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1 Author Article Pg number Lee 1995 Described enlightened self interest as - as protecting the public interest in a self-interested way Robson & Cooper 1990 The accounting profession would account for its existence in relation to the efficiency benefits for society as a whole, arising from the existence of an institutionally organised body of accounting knowledge In return for their monopoly position concerning the right to practise particular accountancy and auditing functions, accountants would see themselves as serving the public interest Buckley 1978 society grants the professions monopoly power over professional affairs and the power to use this monopoly power as they see fit, as long as the power is used in 28 the public interest. Schön 1983 is that professional people must have an awareness of the uncertainty, complexity, instability, uniqueness, and value conflict that surround many of the problems they tackle in practice. Bhamornsiri and Guinn 2005 When selecting candidates for early career promotions, regarded technical skills of candidates as the most important evaluation criterion 56 Topic Description Pg number Public interest Accountants, therefore, serve the public interest by creating and distributing information that conveys a clear and accurate picture of an entity s financial 19 performance, financial position and other relevant issues Alturism Describes action that brings no benefit to an individual and may even be at their own expense. 19 Model of responsible decision-making Accontants should make decisions according to responsible decision making 20 Enlightened self interest Ideals of accounting profesionalism - 4Es Profession Which is based on the 3 models 1) Governance 2) Corporate accountability 3) Ethics That is it is possible to be committed to the public interest and yet possess a degree of self-interest. The phrase sometimes employed is doing well by doing good. But if the actions are not ethical and and will further a peron's own interests - that is not acceptable professional behaviour 1) Education 2) Ethics 3) Expertise 4) Entrepreneurship A profession is based on a high level of competence and skills in a given area, which are learnt through specialised training and maintained by continuing professional development. The accounting profession is not strictly regulated as it would prevent professional judgement. THe accounting profession as moved from a self-regulated profession to a coregulated profession The characteristics confirms the existence of a profession 23 Self regulatory process systematic body of theory and knowledge; extensive education process for its members; ideal of service to the community; high degree of autonomy and independence; code of ethics for its members; distinctive ethos or culture; application of professional judgment; and existence of a governing body. Autonomy allows members of a profession to be judged by their informed peers, rather than by regulators whose knowledge is inevitably more limited and may have a bias resulting from less experience 25

2 Professional Two contrasting views of Accounting profession Attributes of the accounting profession A professional is a person who has a significant level of training and a high level of competence and skills in an area. They behave in an ethical and appropriate manner and apply their skill and judgment in areas of importance. Traditional view - accounting profession as demonstrating a range of attributes that are focused on serving society Self serving view - suggests that professional accountants are self interested and less concerned with the broader public interest, than with their own careers. CADDIES systematic body of theory and knowledge; extensive education process for its members; ideal of service to the community; high degree of autonomy and independence; code of ethics for its members; distinctive ethos or culture; application of professional judgment; and existence of a governing body. Ab ideal of service to the community Service ideal - the pivot around which the moral claim to professional status revolves 28 Service ideal has 3 perspectives 3 main elements 29 High degree of autonomy and independence Regulatory structure of CPA the well-being of society - by preparing and attesting information that ensures the efficient and orderly function of business. the pursuit of excellence; and community service. The member must be allowed to use their professional judgment free from the direction or influence of others, and detached from the risk of financial gain (or loss) as a result of the advice provided. At times the accountant may be torn between meeting the requirements of the client to report in a given way and maintaining their own ethical compass and professional obligations The regulatory structures of CPA Australia include: a system of accreditation for accounting degree programs to ensure that the relevant body of knowledge is acquired by future members; a membership qualification process by way of examination and required practical experience; a requirement for high levels of continuing professional education; a code of ethics that must be complied with; and a disciplinary process to address member misconduct. Code of ethics Professional ethics in its simplest form is behaviour that is consistent with the APESB Code of Ethics, and behaviour that contravenes the Code is considered 31 unprofessional. Ethos or culture For CPA Australia members our ethos has the word integrity as its foundation. This word is at the heart of CPA Australia s image, and is seen on our corporate logo. Application of professional judgement According to Becker, the key is the ability to diagnose and solve complex, unstructured values-based problems of the kind that arise in professional practice Problem setting vs Problem solving Types of professional judgement Governing body Schon argues that aside from having the ability to solve the problem. The professional needs to find the definie the right problem to be solved. The ability to communicate with their clients and employers in order to define the correct problems. Please refer to Q1.2 for examples Application on profesional judgement pg A profession must have a governing body that has been drawn from the membership on a fully democratic basis.,33 33 Roles on the governing body - pg 33 APESB 34

