Creve Couer Pizza Case

Creve Couer Pizza, Inc.

In this case the ethical aspects primarily involved the American Institute of Certified Public Accountants (AICPA) as James Checksfield was serving as Creve Couer's CPA. However, the professional standards set for accountants by the Institute of Management Accountants (IMA) and the AICPA share close similarities. Both organizations emphasize that accountants follow a code of ethics when performing their duties. The members must use these ethical principles when engaging in accounting services for their company and the general public. The organizations note the following ethical standards: competence, confidentiality, integrity and credibility. The ethical principles are based on honesty, fairness, objectivity and responsibility.

Both the AICPA and the IMA stress integrity in their ethical standards which prohibits managerial accountants from engaging in unethical conduct. Integrity refers to behaving consistently with what is right and maintaining the appearance of what is right. In order to do what is right, the accountant must remain honest with their customers, even when the information shared is negative. Confidentiality requires accountants to disclose information only at their supervisor's discretion. The accountant needs to respect the privacy of the customer and keep the information confidential. The most significant exception to the confidentiality rules is that accounting professionals' work papers are subject to subpoena by a court which is nothing analogous to the attorney-client privilege. According to the AICPA and the IMA, accountants must remain credible in their responsibilities. Credibility refers to the accountant's ability to communicate accounting information fairly and objectively to all business stakeholders.

Both organizations highlights the fact that a failure to report negative information or use a company's internal financial information for personal gain can create serious legal situations for the clients, the firm, and the accountants. Accountants who fail to abide by the AICPA and/or the IMA's accounting ethical code face a variety of punishments. Accountants may lose their professional certification, be removed from accounting positions and face legal penalties depending on their inappropriate actions. Maintaining the general public's trust in companies is depicted as being a primary responsibility of all accountants.

I believe that the case of Creve Couer case closely involves the ethical issues of integrity and objectivity, confidentiality, and credibility. In addition, as it is often the case, small business owners face a lack of protocols in enterprise risk management. Particularly lacking in the low implementation of specific internal controls where the owner oversee multiple internal processes. The owner often manages multiple departments, administers the financial statements, and creates the managerial budgets and reports. Therefore increasing the chance of the owners to engage in conducts that prejudice the ethical performance of duties.

Question 1 - Moral Conscience Responsibility

Yes, Certified Public Accountants providing services such as accounting, taxation, audit, attestation, and other related services have a responsibility to serve small businesses as a moral conscience. The professional responsibilities of a Certified Public Accountant to their clients were determined by the American Institute of Certified Public Accountants Code of Professional Conduct. Specifically, Rule 102 regarding integrity and objectivity was used to determine what constituted as integrity and objectivity in the practice of a CPA acting as the moral conscience of their client.

Small business owners using certified public accountants trust the professional to help their small business grow. CPAs must act with integrity, maintain objectivity and independence, and perform services with due care to clients. The AICPA defines, in Section 54 Article III paragraph .01, integrity as an "element of character fundamental to professional recognition." Paragraph .02 describes integrity as "honest and candid within the constraints of client confidentiality" (AICPA, 2011, p. 1681). When businesses think they are conducting themselves in an appropriate manner, and their accountant does not inform them otherwise, the accountant has not provided their client with the due care required.

Within the context of accounting related services provided for small businesses, CPAs hired by the business owners are responsible for ensuring their client is within the confines of accounting rules, and accounting laws, specifically tax laws. CPAs are to advise their clients of changing statuses in tax laws, audit rules, and interpretations of generally accepted accounting principles (GAAP). It is the CPAs responsibility to advise all clients as to when certain activities may cross the line of being unethical and be made aware that such actions are inappropriate and unacceptable. The CPA's reputation and career is on the line, so it is very important for them to act accordingly and in an ethical matter.

Question 2 - Moral and Professional Responsibility

Moral responsibilities are subjective and defined by individuals. Therefore, auditors have a professional responsibility to the accounting profession to turn in clients who are cheating on their taxes or violating other laws. Although it is expected for professional accountants to have morals that mirror the AICPA's code of conduct for professional responsibility, that is not always the case. Rule 301 was used to determine whether information should be disclosed in the instance of fraud. Based on the information in the code of professional conduct, I have concluded that CPAs have a responsibility for the greater public interest in determining the appropriate actions to be taken