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The AICPA’s Code of Professional Conduct contains six principles of professional conduct by which its members must abide: responsibilities, serving the public interest, integrity, objectivity and independence, taking due care, and the scope and nature of services. You can read all about these six principles at www.aicpa.org/search.html?source=AICPA&q=code+of+professional+conduct.

Note: In this section, I use the terms financial accountant and CPA synonymously. I do so because most financial accountants are CPAs, and vice versa.

Here’s a brief explanation of each of the six principles:

 Responsibilities: As an accountant, you hold yourself to high moral and ethical standards so you maintain the public’s confidence in your financial reporting. For example, financial accountants have the responsibility to participate in self-governance by performing peer reviews of other CPA/financial accounting firms’ work to check for accuracy and consistency among the profession.

 Serving the public interest: A financial accountant’s public interest is the company for whom she is preparing the financial statements, as well as the users of the financial statements (such as people and entities thinking about purchasing shares of the company stock).The public interest also includes banks and other businesses that are considering granting credit to the company, governmental agencies such as the Internal Revenue Service (which measures the company’s compliance with the tax code), investors, and other members of the business and financial community who rely on the objectivity and integrity of CPAs.

 Integrity: This characteristic means you are honest when dealing with others. In the world of financial accounting, integrity means that you serve the company for whom you are preparing the financial statements to the best of your ability, keeping in mind that this may not be the same thing as completely agreeing with the way the company wants its financial statements prepared. You can’t be worried that business management is going to be mad at you or fire you if you disagree with them.

 Objectivity and independence: When you are objective, you are neutral and unbiased in all decision-making processes. You base your opinions only on facts and not on any preconceived notions you may have. You interpret rules and policies, such as generally accepted accounting principles (GAAP), in a truthful and sincere manner — staying true to both the form and spirit of the particular principle or regulatory issue.Financial accountants who provide auditing and other attestation services must be independent in both fact and appearance. Being independent means you have no special relationship to or financial interest with the company that would cause you to disregard evidence and facts when evaluating them. For example, preparing the financial statements for a business owned by a close relative can justifiably cause those viewing your report to doubt its veracity or your objectivity.

 Taking due care: In a nutshell, this principle means you have the education and experience to perform the work at hand. You must be both competent diligent. In addition, due care means you plan and supervise adequately any professional activity for which you are responsible.

 Scope and nature of services: All the above principles lead up to this final one. Financial accountants consider all the preceding principles when determining whether they can provide specific services in individual circumstances.

If being a member of the AICPA isn’t mandatory in order to get a job as a financial accountant, you may wonder why its code of conduct is such a big deal. Well, if you want to be a financial accountant practicing as a CPA (see Chapter 22), you must be licensed by your state, which recognizes the authority of the AICPA. State and federal courts consistently hold that all practicing CPAs, regardless of membership in the AICPA, must follow the professional ethical standards contained in the AICPA’s Code of Professional Conduct.