In this article, I address CPA’s ethics and the benefits of making good decisions.
Men are alike in their promises. It is only in their deeds that they differ. Molière
We’ve all been there.
Your client wants you to sign off on an issue, one that is in the land of gray–you know, that place where there is no black or white. And, of course, the issue has significant dollars attached to it, so it’s important.
Your anguish rises, so you try to see the Great Oz, but he’s hiding behind that curtain, smoke billowing, lightning crashing–but no advice. Since the wizard has no wise words of wisdom, you need someone, or at least something, to help you. Here are four questions you can ask yourself when you face ethical decisions.
Here are four questions to ask:
Can questions such as these really help? Let’s see.
Many years ago I was doing an audit of a local county government. I discovered the county commission chairman had arranged for a material purchase of property from his son without using the required bid process, and the transaction was illegal in our state. (I had recently started a CPA firm, so this was one of my few clients. I needed the audit fee.) When I discovered the irregularity, I met with the county commission chairman and told him I would report the transaction in the audit report. He leaned over and quietly said to me, “if you do, you’ll no longer be the auditor.” No one else was in the room.
Later I was physically threatened, and for some time I feared what might happen to me. The decision of what to do, however, had already been made. In asking myself questions such as those above, the right course of action was obvious.
I reported the illegal transaction and was immediately fired. It cost me, but I knew it was the right thing to do. (Interestingly, when the news broke, a reporter contacted the county commission chairman and the county manager. The county manager stated that I had “my hand in the till,” and that the auditor–that’s me–had stolen money, though they never said how.)
Because of situations like this one, client acceptance has become important to me. We need clients with integrity. Yes, we do.
When you face a decision such as this one, here are four actions that may help.
Here are four actions to take:
As you consider this article, remember, a clear conscience is a precious commodity. If you believe a particular course of action is going to keep you awake at night, your conscience is talking to you. Listen, even if it means less money–especially if it means less money.
Do the right thing. You’ll be glad you did.
A CPA’s ethics are, and will always be, important.
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Charles Hall is a practicing CPA and Certified Fraud Examiner. For the last thirty years, he has primarily audited governments, nonprofits, and small businesses. He is the author of The Little Book of Local Government Fraud Prevention and Preparation of Financial Statements & Compilation Engagements. He frequently speaks at continuing education events. Charles is the quality control partner for McNair, McLemore, Middlebrooks & Co. where he provides daily audit and accounting assistance to over 65 CPAs. In addition, he consults with other CPA firms, assisting them with auditing and accounting issues.
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Sit on important decisions and work overnight and let your brain sift through things.
Thank you for your comment Ching-Ming. We surely must live with our decisions and our conscience. I too love a good nights sleep.
I prefer the fourth action. The more detailed analysis and thinking process, the better result may come out. We always have to think about responsibility and conscience we may face in deep of our heart forever. I also love and enjoy that “sleeping well”.
I usually follow the three last actions. I follow the first one when still in a technical interpretation doubt. It depends on the specifics of the situation. I keep in mind that the profession comes first, the business side comes after, and it paid off. I have had situations that if I had allowed to be influenced in taking the wrong decision it would have cost me an expensive price.