Ethics in Accounting and Auditing Practice

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Accounting professionals and auditors are faced with a myriad of ethical principles and professional standards that must be understood and complied with in today's regulatory environment. This course examines the sources and application of accounting ethics rules, providing participants with a practical understanding of the ethical requirements that govern both private and public accounting practices. Attendees will gain insight into the framework that guides ethical decision-making and professional conduct within the accounting profession.

Through a comprehensive review of AICPA ethics standards and related state ethics requirements, this webinar explores key topics including independence, conflicts of interest, and the conceptual framework used to resolve ethical dilemmas. Participants will also examine the potential ramifications of failing to adhere to established ethical standards and learn how ethical principles support public trust and professional responsibility in accounting and auditing engagements.

Your Benefits For Attending:
  • Understand the AICPA and state ethics rules generally applicable to accounting professionals.
  • Review the six AICPA principles of ethics and their role in professional conduct.
  • Examine independence requirements, including when independence applies and how it operates in practice.
  • Learn strategies for identifying and addressing conflicts of interest.
  • Explore the AICPA conceptual framework approach for resolving ethics-related issues.
  • Understand the ramifications of failing to adhere to ethical standards and professional requirements.

This webinar provides practical guidance for navigating ethical challenges encountered in accounting and auditing environments. By strengthening your understanding of professional ethics requirements, you can enhance decision-making, maintain compliance, and uphold the integrity expected of accounting professionals.

CPE Credit Information:
This course is designed to qualify for ethics credit in many states; however, no guarantee can be made with respect to any specific state's requirements.

Level: Basic
Format: Recorded Webcast
Instructional Method: QAS Self-Study (Traditional)
NASBA Field of Study: Behavioral Ethics (2 hours)
Program Prerequisites: None
Advance Preparation: No
  1. Introduction
  2. Morality and Ethics 00:02:02
  3. Ethics and the Accounting Professional 00:03:15
  4. Ethical -Legal Dilemma 00:04:36
  5. Frameworks for Ethical Decision Making 00:06:15
  6. A Thought Before We Begin 00:07:47
  7. Practical Ethica of Practice 00:10:49
  8. Certified Public Accountantcy 00:11:14
  9. Firm 00:13:12
  10. Reciprocal Permits and the Practice Privilege 00:14:20
  11. Requirements for a Reciprocal License 00:17:38
  12. Substantially Equivalent State 00:17:58
  13. Who Can Use “Certified Public Accountant” or “CPA” 00:19:15
  14. Don’t Do It! 00:20:38
  15. Ok if You’re Ok 00:22:48
  16. Continuing Professional Education 00:25:06
  17. Acceptable CPE 00:25:47
  18. Common Requirements For Acceptable CPE 00:27:24
  19. Acceptable CPE 00:29:37
  20. AICPA Code of Professional Responsibility 00:31:23
  21. Competence 00:32:08
  22. Advertising 00:33:22
  23. Fee Arragements 00:35:20
  24. Other Fee Issues 00:36:06
  25. Principles Vs. Rules 00:36:41
  26. Principles Vs. Rules (con’t) 00:37:45
  27. Principles 00:38:59
  28. Responsibilities 00:39:11
  29. The Public Interest 00:41:20
  30. Integrity 00:41:59
  31. Integrity (cont’d) 00:42:18
  32. Integrity: Subordination of Judgement 00:43:11
  33. Conflict of Interest 00:44:25
  34. Conditions That Create Conflicts 00:44:44
  35. Conflict Resolution 00:47:21
  36. Confidential Client Information 00:48:29
  37. Confidential Client Information Exceptions 00:
  38. Confidentiality Vs. Privilege 00:50:33
  39. Work Product Privilege and the IRS 00:51:53
  40. AICPA Independence 00:54:36
  41. Applying the Independence Rules  00:54:58
  42. Applying the Independence Rules - Business Relationships 00:55:31
  43. Routine Activities Related to Attest Services (No Impairment) 00:55:58
  44. General Requirements for Performing Both Attest and Nonattest Services 00:56:35
  45. General Requirements for Performing Both Attest and Nonattest Services (cont’d) 00:57:59
  46. Advisory Services 00:58:51
  47. Due Care 00:59:22
  48. Scope and Nature of Services 01:00:03
  49. AICPA Ethics Codification 01:01:23
  50. What’s a Conceptual Framework? 01:01:54
  51.  Independence: A Conceptual Framework 01:03:01:
  52. Threats to Independence 01:03:31
  53. Safeguards 01:04:21
  54.  Conceptual Framework Definitions 01:05:07
  55. Steps of Conceptual Framework 01:05:37
  56. Outstanding Fees 01:06:15
  57. Fee Arrangements 01:07:14
  58. Other Fee Issues 01:07:18
  59. Advertising 01:07:20
  60. Fraud 01:07:23
  61. What is Fraud?  01:08:57
  62. What is Fraud? - Misrepresentation 01:09:12
  63. What is Fraud? - Intentional 01:10:35
  64. What is Fraud? - Material Fact 01:10:57
  65. What is Fraud About? 01:11:32
  66. The Fraud Triangle 01:13:17
  67. Pressure 01:13:37
  68. Pressure (cont’d) 01:14:48
  69. Pressure (cont’d) 01:16:18
  70. The Fraud Triangle 01:17:30
  71. Opprotunities 01:18:06
  72. Opprotunities (cont’d) 01:19:39
  73. Opprotunities (cont’d) 01:20:17
  74. The Fraud Triangle 01:22:22
  75. Rationalization 01:23:46
  76. Rationalization (cont’d) 01:26:12
  77. The Fraud Triangle 01:29:19
  78. Case Study 01:30:46
  79. The Accountant 01:31:40
  80. Questions to Ponder 01:32:31
  81. The Facts 01:33:20
  82. Questions to Ponder 01:24:37
  83. Intermediate Conclusions 01:36:54
  84. Ultimate Conclusion 01:37:17
  85. Questions to Ponder 01:38:21
  86. Speaker Closing 01:40:32
  87. Presentation 01:40:45
  • Chuck Borek

