Examining How Auditing Text Books Cover the AICPA’s Conceptual Frameworks for Ethics

Alan Reinstein,Martin A Leibowitz

doi:10.11114/aef.v1i2.549

Abstract

The AICPA’s Codification of the Code of Professional Conduct (the Revised Code), issued in June 2014, features two “principle-based” conceptual frameworks that employ a “threats and safeguards” approach to CPAs’ ethical dilemmas. These 2014 conceptual frameworks reprise concepts and terminology from similar AICPA 2006 and 2008 conceptual frameworks. This article discusses the heightened relevance of principle-based conceptual frameworks and examines how eight major auditing textbooks, all written since the 2006 and 2008 frameworks, cover how contemporary principles-based professional ethics supplement and enhance traditional “rules-based” ethics. The results show that few of the eight examined auditing textbooks cover adequately or at all the Code of Professional Conduct’s conceptual frameworks. An appendix presents materials to help auditing professors augment their classroom coverage and to help auditing textbook authors strengthen their future textbook editions.

Highlights

On June 1, 2014, the AICPA issued a Codification of the Code of Professional Conduct (Revised Code), incorporating and superseding the five components of its prior Code of Professional Conduct (Code): Principles of Professional Conduct (Principles), Rules of Conduct (Rules), Conceptual Framework for Independence (Independence Framework, 2006), Interpretations of Rules of Conduct (Interpretations), and Rulings of the Professional Ethics Executive Committee (Rulings)
Our examination shows that most auditing textbook authors currently fail to include critical information regarding the conceptual frameworks, which hopefully they will add in their editions
Auditing faculty members can review the contents of Exhibit 1 to assess their textbook’s coverage of these matters or even to decide which textbook to adopt. They could supplement their current auditing ethics presentations with information found at AICPA websites and other relevant information, as suggested in the appendix to this examination

Summary

Introduction

On June 1, 2014, the AICPA issued a Codification of the Code of Professional Conduct (Revised Code), incorporating and superseding the five components of its prior Code of Professional Conduct (Code): Principles of Professional Conduct (Principles), Rules of Conduct (Rules), Conceptual Framework for Independence (Independence Framework, 2006), Interpretations of Rules of Conduct (Interpretations), and Rulings of the Professional Ethics Executive Committee (Rulings). The Revised Code (AICPA 2014) features two “principles-based” conceptual frameworks by placing one framework at the outset of Part 1 (Paragraph 1.000.010) for AICPA members in public practice and Part 2 (Paragraph 2.000.010) for members in business. Both frameworks reprise “threats and safeguards” concepts and terminology from the superseded Independence Framework (2006) and Guide (2008).The AICPA’s 2006, 2008, and 2014 “principle-based” conceptual frameworks diverge from long-established “rules-based” approaches, and appear to reflect the AICPA’s contemporary mindset and focus of attention.

Objectives

Results

Conclusion