Because Of Recent Financial Disasters In The News

Because Of Recent Financial Disasters In The News The Board Of Direct

Because of recent financial disasters in the news, the board of directors of your company decided that they wanted to ascertain that the organization’s code of ethics was appropriate and in agreement with the Code of Professional Conduct (CPC) as adopted by the American Institute of Certified Public Accountants (AICPA). Therefore, you have been asked to provide this assurance with a report to the CFO of your organization. Create a report of 3–5 pages including the following: Review the 6 principles in the AICPA's CPC. State what you assess to be the primary purpose of each of the 6 principles. Analyze the codes of conduct of at least 3 major public U.S. companies. Include citations for each of these companies' codes of conduct. Identify connections and relationships of the principles included. Explain how the 6 principles relate to those identified in your analysis of the codes of conduct of the 3 chosen companies. Prepare a recommended list of at least 7 essential elements that must be included in your organization’s code of conduct based on your analysis and assessment.

Paper For Above instruction

Introduction

In light of recent financial scandals and corporate misconduct reported in the news, organizations are increasingly scrutinizing their ethical frameworks and codes of conduct to ensure alignment with professional standards. The American Institute of Certified Public Accountants (AICPA) has established a comprehensive Code of Professional Conduct (CPC), which lays out fundamental principles guiding ethical behavior among its members. This paper aims to review the six core principles embedded within the AICPA's CPC, analyzing their primary purposes. Additionally, the report examines the codes of conduct of three prominent U.S. companies—Johnson & Johnson, General Electric, and Microsoft—drawing connections between their ethical standards and the AICPA principles. Based on this comparative analysis, a list of seven essential elements will be recommended for inclusion in our organization’s own code of conduct to reinforce ethical integrity and compliance.

Review of the Six Principles in the AICPA’s Code of Professional Conduct

The AICPA's CPC articulates six fundamental principles that serve as the foundation for ethical behavior in the accounting profession. These principles are: Responsibilities, Public Interest, Integrity, Objectivity and Independence, Due Care, and Scope and Nature of Service (AICPA, 2014).

Responsibilities

This principle emphasizes the ethical responsibilities accountants have towards the public, clients, colleagues, and the profession itself. Its primary purpose is to ensure that professionals uphold competence, exercise due diligence, and foster public trust through ethical decision-making (AICPA, 2014).

Public Interest

Accountants are tasked with serving the public interest rather than personal or corporate gains. This principle underscores the importance of acting in a manner that benefits society, maintains public confidence, and promotes the reputation of the profession (AICPA, 2014).

Integrity

Integrity addresses the need for honesty, fairness, and truthfulness in all professional activities. It aims to foster an environment where ethical dilemmas are approached with moral clarity and transparency (AICPA, 2014).

Objectivity and Independence

This principle mandates that accountants remain free from conflicts of interest and undue influence, ensuring unbiased professional judgment. Independence is especially critical in auditing and assurance services to uphold credibility (AICPA, 2014).

Due Care

Accountants must perform their responsibilities diligently, thoroughly, and competently. The principle advocates continuous professional development and adherence to standards to prevent negligence or carelessness (AICPA, 2014).

Scope and Nature of Service

This principle calls for clarity about the limits and intent of professional services provided. It emphasizes that professionals should deliver services that conform to applicable technical and ethical standards, respecting confidentiality and professional competence (AICPA, 2014).

Analysis of Codes of Conduct of Three Major U.S. Companies

An examination of Johnson & Johnson’s, General Electric’s, and Microsoft’s codes of conduct reveals alignment and divergence with the AICPA principles. Each company emphasizes integrity, responsibility, and stakeholder interests, reflecting core ethical values applicable to their respective industries.

Johnson & Johnson

The Johnson & Johnson Credo emphasizes responsibility to patients, employees, communities, and shareholders. It highlights honesty, integrity, and ethical behavior as essential to maintaining trust and the company’s reputation (Johnson & Johnson, 2021). The Credo’s emphasis on responsibility and integrity corresponds closely with the AICPA principles of Responsibilities and Integrity.

