Question

Peter Beetson , a public accountant , provides tax services, management advisory  services,bookkeeping services  and conducts audits for his Accounting practice .Peter also is the treasurer of the Northbridge Joggers Club ,a small not for profit club which he runs with on a weekend .You are asked to state whether there has been a violation of the Accountants Code of Ethics and state which ethical principle has been violated and  briefly providing a reason(s) for your opinion:

Answer 1

One of the five fundamental ethical principle /code of conduct for professional accountants to follow ,namely,objectivity ----seems to have the possibility of being violated ,in this case.

As per the above principle, a professional accountant should desist from all actions that will cloud his undestanding and hamper his reporting responsibilities, in a true & fair manner .

The above principle expects a professional accountant, to work :

without bias, ie. Without fear of someone or doing favor to someone--

without any conflict of interest or in the interest of self &

without being unduly influenced by vested parties , who may benefit unethically.

If he audits his own compilation of accounts, there is immense possibility to tailor/manipulate

either the account books to suit audit requirements    or

certify false audit reports so as to cover up his own accounting errors or wanton manipulations,if any.

In essence there is scope for

biased accounting work or audit opinion due to

threat of self-interest to safeguard or justify his own work or professional competence

to remain in that employer's service and to obtain future contracts for the services mentioned

this leads to compromising in one's objective thinking as to what is right or wrong ( as per the prevailing laws)

Also,there is the threat of being familiar with the employer, because of which Peter will hesitate to say "no" to his employer's manipulation of the accounting/tax /book-keeping records

In addition,

the violation of the "objectivity" principle in, itself raises questions about the

integrity /honesty of the concerned practitioner (Peter Beetson) and also his

professional competence to carry out two different jobs without even being aware of the serious consequences as well as letting down the profession .

that shows that he has also not applied "due care" to follow the highest standards set by his profession, for others to emulate .