Possible ethical issues and their impact on the firm: Perceptions held by public accountants

Abstract

The accounting profession is concerned with the ethical beliefs of its members. To this end, the authors surveyed public accountants, questioning them about the AICPA's “Code of Professional Conduct” and their perceptions of how potentially unethical behaviors impact the firm. The paper focuses on respondents' perceptions of the impact on the firm's practice, image and degree of concern.

Public accountants appear to agree with the AICPA's “Code of Professional Ethics”. Their mean responses indicate they believe the Code components are important and extremely important. Some Code components were significantly more important than others, especially demonstrating professionalism and maintaining independence while performing independent audits. Gender, role and organizational level all had significant effects on the importance of the Code. Males, non-auditors and upper management all expressed stronger beliefs in the importance of the overall Code and its components.

Significant differences exist in respondents' perceptions of how twelve potential ethical dilemmas impact the firm. Statistically significant differences were found in the way these behaviors harm the firm's business. Similarly, statistically significant differences exist in the degree that the firm's image is tarnished if its members engage in these behaviors and in the extent of the firm's concern about the implications of these behaviors.

Not only do the various behaviors impact the firm differently, but the materiality of the behavior or the direction of the behavior result in significant differences in the extent the firm is impacted. Settling technical issues in the client's favor in response to client pressure, failing to correct known omissions and failing to correct known errors had greater impact on the firm when the technical issues, omissions and errors were material than when they were immaterial. Accountants perceived that giving unfair performance appraisals marred the firm's business more than receiving unfair performance appraisals did. Over reporting expenses on expense sheets had larger effects on the firm's business, image and level of concern. Over reporting hours had a stronger impact on the firm's image and level of concern, but under reporting hours had more of an impact on the firm's ability to transact business.