Accounting Ethics

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Accounting Ethics Paper

Accounting Ethics Paper will be graded out of 100 points. Grading will be based on the

technical merit, completeness, professionalism, and clarity.

As discussed in Earnings Management Paper, managers of companies are given much flexibility

in financial reporting based on the belief that managers would use flexibility to make financial

reporting more useful for financial statement users. However, managers of some companies abuse

flexibility for the benefit of companies or even themselves, which deters reliable and transparent

financial reporting. Hence, ethics plays an important role in dictating managers’ behavior in

financial reporting. In other words, depending on the company managers’ ethics and intention, this

flexibility can be used to manage earnings or enhance financial reporting quality.

Accounting Ethics Paper provides an opportunity to explore accounting ethics, legislation

(i.e., Sarbanes-Oxley Act of 2002), and AICPA codes of conduct in relation to financial

reporting. For Accounting Ethics Paper, each team will read a textbook, professional articles,

and/or academic research papers. Based on those reference papers and each team’s own further

research, each team will write Accounting Ethics Paper using the structure given below. In addition

to the reference papers available in Canvas, each team should conduct own further research

including but not limited to professional articles, news articles and/or academic research

papers, as needed. For reference, I describe what should be included in each section.

Title of each section for the main body of Accounting Ethics Paper:

1. Introduction

• What is the objective of your team’s Accounting Ethics Paper?

• How is your team’s Accounting Ethics Paper structured to support the objective?

2. Legislation: Sarbanes-Oxley Act of 2002 (Please refer to

https://www.congress.gov/107/plaws/publ204/PLAW-107publ204.pdf, textbook and 6 SOX readings in Canvas, and conduct own research)

• Summarize the following key provisions of Sarbanes-Oxley Act of 2002.

✓ PCAOB (Public Company Accounting Oversight Board): Title I

▪ Purpose of PCAOB (Section 101)

▪ Duties of PCAOB (Section 101)

▪ Auditing standards requirements (Section 103)

▪ Quality control standards requirements (Section 103)

✓ Auditor Independence: Title II

▪ Prohibited activities by auditors (Section 201)

▪ Audit partner rotation (Section 203)

▪ Conflicts of interest (Section 206)

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✓ Corporate Responsibility: Title III

▪ Corporate responsibility for financial reports (Section 302)

▪ Improper influence on conduct of audits (Section 303)

✓ Enhanced Financial Disclosures: Title IV

▪ Management assessment of internal controls (Section 404)

✓ Analyst conflicts of interest: Title V

▪ Required disclosure in research reports (Section 501)

• Discuss whether Sarbanes-Oxley Act of 2002 has been effective in providing more

reliable and transparent financial reporting.

3. Professional Codes of Conduct: AICPA Code of Professional Conducts

(Please refer to AICPA Code of Professional Conducts in Canvas and

textbook, and conduct own research) • Discuss the purpose of AICPA Code of Professional Conducts (Refer to AICPA

Code of Professional Conducts 0.100.010 – 0.100.020)

• Under what circumstances may ethical conflicts in the public practice arise? What

steps does AICPA Code of Professional Conducts suggest when ethical conflicts

arise? (Refer to AICPA Code of Professional Conducts 1.000.020)

• Summarize each of 6 Principles of AICPA Code of Professional Conducts. (Refer

to AICPA Code of Professional Conducts 0.300.020 – 0.300.070)

• Discuss how above 6 Principles of AICPA Code of Professional Conducts would

help to provide more reliable and transparent financial reporting.

• Summarize each of the following concepts and provide specific examples for each

of the followings.

✓ Conflicts of interest (Refer to AICPA Code of Professional Conducts 1.110)

✓ Knowing misrepresentations (Refer to AICPA Code of Professional

Conducts 1.130.010)

✓ Subordination of judgment (Refer to AICPA Code of Professional Conducts

1.130.020)

✓ Conceptual framework for independence (Refer to AICPA Code of

Professional Conducts 1.210)

4. Accounting Ethics and Relation Among Legislation, Professional Codes

of Conduct, and Accounting Ethics (Please refer to all reference papers in Canvas and textbook, and conduct own research)

• How would your team define Accounting Ethics?

• Discuss whether legislation and/or professional codes of conducts alone are

sufficient for reliable and transparent financial reporting.

• If your team agrees that legislation and/or professional codes of conducts alone are

sufficient for reliable and transparent financial reporting, discuss what additional

roles Accounting Ethics would play in providing reliable and transparent financial

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reporting. Please use specific examples or evidence to support your team’s

argument.

If your team does not agree that legislation and/or professional codes of conducts

are sufficient for reliable and transparent financial reporting, discuss how

Accounting Ethics would help legislation and/or professional codes of conducts in

making financial reporting more reliable and transparent. Please use specific

examples or evidence to support your team’s argument.

5. Conclusion

• Describe and reiterate what your team’s Accounting Ethics Paper is about and what

the main idea is.

Additional Notes:

(1) Include a cover page where title, last names, first names and IDs are clearly indicated.

(2) Create the title: Your team can choose any title that can highlight your team’s thoughts.

(3) Add “References” right after the main body where your team list up the articles,

academic research papers and other materials your team used.

(4) Double-spaced 15 pages or less (1″ margin for all sides) excluding cover page and

references.

(5) 12-point Time New Roman.

(6) First draft: Due March 4, 2024 (Mon) – NO LATE SUBMISSION: E-mail submission

only by 12:55pm.

(7) Final draft: Due March 18, 2024 (Mon) – NO LATE SUBMISSION: E-mail submission

only by 12:55pm.

(8) Your team must complete without taking help from any other fellow students or another

people.