, Laws of 2001 or board rule and to provide general consumer protection information to the public  The use of accounting titles likely to confuse the public be prohibited

 Protecting the public interest involves:  Enhancing the reliability of information used for guidance in financial transactions or for accounting for or assessing financial status or performance  Assuring that CPAs practicing in Washington have substantially equivalent qualifications to those practicing in other states  Regulating ownership of CPA firms

 Unique to agencies regulating professions  Legal and statutory requirements in place because of need to promote ethical climate, not other way around  WAC and AICPA cover a number of ethical requirements and prohibited practices, we will focus on three today:  Integrity  Objectivity  Independence ** Though a value itself, integrity can also be understood as the result of the integration of objectivity, indpendence, and some other character values

 AICPA treats “objectivity” and “impartiality” as synonymous, which leaves us to interpret “impartiality”  WAC says nothing directly about “objectivity” but can infer it has something to do with avoiding misrepresentation of facts and conflicts of interest  Interesting note in AICPA Code: “Objectivity is a state of mind”

 Tied to subordination of judgment in both WAC and AICPA  Requires judgment-making qua accountant  Small dose of Aristotle

 Remain honest and objective;  Do not misrepresent facts;  Do not subordinate their judgment to others; and  Remain free of conflicts of interest unless such conflicts are specifically permitted by board rule or professional standards listed in WAC

Integrity is an element of character fundamental to professional recognition. It is the quality from which the public trust derives and the benchmark against which a member must ultimately test all decisions. Integrity requires a member to be, among other things, honest and candid within the constraints of client confidentiality. Service and the public trust should not be subordinated to personal gain and advantage. Integrity is measured in terms of what is right and just. In the absence of specific rules, standards, or guidance, or in the face of conflicting opinions, a member should test decisions and deeds by asking: "Am I doing what a person of integrity would do? Have I retained my integrity?"

 Not restricted to situations of C of I, but common there  “Being whole; being undivided:” what does it mean to be an “undivided,” a “whole” CFE or CPA?  Consistency of Belief  Consistency between Principles and Action (sticking to one’s principles)

 Consistency between Principles and Action  Principles non-negotiable  Ignoring them disqualifies one from profession  Strictly utilitarian considerations insufficient  Continued employment not option

 Understand SBOA rules, rule making processes, and operations as having purpose of regulating a professional body in line with its social contract  Keep in mind that “ethics and prohibited practices” covers not only actions but character development – to be a professional accountant is to be an ethical accountant  Appreciate your status, but appreciate it responsibly