Acct4111 The Ethics Of Managerial Accounting: The Code Prese

Acct4111the Ethics Of Managerial Accountingthe Code Presents Four St

ACCT. 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.

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The ethical standards outlined in managerial accounting aim to uphold integrity, objectivity, confidentiality, and credibility among professionals. These core standards guide accountants to make fair decisions, maintain trustworthiness, and ensure transparency in their financial practices. Among these, the standard of integrity emphasizes honesty and moral uprightness, encouraging accountants to provide truthful information even when facing pressures to manipulate results. Upholding integrity fosters stakeholder confidence and reinforces the credibility of financial reporting, which is essential for the functioning of markets and economic stability (AICPA, 2014). It demands that accountants avoid conflicts of interest and refrain from engaging in fraudulent activities, thereby promoting ethical behavior that benefits both their organizations and the broader economic system.

In the Statements of Standards for Tax Services, one important standard is "Reasonable Effort." This standard involves the tax professional's obligation to make diligent, thorough efforts to ensure the accuracy of tax returns and filings based on available information. It requires a careful review of data, consideration of applicable tax laws, and documentation of the process undertaken. The standard recognizes that absolute certainty is impossible but emphasizes that practitioners must act within the bounds of professional competence and due diligence. This helps to prevent errors, reduce tax disputes, and uphold the integrity of tax advice, ultimately fostering compliance and trust between taxpayers and tax authorities (IRS, 2020).

The modern view of business as a social institution reflects the growing recognition that corporations have responsibilities beyond profit generation. While Friedman argued that profits are the primary goal, contemporary perspectives emphasize corporate social responsibility (CSR), which includes ethical practices, environmental sustainability, and community engagement. I believe that businesses should pursue profits responsibly while also addressing social and environmental concerns. Sole focus on profits can lead to neglect of stakeholder interests, environmental degradation, and ethical lapses. A sustainable business model recognizes that long-term success depends on balancing profitability with societal well-being, fostering trust, and ensuring ethical conduct. This integrated approach benefits not only society but also the company's reputation and longevity (Porter & Kramer, 2011).

The three Public Company Accounting Oversight Board (PCAOB) auditing standards that registered CPA firms must follow when auditing public companies are: (1) The Audit Engagement Standards, which set the requirements for planning, performing, and reporting on audits; (2) The Quality Control Standards, which establish procedures to ensure the quality of audits; and (3) The Supervision Standards, which focus on the responsibilities related to supervision of audit work and team members (PCAOB, 2023). These standards are designed to enhance audit quality, ensure consistency across firms, and protect investors from financial misstatements.

According to the Sarbanes-Oxley Act (SOX), companies are required to review their disclosure controls and procedures quarterly, identify control exceptions, assess their impact on financial statements, and report significant deficiencies to the audit committee and auditor. These requirements focus on deficiencies, which usually result from internal control failures such as inadequate staffing, lack of proper procedures, or insufficient monitoring systems. Such weaknesses can compromise the reliability of financial reporting and increase the risk of material misstatements, emphasizing the importance of robust internal controls and continuous oversight (SOX, 2002).

The Center for Audit Quality's study on restatement activity identified several influencing events. One notable event was the enactment of the Sarbanes-Oxley Act in 2002, which significantly heightened the focus on financial transparency and internal controls. This legislation led to increased scrutiny of financial reports, more rigorous audit procedures, and stricter regulatory oversight. Consequently, the year 2002 marked a pivotal point in restatement activity, with a notable rise in restatements due to the implementation of SOX mandates that uncovered prior accounting irregularities (CAQ, 2010).

References

• American Institute of Certified Public Accountants (AICPA). (2014). Code of Professional Conduct. AICPA.
• Internal Revenue Service (IRS). (2020). Standards for Tax Practice. IRS.
• Porter, M. E., & Kramer, M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1/2), 62-77.
• Public Company Accounting Oversight Board (PCAOB). (2023). Auditing Standards. PCAOB.
• Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745.
• Center for Audit Quality. (2010). Restatement Trends Study. CAQ.