How Ethical Accounting Protects Consumers and Encourages Growth

Trust underpins everything people do—from the brands we buy and the companies we work for, to the friends we keep and the politicians we support. Yet confidence in American institutions reached at an all-time low in 2022, according to Gallup, signaling a critical shift in consumer expectations. Faith in big businesses and all three branches of the federal government also reached historic lows.

As trust continues to wane, who will step up to help break this cycle?

Elevating Trust and Integrity

As gatekeepers of the financial market, certified public accountants are professionally obligated to provide investors with trustworthy and reliable information. Communities around the world rely on accountants to keep companies and governments honest through tax filings, audits, sustainability reporting, and fraud investigations, among many other services. Individuals also rely on CPAs for tax preparation, financial planning, and strategic advice.

Trust and integrity have always been at the heart of the accounting profession. In fact, the AICPA’s predecessor was formed over 130 years ago to promote high quality services and professionalism—a mission that endures today. Due to the complex nature of accountancy work, licensed CPAs must meet rigorous education, training, and examination requirements. Accountants are also bound by strict ethical standards, as well as federal and state laws and regulations.

There will always be examples of individuals who fail to uphold these standards, highlighted by recent audit deficiencies and firm cheating scandals. But these cases are not the norm and reinforce why ethical standards are so important. They set clear expectations on what the profession stands for, enable stakeholders to hold bad actors accountable, and promote transparency within our financial ecosystem.

Recognizing an accountant’s responsibility to protect the public’s interest, CPAs must comply with a Code of Professional Conduct. The code outlines key principles that guide accountants in their day-to-day work and underscores the profession’s foundation in ethics:

Carrying out responsibilities with professionalism and moral judgment
Operating with the highest sense of integrity
Serving the public interest and upholding trust in the profession
Maintaining objectivity and being free from conflicts of interest
Performing all services with due care and striving for continuous improvement

These rigorous licensing and ethical requirements help distinguish CPAs from other providers in the financial field, as they are held to the highest moral standards. Most importantly, this framework generates trust in markets by arming consumers and policymakers with the data they need to make informed decisions.

Unfortunately, pressure to act unethically can happen to anyone in any profession, even in businesses with highly effective control systems. While noncompliance with accounting standards is uncommon, the AICPA has stringent processes in place to investigate, monitor, and sanction members.

Holding Stakeholders Accountable

As a standard-setting body for the accounting profession, the AICPA takes deviations from ethical behavior very seriously. Disciplinary matters are investigated by the Professional Ethics Division, and we work closely with US licensing boards and regulatory agencies to encourage uniform compliance. For transparency, individual disciplinary actions and annual reports are published on the AICPA’s website.

The number of expulsions and suspensions has steadily decreased over the past five years, and the majority of cases in 2021 were remediated through mandated continuing education or practice monitoring. In part, this promising trend can be tied to the profession’s enduring commitment to strengthening ethics—though licensing requirements, professional standards, and self-regulation.

Similar to other licensed professions, such as medicine and law, accounting firms evaluate one another’s work through a peer review program. More than 24,000 firms participate in the AICPA-administered program, and virtually all accountancy boards require enrollment as a condition for licensure renewal. These checks and balances provide transparency into a firm’s work, hold individual CPAs accountable for any deficiencies, and improve the overall quality of audits.

Our financial ecosystem hinges on accountability. Transparency strengthens markets and expands opportunities for sustainable growth. But as the business environment, government regulations, and consumer beliefs evolve, so too must the accounting profession.

Embracing Ethical Frameworks

More than six in 10 stakeholders invest based on their beliefs and values, and people want businesses to play a larger role in addressing societal issues, according to Edelman’s trust research. Charged with analyzing the flow of essential business information, CPAs have a reputation for spotting emerging trends—such as growing demand for sustainability reporting, workplace wellness programs, and cryptocurrency accounting.

By leaning into the profession’s foundation in ethics, CPAs can help communities find solutions to these challenges, among many others. Accountants’ expertise, and the ethical frameworks that guide them, has the potential to help drive value for all stakeholders.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

James Brackens is vice president of ethics and practice quality for the American Institute of Certified Public Accountants. He is responsible for providing strategic direction for the AICPA’s ethics division and peer review program, as well as the Employee Benefit Plan and Governmental Audit Quality Centers.