An Introduction to Ethics for Accountants

Accountants and business owners alike need to understand ethics, biases and how to identify ethical issues.

Ethics for Accountants

As Merriam-Webster defines it, ethics is the discipline dealing with what is good and bad with moral duty and obligation. It’s a set of moral principles; a theory or system of values. Ethics is also defined as the principles of conduct governing an individual or group. So, it’s no surprise that accountants and business owners alike need to understand ethics, biases and how to identify ethical issues.

That’s why we’ve created our Introduction to Ethics course. In this course, we walk through: various theoretical theories from history and today, the categories of bias, ethical applications, legal considerations for CPAs, Professional Standards and more.

Who should take this course?
CPAs Business Owners
CFEs Business Managers
CFFs Internal Auditors
MAFFs External Auditors
CIAs Corporate Accountants
CMAs Government Accountants

Historical Ethical Theories

We begin in ancient Greece where the foundations of ethical theories as we know them were laid down. Aristotle theorized the ideas of self-realization and acting in accordance with one’s inner nature. Socrates gave us the idea that knowledge is a virtue and that people will naturally do what is good if they know what is right. Stoicism brought us the idea that there are limitations to what we control in life and those abilities to control reside only within our minds. In the course, we also briefly cover Hedonism, Cyrenaic Hedonism, and State Consequentialism.

Modern Ethical Theories

Next, we look at modern ethical theories to get an idea of the current ethics landscape. Consequentialism purports that consequences override intent and ends do in fact justify means. Utilitarianism aims to maximize happiness. Deontology opposes Consequentialism in that it values intent over consequences and acting from a sense of duty. Pragmatic ethics puts priority on social reform and argues that moral correctness evolves over time. We finish with the lesson on various theories with Role Ethics- morality is based on one’s position in their community- and Situational Ethics- morality can change based on circumstances.

Ethics for Accountants

Conscious Versus Unconscious Bias

Understanding biases is very important for accountants and business owners. Of course, there are conscious biases like family relationships, religious or social group membership, friendships, etc. The more duplicitous biases to look out for are the unconscious ones. Below is a list of unconscious biases that we cover in the course:

  • Affinity Bias (Similar to you)
  • Confirmation Bias (You are right)
  • Bounded Awareness (Did not confirm)
  • Priming (Influenced by other people or data)
  • Anchoring (Auditor is convinced a number is correct)
  • Availability Bias (Deciding based on most recent data)
  • Group Think
  • Rush to Solve (Must meet deadlines)
  • Negativity Bias (Extra weight to negative data)
  • Ambiguity Effect (Just doesn’t care)
  • Blind Spot Bias (Don’t recognize issues)
  • Empathy Gap (Allowing emotions to control decisions)
  • Focalism (Overreliance on first data collected)
  • Framing (Different conclusions on the same data depending on who presents the data)
  • Ostrich Effect (Ignoring data)

Professional Standards Violations

Lastly, let’s look at some of the most common professional standards violations we cover in the course. Professional standards include codes of conduct, quality control, auditing standards, tax services, attestation standards and other services and processes related to the ethical aspects of the business. We cover three main areas when looking at common violations.

Ethics for Accountants

  1. Auditor’s Reporting

There are many violations of professional standards to look for in audit reporting. It could be as simple as an improper audit report date, or as nuanced as the character of examination and degree of responsibility. Other auditor’s reporting violations include: summarized information, non-compliance with SAS 115, unspecified opinion units and departures, and omitting required opinion and report wording.

  1. Audit Procedures

Another area with frequent professional standards violations is audit procedures. Violations under this category can range from the failure to use or customize an audit program to the allocation of indirect expenses- whether systematic or rational basis. Failure to obtain sufficient, competent, evidential matter is an additional, frequent violation. Of course, inadequate documentation also ranks among the most common violations.

  1. Financial Statement Deficiencies

There are quite a few common violations that fall under the category of Financial Statement Deficiencies. Some of these violations include:

  • Reporting expenses
  • Fair value disclosure
  • MD&A missing required elements
  • Revenues not properly classified
  • Disclosure of prior period adjustments
  • Disclosure concerning liabilities and debt service
  • Subsequent events

To get more detailed information about business and accounting ethics, sign up for our Introduction to Ethics course!


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About Dr.Bob

Dr. Minniti is the President and Owner of Minniti CPA, LLC. Dr. Minniti is a Certified Public Accountant, Certified Forensic Accountant, Certified Fraud Examiner, Certified Valuation Analyst, Certified in Financial Forensics, Master Analyst in Financial Forensics, Chartered Global Management Accountant, and is a licensed private investigator in the state of Arizona. Dr. Minniti received his doctoral degree in business administration from Walden University, received his MBA degree and Graduate Certificate in Accounting from DeVry University’s Keller Graduate School of Management, and received his Bachelor of Science in Business Administration degree from the University of Phoenix. Dr. Minniti teaches graduate and undergraduate courses in accounting, fraud examination, fraud criminology, ethics, forensic accounting, external audit, and internal audit, at DeVry University, Grand Canyon University, Northwestern University, and the University of Phoenix. He designed graduate and undergraduate courses for Grand Canyon University, Northwestern University, and Anthem College. He is a writer and public speaker. He has experience in forensic accounting, fraud examinations, financial audits, internal audits, compliance audits, real estate valuations, business valuations, internal control development, business continuation planning, risk management, financial forecasting, and Sarbanes-Oxley compliance work. Dr. Minniti is an instructor teaching continuing professional education classes for the American Institute of Certified Public Accountants, Compliance Online, CPE Link. AccountingEd, Global Compliance Panel, Clear Law Institute and various state CPA Societies.

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