Accountant

Code of
Ethics

KIKY SRIREJEKI
WHAT ARE ETHICS?

Ethics can be defined broadly as

a set of moral principles or values.

Each of us has such a set of values.

We may or may not have considered

them explicitly.
ILLUSTRATIVE PRESCRIBED
ETHICAL PRINCIPLES
 Trustworthiness  Respect

 Responsibility  Fairness

 Caring  Citizenship
 Example
You find a briefcase containing
important papers and Rp. 1 Billion.

What are you going to do?

Tosses the briefcase and take the money

Brags with your friends about your good fortune

Keeps the money and leave the briefcase.

Tells nobody and spends the money.
 Example
You find a briefcase with your friend containing
important papers and Rp. 1 Billion.

What are you going to do?

Your friend said let’s divide the money

If you do not take it, you friend will.

So, what are you going to do?

Rationalizing
Unethical Behavior
• Everybody does it

• If it’s legal, it’s ethical

• Likelihood of discovery and

consequences
Need for Ethics

Ethical behavior is necessary for a society

to function in an orderly manner.

The need for ethics in society is sufficiently

important that many commonly held
ethical values are incorporated into laws.
 Why People Act Unethically

The person’s ethical standards are different

from those of society as a whole.
Ethical
Standard
The person chooses to act selfishly.
Why Accountants needs ethical
Standard?
Who made the ethical standards?
IFAC (the International Federation of
Accountant)

AICPA (American Institute of Certifed

Public Accountant)

IAI (Ikatan Akuntan Indonesia)

Code of Ethics for Professional Accountants: Introduction

OBJECTIVITY

PROFESSIONAL
INTEGRITY COMPETENCE
AND DUE CARE

PROFESSIONAL
CONFIDENCIALITY
BEHAVIOR

11
Fundamental Principles
Integrity

To be straight forward and honest in all professional

and business relationships
Objectivity

To not allow bias, conflict of interest or undue

influence of others to override professional or business
judgments
Fundamental Principles
Professional Competence and Due Care
To maintain professional knowledge and skill at the
level required to ensure competent professional
services based on current developments in practice,
legislation and techniques
To act diligently in accordance with applicable
technical and professional standards
Fundamental Principles
Confidentiality
 To refrain from disclosing confidential information acquired as a result of
professional and business relationships without proper and specific authority
to disclose unless there is a legal or professional right or duty to disclose
 To refrain from using confidential information acquired as a result of
professional and business relationships for personal advantage or the
advantage of third parties
Fundamental Principles
Professional behavior
Obligation to comply with relevant laws and
regulations and avoid any action that
discredits the profession
The AICPA Code of Professional Conduct

A. Principles (Part I)
B. Ethical Principles
C. Rules (Part II)
D. Interpretations of Rules of Conduct (Part III)
E. Ethical Rulings (Part IV)
 A. Principles (Part I)

Although not enforceable against

AICPA members, principles provide
ideal standards of ethical conduct
stated in philosophical terms.
 B. Ethical Principles
 Responsibilities – exercise sensitive and professional moral judgments.
 The Public Interest – serve the public interest, honor the public trust, and demonstrate
commitment to the profession.
 Integrity – perform professional responsibilities with the highest sense of integrity.
 Objectivity and Independence – be independent in fact and appearance in providing
auditing and other attestation services.
 Due Care – observe technical and ethical standards, improve competence, and perform
to the best of your ability.
 Scope and Nature of Services – follow Code of Professional Conduct in determining
scope and nature of services.

Each of the above principles could be applied to any profession

except for the need for independence.
 C. Rules (Part II)

Rules represent minimum standards of

ethical conduct stated as specific rules.
These are enforceable against AICPA
members.
D. Interpretations of Rules of Conduct (Part III)

The AICPA’s Division of Professional Ethics

provides published interpretations of rules of
conduct when practitioners have frequent
questions.
Before interpretations are finalized, they are
sent to a large number of key people in the
profession for comment.
Although not enforceable, a practitioner must
justify a departure.
 E. Ethical Rulings (Part IV)

Ethical rulings are published explanations and

answers to questions about the rules of conduct
submitted to the AICPA by practitioners and
others interested in ethical requirements.
Although not enforceable, a practitioner must
justify a departure.
HOMEWORK
Inside job: The Global Economic Crisis of 2008
(Documentary)

What causes the global economic crisis?

The role of accountants in creating the bubble?
What should we do next?