3 Quality assurance process - Standard setting 35 - Conformity with standards - Practice reviews - Accounting firm regulation Quality control 6 elements and policies related to quality control of firm 36 Complaint process 38 Peanlities and appeals Please refer to pg Types of accounting work environments please refer to table on pg Public practice accounting Public practice refers to professional accountants who offer accounting services to businesses and the public 40 Talks about Big 4, Second tier and the like Professional accountants in business (PAIB) Professional accountants are employed by private sector business in varying roles 43

4 Description of activities performed by PAIB Please refer to table on pg How PAIBs generate value for their organisations 7 ways in which value is generated establishing a common performance language throughout the company so that everyone s activities are aligned with the vision and goals leadership has set; upholding business integrity; creating, implementing and improving management information systems to bolster strategy, planning, decision-making, execution and control activities; managing costs through rigorous planning, budgeting, forecasting and process improvement efforts; managing risk and handling business assurance; measuring and managing performance; and communicating financial and other performance information to internal and external stakeholders, including regulatory authorities, lenders, bankers and investors in a manner that fosters trust 45 Accountants as external advisors to SMEs Public sector Not for profit Key issues causing reduced credibility Research from IFAC 2010 has found that SMEs usually see external accountants as a source of compliance not a source of business advice. This is due to their fortress mentality where they prefer to keep their issues in house. This can be changed by PAIB providing more relevant and easy to understand information The public sector includes a wide range of government and regulatory bodies. They often set up particular entities called government business enterprises (GBEs) or state-owned enterprises (SOEs). NFPs are generally defined as legal or social entities formed for the purpose of producing goods or services, and whose status does not permit them to be a source of income, profit or financial gain for the individuals or organisations that establish, control or finance them 1) Creative accounting 2) Poor audit quality 3) Lack of auditor independence 4) Financial accounting distortions - mark to market techniques that reduce asset values 46, ,51 Combating issues related to credibility Business leadership capabilities Career guidance system 1) Establishment of the Financial Reporting Council - reducing the degree of autonomy in the industry 2) Accounting standards are backed by law 3) Auditors must apply the code of ethics 4) FRC responsible for auditor independence 5) Enhanced regulation 6) Adoption of international standards -Technicial skills, knowledge and experience - Soft skills The Career Guidance System identifies four skill areas: technical skills; business skills; personal effectiveness skills; and leadership skills

5 Author Article Pg number APESB 2013 Definition of ethical responsibilities 78 ASIC 2007 James Hardie case, even though he was complying with the law, the company was not acting ethically, although they were aware of the issues, but 80 they did not disclose them, hence they were acting unethically. Leung and Cooper (2005) Explored the ethical dilemmas and experiences of 1500 CPA Members. Accountants were asked to describe which ethical issues they experienced and important they thought they were. From the study, not only was it important to have the technical knowledge to identify the accounting method, but to have the ability to make the right professional decision. 80 Rawls 1971 A qualified approach to equality is the difference principle, which allows for unequal distribution of resources only in circumstances which this distribution works to everyone's advantage, including those placed in an inferior position by the inequality that results 89 Mele 2005 Determining what is right according to a set of duties or by systematically analysing the consequences of an action may not motivate appropriate behaviour. Ethical character is seen to be more important than the right action 90 Doucet and Ruland (1994) They identified 3 virtues of particular relevance for accountants, expertise, courage and integrity 90 Windal, 1990, pg 26 Integrity is an element of character and is essential to the maintenance of public trust 94 FBI 2013 Case study of Scott London, Insider trading 98 SEC (2013b,p9) Scott London was banned by the SEC from auditing public companies and denied practicing as an accountant 98 Cottell and Perlin 1990 Remind us that independence should be consider of utmost importance if the profession is to maintain the confidence of the public. 112 Tshahuridu 2011 Kohlberg 1981 Schein 2004 Whistleblowing is more of a risk generator rather than an element of the risk management infrastructure. They are perceived to be 'against the organisation' and disloyal. Obeying the law and rules motivates many people, without much thought as to whether those laws and rules are appropriate. Meanwhile, others may focus on acting based on intentions to the right thing - regardless of external factors such as peer approval or legal rules. The actions and decisions of management have a significant contribution to the culture and ethical approach of an organisation. Schein identifies six areas in which such actions and decisions are most relevant ) What leaders pay attention to 2) How leaders react to critical incidents 3) How leaders allocate resources 4) Deliberate role modelling 5) How leaders allocate rewards and status 6) How leaders recruit, select, promote Simha & Cullen 2012 Ethical climates, or cultures, have been found to affect various organisational outcomes. 125