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Rules of Professional Conduct Essay

The governing of the behavior of Certified Public Accountants (CPA) is done by the American Institute of Certified Public Accountant (AICPA). The largest professional association for the CPAs is the AICPA. The purpose of the AICPA is to equip CPAs to fulfill their duties to the public sector.

Five Sections of the AICPA Rules of Professional Conduct

There are five sections to the AICPA Rules of Professional Conduct: Independence, Integrity, and Objectivity, General Standards Accounting Principles, Responsibilities to Clients, Responsibilities to Colleagues, and Other Responsibilities and Practices. Each section, except for Responsibilities to Colleagues, has rules for an accountant to follow. Some of the rules are flat out rules with no exception, but some of the rules can be interpreted in different ways depending on the person reading them. In order to comply with the AICPA Rules of Professional Conduct, an accountant must understand each rule and understand what the rules really mean.

Overall Purpose of Each Section

Section one of the AICPA Rules of Professional Conduct is Section 100 – Independence, Integrity, and Objectivity. An accountant needs to remain independent from the work one performs, always do what is right, and stay objective throughout the process. If an accountant breaks any one of these, all three could be question. In order to maintain a good standing, one has to be unconnected, honest, and unbiased. There are two rules for section 100 of this code. Rule 101-Independence states “A member in public practice shall be independent in the performance of professional services as required by standards promulgated by bodies designated by Council” (Accounting ethics, 94). Rule 102- Integrity and objectivity pertains to members being free of conflicts of interest. This rule makes sure that accountants do what is ethically correct. It was implemented for the basis of doing unto others that one would have them do unto thy. Sometimes one must think what someone else would do in a situation like this.

It helps detach them for the situation and thus gives the ability to be more objective to a decision. Section two of the AICPA Rules of Professional Conduct is Section 200 – General Standards Accounting Principles. This section is broken down into three rules: General Standards, Compliance with Standards, and Accounting Principles. The General Standards consist the following four standards: Professional Competence, Due Professional Care, Planning and Supervision, and Sufficient Relevant Data. The second rule entails that every accountant should be in compliance with the standards. The third rule states that Financial Statements must be in accordance with the GAAP. Section two of this code includes three rules. Rule 201-general standards helps reiterate prescriptions under principle of due care. This means that members must make sure they are in compliance with rules set forth by the council.

Rule 202- compliance with standards purpose is to make sure that anyone that is performing audits or any other financial services makes sure that they are in compliance. This rule is set implemented to ensure Section three of the AICPA Rules of Professional Conduct is Section 300 – Responsibilities to Clients. This section is made up of two different rules: Rule 301 – Confidential Client Information and Rule 302 – Contingent fees. Client information should be protected at all times except when a client discloses they wished their information to be released to a specific party. Rule 301 has been implemented to make sure that information that should not be released pertaining to customers is not. Examples of confidential information would be customers name, address, and social security numbers to name a few. Our reading states Rule 302 “prohibits members from accepting fees contingent upon audits or reviews of financial statements, or compilations of statements to be used by a third party that do not disclose a lack of independence” (Accounting Ethics, page 102).

Accountants must not ensure clients that if their auditing services are used it will make them look better than if they used other companies. Section four of the AICPA Rules of Professional Conduct is Section 400 – Responsibilities to Colleagues. This section is currently not being used. This section is being saved for future rules on the responsibilities to one’s colleagues. The purpose of this section is for accountants to know what should take place when someone does something illegal and must be addressed.

It is also important to make sure that their own actions are accounted for when it comes to working with others in the financial field. Section five of the AICPA Rules of Professional Conduct is Section 500 – Other Responsibilities and Practices. This section is for any and all rules that do not fall under the first four sections. The rules under this section currently cover acting discreditable, advertising and other forms of solicitation, commission and referral fees, and form of organization.

Nature, Purpose, and Implementation of Each Rule

There are four rules in this section of the code. Rule 501- acts discreditable serves one main purpose is to ensure that no harm will be brought to reputations bases upon ones actions by dishonorable acts. Just like many other corporations it is inappropriate to discriminate in any manner. One must also make sure that they are following standards when performing audits. Rule 502 is advertising and other forms of solicitation. The purpose of Rule 501 is to help cut out any intent to falsely obtain clients. It is against the rules to try to coerce anyone into doing business with particular companies. Any clients that are obtained should be done in a correct manner without the use of deception.

