.01–Rule
102—Integrity and objectivity. In the
performance of any professional service, a member shall
maintain objectivity and integrity, shall be free of
conflicts of interest, and shall not knowingly
misrepresent facts or subordinate his or her judgment to
others.
[As adopted January 12,
1988.]
.04–102-3—Obligations of a member to
his or her employer’s external accountant.
Under rule 102 [ET section 102.01], a member must
maintain objectivity and integrity in the performance of
a professional service. In dealing with his or her
employer’s external accountant, a member must be
candid and not knowingly misrepresent facts or knowingly
fail to disclose material facts. This would include, for
example, responding to specific inquiries for which his
or her employer’s external accountant requests
written representation.
[Effective
November 30, 1993.]
.05–102-4—Subordination of judgment by
a member. Rule 102 [ET section 102.01] prohibits
a member from knowingly misrepresenting facts or
subordinating his or her judgment when performing
professional services. Under this rule, if a member and
his or her supervisor have a disagreement or dispute
relating to the preparation of financial statements or
the recording of transactions, the member should take the
following steps to ensure that the situation does not
constitute a subordination of judgment:
- The member
should consider whether (a) the entry or the
failure to record a transaction in the records,
or (b) the financial statement presentation or
the nature or omission of disclosure in the
financial statements, as proposed by the
supervisor, represents the use of an acceptable
alternative and does not materially misrepresent
the facts. If, after appropriate research or
consultation, the member concludes that the
matter has authoritative support and/or does not
result in a material misrepresentation, the
member need do nothing further.
- If the
member concludes that the financial statements or
records could be materially misstated, the member
should make his or her concerns known to the
appropriate higher level(s) of management within
the organization (for example, the
supervisor’s immediate superior, senior
management, the audit committee or equivalent,
the board of directors, the company’s
owners). The member should consider documenting
his or her understanding of the facts, the
accounting principles involved, the application
of those principles to the facts, and the parties
with whom these matters were discussed.
- If, after
discussing his or her concerns with the
appropriate person(s) in the organization, the
member concludes that appropriate action was not
taken, he or she should consider his or her
continuing relationship with the employer. The
member also should consider any responsibility
that may exist to communicate to third parties,
such as regulatory authorities or the
employer’s (former employer’s) external
accountant. In this connection, the member may
wish to consult with his or her legal counsel.
- The member
should at all times be cognizant of his or her
obligations under interpretation 102-3 [ET
section 102.04].
*AICPA
Professional Standards, Code of Professional Conduct
www.aicpa.org
To view this document electronically or to view other
ethics materials
for CPAs in business and industry, please visit
http://www.aicpa.org/members/div/ethics/industry.htm
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