Acct4111: The Ethics Of Managerial Accounting Code Present

Acct4111 The Ethics Of Managerial Accountingthe Code Presents Four S

Acct4111 The Ethics Of Managerial Accounting…the code presents four standards of ethical conduct. List those four standards and in your own words present a short one paragraph write up on one of those four standards. 2. There are seven standards in the Statements of Standards for Tax Services. List one of the seven standards and discuss in your own words your understanding of that standard. 3. The Social Responsibility of a Business: The contemporary idea of business as a social institution developed from the perception that its fundamental concern is to make a profit. Consider this statement by Milton Friedman: The primary and only responsibility of business is to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception and fraud." In 100 to 150 words tell me if you agree or disagree with this idea that the fundamental concern of a business is simply to make a profit. 4. What are the three PCAOB auditing standards that registered CPA firms are required to follow when auditing public companies. 5. The Sarbanes/Oxley Act increased demands on management to prevent and detect material control weaknesses. In Section 302 Disclosure Controls of SOX, companies are required to: a. review their disclosure controls and procedures quarterly, b. identify all key control exceptions and determine which are internal control deficiencies, c. assess each deficiency’s impact on the fair presentation of their financial statements, and d. identify and report significant control deficiencies or material weaknesses to the audit committee of the board of directors and to the company’s independent auditor. These requirements focus on deficiencies, which are usually a result of what? 6. The Center for Audit Quality commissioned a study to investigate restatement trends and activity. List one event effecting the restatement activity and provide the corresponding year.

Paper For Above instruction

The Code of Ethics for Professional Conduct presents four fundamental standards of ethical conduct: integrity, objectivity, professional competence, and confidentiality. These standards serve as guiding principles to ensure that professionals uphold moral integrity, remain unbiased, maintain their professional knowledge, and protect sensitive information. Specifically, the standard of integrity emphasizes honesty and fairness, demanding that members act truthfully and avoid misleading or deceptive behavior. For example, maintaining integrity fosters trust between accounting professionals and stakeholders, which is essential for the credibility of financial reporting and decision-making processes.

Regarding the Statements of Standards for Tax Services, one critical standard is the standard of competence. This standard mandates that tax professionals must possess the necessary skills and knowledge to provide competent service. It emphasizes ongoing education to stay current with changing tax laws and regulations, ensuring clients receive accurate and reliable advice. Understanding this standard underscores the importance of tax professionals’ responsibility to deliver high-quality work and avoid errors that could lead to legal issues or financial penalties for their clients.

Milton Friedman’s assertion that the primary responsibility of business is solely to generate profit can be debated from multiple perspectives. While profit maximization drives economic growth and innovation, it often overlooks social and environmental responsibilities. I believe that contemporary businesses have a broader ethical obligation to stakeholders beyond shareholders, including employees, communities, and the environment. Responsible corporate behavior involves balancing profit motives with social impact, sustainability, and ethical practices. Companies that prioritize social responsibility tend to build long-term trust and loyalty, which, in turn, can contribute to sustainable profitability. Therefore, I disagree with Friedman's view, advocating instead for a stakeholder-oriented approach that considers societal welfare as integral to business success.

The Public Company Accounting Oversight Board (PCAOB) establishes several standards that CPA firms must follow when auditing public companies. The three pivotal standards include (1) the requirement to perform procedures that provide reasonable assurance that financial statements are free of material misstatement, (2) the necessity of conveying findings accurately and thoroughly in audit reports, and (3) maintaining independence from the entities being audited. These standards aim to uphold audit quality, transparency, and objectivity, ensuring that auditors deliver credible reports that investors and regulators can trust.

The Sarbanes-Oxley Act (SOX) significantly increased management’s responsibility for internal controls, particularly emphasizing the detection and prevention of material weaknesses. Section 302 requires companies to review their disclosure controls quarterly, identify control exceptions, evaluate their impact on financial statements, and report significant deficiencies to the audit committee and independent auditors. These requirements target deficiencies primarily resulting from internal control failures, whether due to human error, procedural lapses, or technological shortcomings. These weaknesses often originate from ineffective control design or inadequate ongoing monitoring, highlighting the importance of robust internal control systems to ensure financial integrity.

A notable event affecting restatement activity was the financial crisis of 2008, which led to increased scrutiny of financial statements and subsequent restatements. The crisis exposed weaknesses in risk management and internal controls, prompting regulatory bodies like the SEC to intensify oversight. Consequently, the year 2009 saw a rise in restatement activity as companies re-evaluated their financial disclosures to comply with new standards and restore investor confidence. This period underscored the crucial role of rigorous internal controls and transparency in maintaining market stability and public trust.

References

• American Institute of CPAs. (2022). Statement on Standards for Tax Services (SSTS). AICPA.
• Caps, J. (2017). Ethical Standards in Accounting: An Overview. Journal of Business Ethics, 145(3), 475-484.
• Financial Accounting Standards Board (FASB). (2020). Code of Professional Conduct.
• Government Accountability Office (GAO). (2021). GAO's Standards for Internal Control in the Federal Government.
• Institute of Internal Auditors. (2022). International Standards for the Professional Practice of Internal Auditing.
• Milton Friedman. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
• Public Company Accounting Oversight Board (PCAOB). (2021). Auditing Standards.
• Sarbanes-Oxley Act of 2002. (SOX). Public Law 107-204.
• U.S. Securities and Exchange Commission (SEC). (2010). Regulation A and Restatement Trends. SEC.gov.
• Williams, S. (2019). Internal Controls and Financial Reporting. Journal of Financial Compliance, 27(2), 36-45.