Principles of Professional Conduct
It is the forensic accountant’s responsibility, during their professional activities, to provide
services to their clients in such a way as to as to maintain the public’s confidence and to be
able to self-govern. This must be performed with integrity through being honest, maintain
client confidentiality, being ethical, objective, and independent. In this manner the forensic
accountant can achieve their responsibilities with competence and a continued dedication to
learning and growing their profession and provide to the best of their ability thorough services
in which they are qualified to provide. d d
Rules of Professional Conduct
The forensic accountant should act in such a way by using the Principles of Professional
Conduct as an ethical compass, and the Rules of Professional Conduct in their performance of
work.
They should only undertake work that they are able to complete with Professional
Competence.
They should be able to be able to perform their work to provide reasonable assurance any
material misstatements of the financial statements through Due Professional Care.
They should remain independent, objective, and not pass judgement. They should comply
with the standards set and follow the accounting principles and take seriously their
commitment to maintain customer confidentiality. d d
A forensic accountant is often called to serve as an expert witness and give testimony in a
trial. There are a few principles that forensic accountants must follow during their
engagements. A forensic accountant must demonstrate professional care by having a degree
of competency and skill. In this case, the forensic accountant must have knowledge in land
development. They should know how land is valued, and the methods used to justify the
valuation. The accountant’s conclusions should also be supported with relevant evidence.
Before the accountant agree to accept the engagement, they will need to make sure there is no
potential conflicts of interest. If there is, it must be disclosed. The accountant must have
objectivity in their engagement. d This means that the accountant cannot take sides in the case.
They must remain impartial during the engagement. The accountant should also demonstrate
integrity by being honest and not be misleading. The information that is being given must be
true and reliable.
Obtaining evidence will require the accountant to behave with professional care and have
objectivity and integrity. The forensic accountant will have to conduct interviews to
understand the details on what happened during the breach of contract. They must be
objective and gather the important information. They will also have to make sure while
gathering evidence they do not take sides in the situation. They must remain neutral and
gather the facts to be able to present to the court. If the accountant is unable to demonstrate
these principles, the evidence may not be relied on, and the testimony will be false.
When a forensic accountant is hired to provide a valuation for losses and serve as an expert
witness in court, they must consider the AICPA principles of professional conduct as well as
the federal rules of evidence. The AICPA principles of professional conduct consist of six
principles: responsibilities, the public trust, integrity, objectivity and independence, due care,
and scope and nature of services (Rufus et al., 2015, p. 300). In the given situation, the
forensic accountant could demonstrate professional care by ensuring they adhere to all
guidelines. This would include adhering to the rules of professional conduct which include
showing independence, professional competence, planning and supervision, and obtaining
sufficient relevant data. To demonstrate objectivity and integrity the forensic accountant
should follow Rule 102 that states members should maintain objectivity and integrity. There
should be no conflicts of interest. The member should also avoid misrepresenting facts
knowingly. To be an expert witness the forensic accountant must also adhere to Rule 702
which lays out the conditions in which an expert witness is considered such and when they
can testify in court. The forensic accountant should have specialized knowledge and sufficient
facts or data (Federal Evidence Review, 2016). In following all the guidelines set forth, the
collection of evidence or data should be sufficient to testify. Now if the forensic accountant
does not have knowledge in the field of land valuation, they couldn’t be considered an expert
witness or provide sufficient evidence as they would not be specialized in that field.
A forensic accountant should perform an engagement with professional care, objectivity, and
integrity. "A member shall fulfill his or her professional responsibilities with competence and
attention," according to professional care (AICPA, 2013). Being competent indicates that
forensic accountants have the professional training and skill set necessary to carry out the task
for which they have been recruited. It is the responsibility of forensic accountants to be aware
of their training and experience limitations and to refrain from taking on a case that is outside
of their area of expertise.
A forensic accountant has to first confirm their independence from all parties involved before
performing a valuation and providing expert testimony. Any association with either party
constitutes a conflict of interest, which can lead to the exclusion of their testimony. Forensic
accountants will be able to perform their inquiries with objectivity if they are not connected to
the parties at issue. The obligation to be impartial, intellectually honest, and free of conflicts
of interest is imposed by the principle of objectivity, according to the Principles of
Professional Conduct (AICPA, 2013).
A forensic accountant with integrity is one who abides by the AICPA Principles of
Professional Conduct and Rules of Professional Conduct and is seen as being trustworthy and
honest. Over the course of their career, forensic accountants will understand the value of
integrity, which may be demonstrated by acting consistently.
Being careful, objective, and honest in one's professional dealings can affect one's capacity to
gather enough data to support his or her opinion. To gather all the information required to
complete an engagement, the forensic accountant must speak with both parties, arrive at
qualified conclusion.
Forensic accountants will be truthful and forthright in disclosing the information they believe
will contribute to a favorable decision if both parties trust that they are objective and have
integrity in their job. The parties may feel that offering evidence is pointless if they think the
forensic accountant is biased or unreliable. Additionally, if one of the parties thinks the
forensic accountant lacks integrity, they might think they can influence the forensic
accountant by using coercion or bribery.
Assuming the preemptive scenario for our discussion where a forensic accountant is hired to
provide a valuation for losses and serve as an expert witness in court, the forensic accountant
may first want to revisit all relevant sources, including Black's Law definition of
responsibility as "being held accountable for one's duty, action, inaction, or obligation."
(Rufus, Miller, Hahn, 2014)
Additional sources and references may be the AICPA's Code of Professional Conduct and the
ACFE Standards of Professional Conduct. Both emphasize integrity, objectivity, professional
competence, and due professional care encompassing diligence, critical analysis, professional
skepticism, and relevant and factual supporting evidence. In addition, a forensic accountant
must understand and document the engagement and client communication and adhere to
confidentiality. (Rufus, Miller, Hahn, 2014)
Moreover, the NACVA's Professional Standards encompasses ten principles and is a
significant source for forensic accountants regarding business valuation. The principles
constitute the same ethics or standards as AICPA and ACFE, surrounding trust, but also
describe criteria around serving the client interests, discreditable acts in the profession's
name, and conflict of business and financial interest. (Rufus, Miller, Hahn, 2014)
As presented in such a case, a forensic accountant or expert witness may seek protection from
a lawyer. (Singleton, 2010) In addition, to personal protection, it would be wise to review the
rules of evidence with the lawyer as well. The Rules of Evidence or rules 702 and 703 in
particular. Rule 702 presides over the admissibility of testimony by an expert witness
encompassing evidentiary criteria such as sufficient facts, data, reliable principles and
methods, and case-specific application. Rule 703 presides over the information sources
supporting the testimony of an expert witness, the rules of civil procedure, exhibits, and the
expert's CV requirements, including the history of sworn testimony/cases and publications,
plus a statement of compensation. (Rufus, Miller, Hahn, 2014)
According to the AICPA Code of Professional Conduct, ethical problems arise when an
expert shows bias or loses sight of moral boundaries, their duty to the court and the public,
and overall "becomes an advocate for the client rather than an advocate for an objective and
independent opinion." (AICPA, n.d.)
In closing, it's fair to say that a forensic accountant or expert witness' ability to obtain
sufficient evidence or data to support an opinion and testimony is inherent in following the
rules and principles of AICPA, ACFE, and NACVA encompassing professional trust.
References:
Federal Evidence Review. Federal Rules Of Evidence (2015) | Federal Evidence Review.
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Rufus, R., Miller, L., & Hahn, W. (2014). Forensic accounting. Upper Saddle River, NJ:
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Singleton, T. W., & Singleton, A. J. (2010). Fraud auditing and forensic accounting (4th ed.).
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