    Chuck Borek

    Chuck Borek is a practicing attorney and founder of  the Borek Group, LLC. Chuck is also a CPA, and his background includes  five years as a partner in a public accounting firm. He received his law degree and MBA summa cum laude from the University of Baltimore in 1993, where he was editor [...]

    View Full Profile

ATATX Credit

Aurora Training Advantage is offering continuing education points designed to recognize dedication to training and excellence in accounting.

CPE Credit

Continuing Professional Education

Aurora Training Advantage is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

For more information regarding administrative policies such as complaint and refund, and cancellation please contact our offices at 407-542-4317 or [email protected].

You must answer all questions during the webinar, view the recording completely and pass the test at the end with 70% correct answers to receive CPE credit.

  • AICPA 00: 00:27:07, 00:31:26
  • Certified Financial Planner (CFP) 00:23:18
  • Certified Public Accountant (CPA) 00:19:17
  • Enrolled Agent (EA) 00:
  • Generally Accepted Accounting Principles (GAAP) 00:51:15
  • Reciprocal License 00:15:59
  • Sole Proprietorship 00:13:17

AICPA: The American Institute of Certified Public Accountants is the national professional organization of Certified Public Accountants in the United States, with more than 418,000 members in 143 countries in business and industry, public practice, government, education, student affiliates and international associates.

Certified Financial Planner: The Certified Financial Planner (CFP) designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards (CFP Board) in the United States, and by 25 other organizations affiliated with Financial Planning Standards Board (FPSB), the owner of the CFP mark outside of the United States.

Certified public accountant (CPA): A designation given to an accountant who has passed a standardized CPA exam and met government-mandated work experience and educational requirements to become a CPA.

Enrolled agent (EA): A tax professional who represents taxpayers in matters where they are dealing with the Internal Revenue Service (IRS).

Generally Accepted Accounting Principles (GAAP): A set of rules and guidelines developed by the accounting industry for companies to follow when reporting financial data. Following these rules is especially critical for all publicly traded companies.

Reciprocal License : CPA license reciprocity, or certification by reciprocity, is designed for CPAs that currently hold a CPA license and want to move their principal place of practice to another jurisdiction, effectively changing their home jurisdiction.