General Electric

GE’s code underscores commitment to integrity, accountability, and transparency. It highlights the importance of compliance with laws and regulations and safeguarding the company’s reputation (General Electric, 2022). The focus on integrity and responsibility aligns with the CPC’s principles of Integrity and Responsibilities, emphasizing ethical compliance and accountability.

Microsoft

Microsoft’s Standards of Business Conduct focus on ethical behavior, respect for privacy, and compliance with legal standards. It promotes transparency, respect for confidential information, and respect for diverse stakeholders (Microsoft, 2023). These elements relate directly to the principles of Integrity, Scope and Nature of Service, and Responsibilities.

Connections and Relationships Between the Principles

The principles of the AICPA are interconnected, forming a cohesive ethical framework. For instance, integrity underpins responsibilities and objectivity, while responsibility and public interest reinforce each other in fostering societal trust. The companies’ codes reflect these linkages, emphasizing ethical duties that serve both internal stakeholders and the broader community.

Relationship Between AICPA Principles and Company Codes of Conduct

The analyzed corporate codes mirror the AICPA’s principles by non-verbally aligning responsibilities, integrity, and ethical conduct as core elements. While the CPC provides a broad, profession-wide ethical baseline, corporate codes tailor these principles to their specific contexts, emphasizing compliance, responsibility, and transparency (Schwartz, 2010).

Recommended Elements for Our Organization’s Code of Conduct

Based on this analysis, the following seven elements are recommended for inclusion in our organization’s code:

  1. Commitment to Ethical Principles and Legal Compliance
  2. Responsibility to Stakeholders and Society
  3. Emphasis on Integrity and Honesty
  4. Objectivity and Independence in Decision-Making
  5. Protection of Confidential Information
  6. Accountability and Whistleblower Protections
  7. Continuous Professional Development and Due Care

Integrating these elements will help uphold ethical standards aligned with professional best practices and foster organizational trust and integrity.

Conclusion

The review of the AICPA’s six principles and the ethical codes of major corporations reveals significant overlaps, underscoring the importance of core values such as integrity, responsibility, and public interest. Tailoring these principles into our organization's code of conduct, with an emphasis on specified key elements, will promote a culture of ethical excellence, compliance, and stakeholder trust. Regular review and reinforcement of these elements will be essential to adapt to emerging ethical challenges and uphold the organization's reputation.

References

  • American Institute of Certified Public Accountants (AICPA). (2014). Code of Professional Conduct. Available at https://www.aicpa.org/research/standards/codeofconduct.html
  • Johnson & Johnson. (2021). Credo. Retrieved from https://www.jnj.com/credo
  • General Electric. (2022). Code of Conduct. Retrieved from https://www.ge.com/code-of-conduct
  • Microsoft. (2023). Standards of Business Conduct. Retrieved from https://www.microsoft.com/en-us/about/our-approach/standards-of-business-conduct
  • Schwartz, M. S. (2010). Ethical leadership and organizational integrity. Business Ethics Quarterly, 20(4), 581–608.
  • Kaptein, M. (2011). Understanding unethical behavior by unraveling ethical culture. Human Relations, 64(6), 843–869.
  • Treviño, L. K., & Nelson, K. A. (2017). Managing Business Ethics: Straight Talk About How To Do It Right. Wiley.
  • Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2021). Business Ethics: Ethical Decision Making & Cases. Cengage Learning.
  • Brown, M. E., Treviño, L. K., & Harrison, D. A. (2005). Ethical Leadership: A Social Learning Perspective. Leadership Quarterly, 16(2), 695–720.
  • Sison, A. J. G. (2011). The role of the ethic of care in ethical decision making. Journal of Business Ethics, 100(4), 557–570.

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