Trust underpins everything people do, from the brands we buy, to the companies we work for, to the friends we have and the politicians we support. Yet trust in U.S. institutions hit an all-time low in 2022, according to Gallup, signaling a critical shift in consumer expectations. Confidence in big business and all three branches of the federal government also hit historic lows.
As trust continues to decline, who will step in to help break this cycle?
Improve trust and integrity
As guardians of the financial market, accountants are professionally bound to provide investors with trustworthy and reliable information. Communities around the world rely on accountants to keep businesses and governments honest through tax filings, audits, sustainability reports, and fraud investigations, among many other services. Individuals also rely on CPAs for tax preparation, financial planning and strategic advice.
Trust and integrity have always been at the heart of the accounting profession. In fact, the AICPA’s predecessor was formed over 130 years ago to promote high quality service and professionalism, a mission that continues today. Due to the complex nature of accounting work, chartered CPAs must meet rigorous education, training and examination requirements. Accountants are also bound by strict ethical standards, as well as federal and state laws and regulations.
There will always be examples of individuals failing to meet these standards, evidenced by recent audit shortcomings and corporate cheating scandals. But these cases are not the norm and reinforce the importance of ethical standards. They set clear expectations about what the profession stands for, enable stakeholders to hold bad actors accountable, and promote transparency within our financial ecosystem.
Recognizing an accountant’s responsibility to protect the public interest, CPAs must adhere to a code of ethics. The code outlines the key principles that guide accountants in their day-to-day work and outlines the ethical foundation of the profession:
- Assume responsibilities with professionalism and moral judgment
- Operate with the highest sense of integrity
- Serving the public interest and maintaining trust in the profession
- Demonstrate objectivity and be free from conflicts of interest
- Perform all services with care and strive for continual improvement
These stringent licensing and ethical requirements help set CPAs apart from other providers in the financial arena, as they are held to the highest moral standards. Most importantly, this framework generates trust in markets by equipping consumers and policy makers with the data they need to make informed decisions.
Unfortunately, the pressure to act unethically can happen to anyone in any profession, even in companies with very effective control systems. Although non-compliance with accounting standards is rare, the AICPA has rigorous processes in place to investigate, monitor and sanction members.
As the standard-setting body for the accounting profession, the AICPA takes deviations from ethical behavior very seriously. Disciplinary matters are reviewed by the Division of Professional Ethics and we work closely with US licensing boards and regulators to encourage consistent compliance. For greater transparency, individual disciplinary actions and annual reports are published on the AICPA website.
The number of expulsions and suspensions has steadily declined over the past five years, and the majority of cases in 2021 were resolved through mandatory continuing education or practice monitoring. In part, this promising trend can be linked to the profession’s enduring commitment to strengthening ethics, through licensing requirements, professional standards and self-regulation.
Like other licensed professions, such as medicine and law, accounting firms evaluate the work of others through a peer review program. More than 24,000 companies participate in the program administered by the AICPA, and virtually all accounting boards require registration as a condition of license renewal. These checks and balances provide transparency to a firm’s work, hold individual CPAs accountable for any shortcomings, and improve the overall quality of audits.
Our financial ecosystem is built on responsibility. Transparency strengthens markets and expands opportunities for sustainable growth. But as the business environment, government regulations, and consumer beliefs evolve, so too must the accounting profession.
Adopt ethical frameworks
More than six in 10 stakeholders invest based on their beliefs and values, and people want companies to play a bigger role in solving societal problems, according to Edelman’s trust research. Tasked with analyzing the flow of critical business information, CPAs have a reputation for spotting emerging trends, such as the growing demand for sustainability reporting, workplace wellness programs, and cryptocurrency accounting.
By building on the profession’s ethical foundations, CPAs can help communities find solutions to these and other challenges. The expertise of accountants and the ethical frameworks that guide them can help create value for all stakeholders.
This article does not necessarily reflect the views of Bloomberg Industry Group, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.
James Fougeres is vice president of ethics and practice quality for the American Institute of Certified Public Accountants. He is responsible for providing strategic direction for the AICPA’s ethics division and peer review program, as well as the employee benefits plan and government audit quality centers.
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