Sole Proprietor: A business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

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Frequently Asked Questions

The AICPA Code of Professional Conduct is organized around six fundamental principles that define the ethical obligations of CPAs in public accounting and related roles. The principle of Responsibilities requires CPAs to act with professional and moral judgment in all activities. The Public Interest principle establishes that CPAs must serve the public interest—particularly clients, employers, the financial community, and governments—not merely their immediate clients or employers. Integrity demands that CPAs be straightforward and honest in all professional and business relationships, avoiding false or misleading statements. Objectivity requires CPAs to be free of conflicts of interest and to not allow bias, conflict, or undue influence to override professional judgments. Independence—particularly for attestation services—mandates that CPAs in public practice be independent in fact and in appearance when providing auditing or other assurance services. Due Care obligates CPAs to observe technical and ethical standards, continuously improve their competence, and perform services to the best of their ability. These principles are reinforced by specific rules and interpretations that address particular practice areas, providing concrete guidance for applying the principles to real-world professional situations.
IRS Circular 230 governs the practice of CPAs, attorneys, enrolled agents, enrolled actuaries, and other practitioners before the Internal Revenue Service. It establishes both affirmative duties and prohibitions that define the ethical obligations of tax professionals in their dealings with the IRS and with clients. Practitioners must provide competent representation, maintaining the necessary knowledge and skill to handle the matters they undertake. They must exercise due diligence in preparing and filing tax returns, submissions, and documents—verifying factual accuracy and not signing returns they know to contain errors or omissions. Practitioners cannot advise clients to take positions on returns that lack a reasonable basis, and they must advise clients of any noncompliance issues that come to their attention during the engagement. Circular 230 prohibits practitioners from unreasonably delaying matters before the IRS, charging unconscionable fees, or engaging in conduct that is incompatible with practice before the IRS. The rules also address conflicts of interest, confidentiality, and the prohibition against assisting disqualified practitioners. Violations of Circular 230 can result in censure, suspension, or disbarment from practice before the IRS, making familiarity with its requirements essential for any tax professional.
Client pressure is one of the most common and challenging sources of ethical dilemmas for accounting professionals, particularly when clients push for favorable treatment of transactions, aggressive tax positions, or accounting judgments that the practitioner views as impermissible or misleading. The starting point for resolving these situations is clarity about the professional standards at stake: the AICPA Code, IRS Circular 230, GAAP, auditing standards, or other applicable frameworks define the boundaries of professional conduct regardless of client preferences. When a client requests treatment that the accountant believes is non-compliant or unethical, the accountant's obligation is to explain clearly why the request cannot be accommodated and to present any permissible alternatives. If the disagreement cannot be resolved, the accountant must consider whether continued engagement is appropriate—and in some circumstances, whether withdrawal is required. For auditors in particular, independence obligations mean that yielding to management pressure on audit judgments constitutes a fundamental breach of professional duty. Maintaining contemporaneous documentation of the professional judgments made and the basis for those judgments provides essential protection if the accountant's decisions are later questioned. Professional ethics consultations and anonymous ethics hotlines offered by the AICPA and state societies are available resources when guidance is needed.
Auditor independence is the cornerstone of the attest function and the primary reason why audited financial statements carry credibility with investors, creditors, regulators, and the public. Independence requires that auditors be both independent in fact—meaning they genuinely have no financial, familial, or business interests that impair their objectivity—and independent in appearance—meaning that a reasonable and informed observer would have no basis to question their objectivity. The two are equally important: even where actual independence is intact, the appearance of impairment undermines the value of the audit opinion. Threats to independence include financial interests in the audit client (ownership of shares, loans, or other financial arrangements), close personal relationships with client management, providing non-audit services that create a self-review threat, excessive fee dependence on a single client, and long audit tenure that creates familiarity threats. Auditing standards and the AICPA Code require auditors to identify and evaluate these threats and apply appropriate safeguards—such as engagement partner rotation, quality reviews, or in severe cases, declining or terminating the engagement. Independence is not merely a regulatory technicality—it is the fundamental promise that makes audited financial information reliable and the capital markets function efficiently.
The Institute of Management Accountants (IMA) has developed its own Statement of Ethical Professional Practice that governs the conduct of management accountants and financial professionals working within organizations rather than in public accounting. The IMA's ethical framework is organized around four core principles and four standards that together define the professional obligations of its members. The four principles are Honesty, Fairness, Objectivity, and Responsibility—establishing the foundational values that guide all professional conduct. The four standards translate these principles into specific behavioral obligations: Competence (maintaining professional knowledge and skills, performing duties in accordance with applicable standards), Confidentiality (refraining from disclosing confidential information inappropriately and protecting sensitive data), Integrity (avoiding actual or apparent conflicts of interest and refusing gifts or favors that would influence actions), and Credibility (communicating information fairly and objectively, disclosing all material information and limitations). When management accountants face situations that appear to conflict with these standards, the IMA provides a framework for resolution that includes escalating through reporting channels, consulting legal counsel, and in cases where no satisfactory resolution is available within the organization, resigning from the position rather than compromising professional integrity.