AICPA CODE OF ETHICS INFORMATION DISCLOSURE RESPONSIBILITIES
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AICPA Code of Ethics Information Disclosure Responsibilities
MS: Accounting: Taxation, Liberty University
March 02, 2023
Author Note
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Porteah Purcell.
Email: preamer@liberty.edu
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Summary
AICPA Code of Ethics Information Disclosure Responsibilities
Clara goes to an attorney's office because she needs help handling the estate her late
husband left behind. Her husband Phil, who worked in a factory all his life, was a saver and
amassed roughly $1,500,000 in stocks and bonds. As a result of Clara's lack of experience in
dealing with complex financial issues, the attorney is willing to manage the estate for a fee equal
to 17% of the estate's total worth. The typical fee for this type of labor ranges from 3 to 5 percent
of the estate. The widow gives her assent to the agreement of 17 percent. The attorney then
spends $10,000 to engage the services of CPA Charles to compute Phil's estate tax using Form
706 and to create the necessary documentation.
1. Under Circular 230, does Charles have any responsibility to inform the widow that
she is being significantly overcharged by the attorney?
Rule 208 of the CPA Code, the confidentiality of information will prevent Charles not to
tell Clara that he thinks the lawyer is charging her too much. Rule 208 says that confidential
information about a current or former client or employer cannot be used without their
permission, whether to help the registrant, to help a third party, or to hurt the client or employer.
Unless Charles thinks it is in the public interest. In the public interest, the CPA can inform the
attorney about the 17 percent rule under the AICPA Code. Jenkins et al. (2018) explain that the
public interest in accounting refers to protecting the business community, clients, shareholders,
regulators, government, and society from the (un)intentional detrimental activities of accounting
professionals.
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2. What potential ethics issues do you see in this situation?
The ethical concern is that it will require a CPA with integrity to challenge the attorney
about the 17 percent deal because the CPA, Charles is also getting $10,000 to calculate Phil's
estate tax on Form 706 and to create other necessary documents. Jenkins et al. (2018) also states
that accountants often perform functions in service to the public interest (p.526, 528). The IRS §
10.27 has a rule for service fees. In general, in connection with any pending matter before the
Internal Revenue Service, a practitioner is not permitted to charge an unreasonable fee.
Another ethical matter is from the book of Proverbs. It states, "All hard work brings a
profit" Doing valuable work and being successful in business are activities God commends and
promotes. However, because He wants us to use our businesses as opportunities to represent
Him, we should conduct all business dealings honestly. He expects us to utilize our enterprises as
opportunities to represent Him (Proverbs 14:23 NIV). This scripture demonstrates that Charles
should give some thought to maintaining his integrity regarding this matter.
3. Which AICPA Code(s) of Professional Conduct rules apply in this situation?
AICPA code rule 102 – Integrity and objectivity.
The applicable rules in this circumstance are rule 102: Integrity and §10.27. A member
must maintain objectivity and integrity in the conduct of any professional service, be free of
conflicts of interest, and not deliberately falsify facts or defer to the judgment of others.
According to Safta, integrity in the business world has much to do with fighting corruption, but it
is not the same. Its scope is much more comprehensive. Studies show that business integrity
focuses on internal financial and administrative activities, relationships with suppliers, work
relationships, hiring, customer relationships, and so on. Any approach to honesty in business
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must consider the political and legal framework. Because of this, the state's role in these areas is
crucial to developing a fair business environment (p. 811-812).
4. Cite the specific verse(s) for at least one biblical principle that you feel is relevant to
the situation.
The perfected bible verse for this situation is John 8:31-32 which talks about following
the rules. According to the book of John, Jesus told the Jews who believed in him, "If you stay
true to my words, you are my disciples. You will know the truth, and the truth will set you free.
Even though the CPA cannot discuss the fees with Clara due to confidentiality concerns, he must
be honest with the attorney.
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References
Bible Gate Way (n.d), Proverbs 14:23 NIV) Retrieved February 28, 2022, from
https://www.biblegateway.com/passage/?search=Proverbs+14%3A23&version=NIV
Bible Gate Way (n.d), John 8:31-32 NIV) Retrieved February 28, 2022, from
https://www.biblegateway.com/passage/?search=John+8%3A31-32&version=NIV
CPA (2021) Maintaining Confidentiality and Public Confidence: Retrieved March 01, 2023
https://www.bccpa.ca/news-events/latest-news/2021/november/maintaining-
confidentiality-and-public-
confidence/#:~:text=Simply%20put%2C%20registrants%20must%20respect,and%20curr
ent%20clients%20and%20employers.
Law Cornell school (n.d) Legal Information Institute. Retrieved February 28 2023 from
https://www.law.cornell.edu/cfr/text/31/10.27#:~:text=of%20Popular%20Names-
,%C2%A7%2010.27%20Fees.,before%20the%20Internal%20Revenue%20Service
Safta, M. (2018). Integrity in the business environment. Juridical Tribune Journal = Tribuna
Juridica, 8(3), 811-822.
https://go.openathens.net/redirector/liberty.edu?url=https://www.proquest.com/scholarly-
journals/integrity-business-environment/docview/2275043540/se-2
PCAOB (n.d) ET Section 102 Integrity and Objectivity Retrieved March 01, 2023 from
https://pcaobus.org/oversight/standards/ethics-independence-
rules/details/ET102#:~:text=Rule%20102%20%E2%80%93%20Integrity%20and%20obj
ectivity,adopted%20January%2012%2C%201988.%5D
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AICPA Code of Professional Conduct (n.d) Retrieved March 01, 2023, from
https://us.aicpa.org/content/dam/aicpa/research/standards/codeofconduct/downloadabledo
cuments/2014december15contentasof2016august31codeofconduct.pdf