Rule 503- Commissions and referral fees serves the purpose by making sure that accountants do not receive commissions for referring services to be rendered. It can sometimes cause problems for some accountants based on the type of work that they may do. If any does receive a fee for referral services provided by a CPA must make sure that it is disclosed. Rule 505- form of organization takes the place of rule 504 that has been deleted. The main purpose of this rule is to prevent the practice of accounting under names that are false by a member. There are two exceptions to this code for its implementation. Members that own separate businesses all the rules would apply to them. If one has alternative practices then a different rule would apply.

Compare AICPA and IMP Code of Conduct

The AICPA Code of Conduct is its fundamental set of standards for its members. It was created to “provide guidance and rules to all members-those in public practice, in industry, in government and in education-in the performance of their responsibilities” (2007a, para. 21). The AICPA Code of Conduct is broken down into two main sections: principals and rules. The framework for the rules section is set by the principles. The AICPA and IMA were created to find a better way to correct false financial reporting by businesses. With a string of companies and auditors reporting false financials or even omitting information about the company, Chief Executive Officers were denying any omissions or problems with the statements. These problems also caused reactions on the stock market and started the recession the nation incurred in recent years of which people are still working their way out of. These situations are similar and as a result of the drastic problems that they have caused required the government to take drastic measures in these acts.

Purpose of AICPA and IMA Code of Professional Conduct:

The AICPA and IMA Codes of Professional conduct both have a very distinct purpose for the field of accounting. Their main goal is to ensure the trust of the public is put first. Each member is obligated to act in a way that will serve the public interest and demonstrate commitment to their profession. Professional standards of the AICPA and IMA require that an accountant exercises their independence in for all attest engagements. The AICPA has five (5) rules while the IMA only has four (4) rules.

Identify Major Similarities

The major similarities between both codes are the integrity. The integrity of an accountant is very important given the accusations and scandals that have occurred over the last decade. The accountant must advise all parties of any conflict that may arise while making sure they do not get caught in a conflict of interest with a client. This is why an accountant must refrain from any and all activities that may cause him to carry out the duties of an accountant. An account is forbid to have any claims with his clients. An accountant is forbid to accept any gifts, favors, or hospitality from a client under any circumstances. According to the principle of integrity, an accountant does not want to give any assumption that will discredit their work. Another area each code focuses on that is very similar is its Due Care code and IMA’S Competence code. Before reports are put out, the accountant must make sure that their work is free from error. In order to master such a profession, a CPA must enroll in continuing education classes throughout their career to perfect their skills.

Identify and Explain Major Differences

The difference is the two codes is that the Institute of Management Accountants is formed by a group of managers and the AICPA is largely formed of certified public accountants regardless if they are in management or not. The IMA’s main focus is the service of the business itself by working with the company and maintaining its financial data to assist management with day to day decisions. Their objective is to serve the customers internally and must maintain a level of trust with these customers. The main focus of the AICPA is to serve vendors, creditor, and lenders outside of the company. This is one of the critical differences in the two codes. This group of accountant’s interest is to provide financial statements to the end user while assisting the external user with decisions on financial investment and lending.


The AICPA Code of Professional Conduct is in place as a guide to better help CPA’s and future accountants learn the rules and regulations of the accounting profession. Each has a responsibility to the public, their client, and their colleagues as a professional. In order to ensure complete compliance of the rules, we must adhere to the policies that are put in place to gain the trust of the public. Composition, applicability, and compliance are laws that are used to ensure ethics rules are not being broken. Keeping these rules in mind will ensure that a CPA or future accountant will have a successful career.

AICPA – Section 50 – Principles of Professional Conduct. (2008). Retrieved from…/Cod…

American Institute of Certified Public Accountants. (2007c, June). Integrity. AICPA code of professional conduct, ET Section 54, Article III. Retrieved January 12, 2015, from Duska, R., Duska, B.S., & Ragatz, J.A. (2011). Accounting ethics. Wiley-Blackwell.

Institute of Management Accountants. (2008a). About IMA. Retrieved January 30, 2009 from

Institute of Management Accountants. (2008b). Ethics center. Retrieved January 30, 2009 from

Similarities Between the Code of Ethics for IMA & AICPA …. (2011). Retrieved from › Business

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