Professional Ethics of the CPA
BY DORRIS C. MICHALSKE In-Charge Accountant, Cleveland Office
Presented before the Cleveland Chapter of American
Society of Women Accountants — May 1960
AMONG THE MANY problems encountered by Certified Public Account-• ants are those concerning ethics. In professional relations with clients, with the public, and with other CPAs diverse situations arise about which the CPA might question the ethical propriety. Consider the following examples:
• The examination of the financial statements of a client corporation
has been completed. The report will be published in a week or so, and the CPA wonders if it would be improper to reveal the earnings as shown on the report to a close personal friend.
• Being properly civic-minded, a CPA rendered services without
charge to a nonprofit organization. In recognition of the free services, the organization proposes to put a free advertisement
of the CPA's firm in their bulletin.
• A CPA who is an authority on declining-balance depreciation
wrote an article on this subject. Included in the resume on the author's background was the name of the firm with which he is associated.
• A prospective client is engaged in an income tax case. He is
quoted a fee by the public accountant based on the results obtained in the tax case.
• In a report on financial statements it was stated that sales and
purchase data had not been checked, and that inventories had not been test-checked. The CPA wonders whether it would be proper to express the opinion that the financial statements present fairly the company's financial position and the results of operations.
ETHICAL STANDARDS PROFESSIONAL BACKGROUND
Before suggesting an answer to these problems, a review of the history and nature of public accounting will help to explain why the CPA is concerned with following the ethical standards of his profes-