PROFESSIONAL ETHICS

CHAPTER 3

ETHICS

• A SYSTEM OR CODE OF CONDUCT BASED ON UNIVERSAL MORAL DUTIES AND OBLIGATIONS WHICH INDICATE HOW ONE SHOULD BEHAVE. ASSISTS IN THE ABILITY TO DISTINGUISH GOOD FROM EVIL, RIGHT FROM WRONG.

SYSTEMS OF ETHICAL DECISION MAKING

• EGOISM– ALL PEOPLE OUGHT TO ACT IN THEIR

PERCEIVED BEST INTERESTS

• GOLDEN RULE– DO UNTO OTHERS

• SITUATION ETHICS– OBLIGATION IS RELATIVE TO

SITUATION

• UTILITARIANISM– DECISIONS SHOULD MAXIMIZE GOOD

AND MINIMIZE HARMS• ACT UTILITARIANISM

• RULE UTILITARIANISM

• UTILITARIAN CALCULUS

• DEONTOLOGY/ABSOLUTE DUTIES– SYSTEM OF ETHICAL LAWS

• THEORY OF JUSTICE– JUSTICE OF PROCESS– JUSTICE OF OUTCOME

• VIRTUE ETHICS– ARISTOTLE– QUALITIES OF CHARACTER WHICH

REQUIRE YOU TO DO THE RIGHT THING– RIGHT IS DEFINED AS GOOD – GOOD IS DEFINED WITHIN “PRACTICES”

AS THEY FIT INTO SOCIETY

ETHICAL FALLACIES• IF IT’S LEGAL, IT’S ETHICAL

– TECHNICAL COMPLIANCE WITH LAW SATISFIES MORAL OBLIGATION

• WHITE LIE FALLACY– SOME LIES ARE NECESSARY TO

PROTECT FEELINGS

• HERD ETHICS– EVERYONE IS DOING IT

• ETHICAL DOUBLE STANDARD– WORKPLACE VS PERSONAL

REBELLIOUS ETHICS AND ALBERT SPEER

• ALBERT SPEER– HITLER’S ARCHTECT– RESPECTABLE, PROFESSIONAL, SUCCESSFUL– PURE TECHNICIAN– TECHNOLOGY AND ACCOUNTABILITY

• REBELLIOUS ETHICS– NEED TO DISTANCE OURSELVES FROM

PROFESSIONAL ROLES– CHALLENGE REQUIREMENTS

• THE FAILED ARCHITECT– SEPARATE COMMUNITY OF

ARCHITECTURE– FAILURE TO REFLECT– CORRUPTION OF PROFESSION

• WHO REBELS?– VARIETY OF PERSPECTIVES– CULTURAL AND ROLE-BOUND– MASTER STORIES

CODE OF PROFESSIONAL CONDUCT

• PRINCIPLES– RESPONSIBILITIES– PUBLIC INTEREST– INTEGRITY– OBJECTIVITY AND INDEPENDENCE– DUE CARE– SCOPE AND NATURE OF SERVICES

• RULES– 101 - INDPENDENCE

• IN FACT– MENTAL QUALITY OF BEING WITHOUT BIAS

– GAAS STANDARD

– YOU JUDGE

• IN APPEARANCE– PERCEPTION OF PARTIES OUTSIDE AUDIT

– AVOIDANCE OF CONFLICT OF INTEREST SITUATIONS DEFINED

– CODE OF CONDUCT

• PROBLEMS– EMPLOYMENT

– SCOPE OF SERVICES

– MARKETING ORIENTATION

CONFLICTS OF INTEREST

• A PERSON HAS A CONFLICT OF INTEREST IF a) THEY ARE IN A RELATIONSHIP WITH ANOTHER REQUIRING THEM TO EXERCISE JUDGMENT IN THAT OTHER’S SERVICE AND b) THEY HAVE AN INTEREST TENDING TO INTERFERE WITH THE PROPER EXERCISE OF JUDGMENT IN THAT RELATIONSHIP

– 203 - ACCOUNTING PRINCIPLES• A MEMBER SHALL NOT EXPRESS AN

OPINION THAT THE FINANCIAL STATEMENTS ARE PRESENTED IN CONFORMITY WITH GAAP, IF THEY KNOW THAT SUCH STATEMENTS CONTAIN ANY MATERIAL DEPARTURE

• 203.1– STRONG PRESUMPTION THAT GAAP RESULTS IN

A FAIR PRESENTATION

– IN UNUSUAL CIRCUMSTANCES, GAAP MAY MISLEAD

– AUDITOR MAY EXPRESS CLEAN OPINION IF, IN JUDGMENT, DEPARTURE IS JUSTIFIRD TO KEEP STATEMENTS FROM BEING MISLEADING

– 301 - CONFIDENTIAL CLIENT INFORMATION

• A MEMBER IN PUBLIC PRACTICE SHALL NOR DISCLOSE ANY CONFIDENTIAL CLIENT INFORMATION WITHOUT SPECIFIC CONSENT OF CLIENT

• EXCEPTIONS

• PROBLEMS– “CONFIDENTIAL INFORMATION” IS NOT DEFINED

– VIOLATIONS OF LAW

– INFORMATION USEFUL TO OTHER AUDITORS WITHIN FIRM

– 302 - CONTINGENT FEES• A MEMBER IN PUBLIC PRACTICE SHALL NOT

– PERFORM FOR A CONTINGENT FEE ANY PROFESSIONAL SERVICE FROM A CLIENT IF

» AUDIT OR REVIEW OF FINANCIAL STATEMENTS

– 400 - RESPONSIBLITIES TO COLLEAGUES• NONE

– 501 - ACTS DISCREDITABLE• A MEMBER SHALL NOT COMMIT AN ACT

DISCREDITABLE TO THE PROFESSION– 501.1 RETENTION OF CLIENT RECORDS

– 501.2 DISCRIMINATION AND HARASSMENT

– 501.3 FAILURE TO FOLLOW STANDARDS IN GOVERNMENT AUDITS

– 501.4 NEGLIGENCE

– 503 - COMMISSIONS AND REFERRAL FEES

• 503.A - PROHIBITED COMMISSIONS– A MEMBER SHALL NOT FOR A COMMISSION

RECOMMEND OR REFER TO A CLIENT ANY PRODUCT OR SERVICE IF THAT MEMBER PERFORMS AN AUDIT, REVIEW, ETC