The AICPA’s Code of Professional Conduct consists of two sections viz. Principles and Rules. The Principles section outlines the necessary framework for the Rules section which is used for governing professional performance of the members. This code was adopted in order to provide rules and guidance to all the professional members including all those who are either in government or public practice, industry or education. Compliance with it depends on the understanding of the members, voluntary actions, and reinforcement by public opinion and peers and in some case on disciplinary proceedings.
• Section 50 - Principles of Professional Conduct
Section 50 covers Section 51-57. Section 51 gives the preamble of Section 50 which states that AICPA membership is voluntary and once registered; it becomes obligatory for the members to have self-discipline even beyond the law and recognize their professional responsibilities towards their client, colleagues and the public. According to Section 52, members of AICPA shall exercise moral and professional judgments in all aspects of their professional activities. Section 53 requires members to act in public interest honoring their trust on them. Section 54 states that members shall maintain highest integrity in all their activities and try to broaden the confidence of public. Under Section 55, it is required for a member to be independent and free of interest conflicts in discharging his responsibilities. Section 56 requires members to exercise due care in discharging their services. And according to section 57, a member shall determine the nature and scope of his services by observing the principles section of the code.
• Section 90 - Rules: Applicability and Definitions
Section 90 covers Section 91 and 92. While Section 91 provides the applicability criteria, section 92 gives definitions for various terms used in the code. For the purpose of this section, an international associate of the AICPA and an associated member are also covered under the definition of member. This section requires all the members to adhere to the Rules of the code except in 4 cases:
a) When a foreign component auditor who is a member of a group engagement team departs from the discipline but his conduct is in accordance with the independence and ethical requirements of Code of Ethics for Professional Accountants by International Ethics Standards Board for Accountants (IESBA), then a member of such a group engagement team will not be subject to the discipline,
b) If a member practices outside US and his conducts are in accordance with the rules of that country’s organized accounting profession, then he will not be subject to the discipline,
c) When a firm within a network is located outside US and departs from the discipline but its conduct is in accordance with the independence and ethical requirements of Code of Ethics for Professional Accountants by International Ethics Standards Board for Accountants (IESBA), then a member of such a network firm will not be subject to the discipline and,
d) When rules themselves indicate so.
This section also restricts a member to permit a person to perform such acts on his behalf that if performed by the member himself would be recognized as violation of rules.
• Section 100 - Independence, Integrity and Objectivity
This section provides conceptual framework for AICPA Independence, Integrity and Objectivity standards. It consists of three sections viz. ET Section 101, ET Section 102 and ET Section 191. Section 101 gives the Independence standards and its various interpretations like effect on independency when the member takes loan from a financial institution which is his client etc. Section 102 gives interpretations regarding Integrity and Objectivity of the members like conflicts of Interest (Sec. 102-2), member’s obligation towards the external accountant of his employer (Sec. 102-3) etc. Lastly, Section 191 gives the ethical rules regarding Independence, Integrity and Objectivity for a member.
• Section 200 - General Standards Accounting Principles
This section consists of subsections 201, 202, 203 and 291. Section 201 gives competence standards for a member which require a member to have professional competence, adequately plan, supervise and perform his professional responsibilities with due care and must obtain sufficient relevant data to make reasonable conclusions on that basis. Section 202 requires a member to comply with all the standards while performing his professional services. Section 203 restricts a member to express an affirmative opinion on financial statements of his clients or to state that he is unaware of required modifications in the financial statements so that they confirm with the generally accepted accounting principles when the case is no so i.e. the data or such statements depart from the accounting principles. Section 291 gives ethical rules regarding general and technical standards like financial statements’ submission by a member in public practice (Sec. 291-10) etc.
• Section 300 - Responsibilities to Clients
This section illustrates various responsibilities of a member towards his clients. For example, a member shall not share his client’s confidential information with any other client (Section 301), a member shall not receive any contingent fee from his client in return of his services (Section 302). And Section 391 lists ethical responsibilities of a member towards his clients for example the member shall not use a third party service provider to provide services to his own client (Subsection 391-1) etc.
• Section 400 - Responsibilities to Colleagues
This section illustrates various responsibilities of a member towards his colleagues. The content of this section is reserved by AICPA.
• Section 500 - Other Responsibilities and Practices
This section describes other responsibilities and practices required to be performed by a member. This section covers subsections 501-503, 505 and 591. Section 501 gives a list of discreditable acts that shall not be performed by a member of AICPA. Section 502 prohibits a member to obtain clients through advertising or other misleading, deceptive or false solicitation activities. Section 503 prohibits a member to accept commission and referral fees. A member is allowed to accept permitted commissions only and that too need to be properly disclosed. Section 505 prohibits a member from practicing public accounting under a misleading firm name. The member can practice under the organizations permitted by the law and he can designate himself as a member of AICPA if and only if all the co-owners of his firm are also the members of AICPA. Section 591 gives other ethical rulings regarding a member’s responsibilities and practices.
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