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Handling Ethical Dilemmas for the Salaried Accountant

Certified Public Accountants, no matter the industry or business, have a responsibility to uphold the highest standards of ethics and professionalism. CPAs are often viewed as one of the most trusted professions in the world. They are also one of the most regulated professions in the country, having to pass a series of education and experience requirements before being allowed to sit for the U.S. CPA Exam. Even after they pass the CPA Exam, they are required to maintain their education through continuing professional education as regulated by their state board of accountancy. Of particular note is the requirement to follow state ethics laws and rules as a condition of licensure. CPAs also must complete a specified number of units in ethics education to maintain their license. BISK Education is one of the largest providers of continuing education for CPAs. I develop continuing education courses for BISK that are used by more than 20 states.

Grant Webb from BISK poses the following ethical dilemma that I felt was worth sharing with you. Mr. Webb discusses just how to handle the dilemma below.

It can be a daunting task for a CPA when they are presented with an ethical dilemma. They must weigh all the options and ensure they are presenting the best possible guidance. That said, CPAs are not required to provide specific solutions for dilemmas as they arise, but should aid in their company's decision-making process. These solutions can come in the form of recording options for future earnings presentations or other accounting strategies. Take into consideration this example:

A set of executive level managers instruct their CPA to record a transaction in a fraudulent manner that will in turn reflect the company’s higher revenue generation for the last quarter of the year.

This is a relatively common situation faced by many CPAs. The executives may be trying to ensure they earn revenue-based bonuses or have other ulterior motives for manipulating the financials. As a CPA, you know that the correct way to record earnings is to record those that only exist for the actual last quarter of the year and not what is already contracted for income through the first month of the next year.

Ultimately it is the company’s executives that are required to make the final decision, but they need the expert advice of a CPA to make the right decision. As a CPA, you know you’re obligated to record actual earnings and by following the executives’ wishes you would be violating your ethical standards and the law. When all is said and done, it is your license and reputation that is ultimately on the line. Failing to uphold the ethical standards you’ve sworn to maintain and reporting the actual earnings could land you in the proverbial hot seat, resulting in loss of license, fines and even jail time. The repercussions you stand to encounter are much more costly than what you stand to gain.

Whether you’re a salaried CPA or have your own firm, you’re required to maintain the highest standard of ethics and professional conduct. Taking the risk to please an executive or get ahead at work and violating those ethical standards will only hurt you in the long run.

By Grant Webb with Bisk Education. Bisk Education provides continuing professional education for Certified Public Accountants and <a href="http://www.cpaexam.com">CPA Exam Review</a> courses for those aspiring to sit for the CPA exam to become CPA's.


Blog posted by Steven Mintz, aka Ethics Sage, on February 10, 2012