Title: An International Business Code of Conduct: Guidelines for Sustainable Global Competitiveness
Abstract: EXECUTIVE SUMMARY This paper deals with one of newest accounting standards requirements. All corporations are required to develop a code of conduct and to publish it. One of problems international corporations are faced with is how to make a code of conduct that will have adequate consumer protections while translating it to an international audience. Keywords: Accounting standards, Codes of conduct INTRODUCTION A series of accounting scandals came to light in late 1900s and early 2000s that rocked investor confidence in financial markets. The US Congress felt compelled to step in and implement changes to how businesses handled their ethical responsibilities to public. Congress passed Sarbanes-Oxley Act of 2002 which included sections relating to auditor and corporate responsibilities to stakeholders of publicly traded companies. Among provisions of Sarbanes Oxley Act of 2002, all publicly traded companies are required to have a code of ethics for senior financial officers or, per Section 406 of act, the SEC shall issue rules that require each issuer to disclose whether or not, and if not, reasons therefore, such issuer has adopted a code of ethics for senior financial officers. There are few guidelines that appear to enhance and sustain global competitiveness. This paper recommends several such guidelines. EVOLUTION OF ETHICAL STANDARDS and CODES OF CONDUCT IN ACCOUNTING PROFESSION Accounting is one of few professions that have generally been allowed self governance. The theory was that accountants, through AICPA and other standards setting bodies, did an adequate policing job of themselves. This has not always been case. Even though bookkeepers have existed for as long as humans have been trading with each other, accounting as a recognized profession was hit or miss for many centuries. We can find records in which audits of assets were done by Egyptians. However, until late 1800's, when several of what would become largest CPA firms were formed, skills of any accountant were dependent on limited training provided by schools and on needs of various business owners. Since owners of companies were generally small business owners, owner generally knew everything he needed to know to determine if he was making money. Starting with development and growth of railroads, which in itself ushered in industrial age, companies were able to grow and expand. Owners became less likely to be hands on, and owners and management needed more accurate information in order to run their companies. With growth of industry, British accounting firms expanded into United States. British accountants had long enjoyed respect for their profession. Numerous scandals in United States in late 1800s continued to give American accountants a poor reputation. This had to change if American accounting was going to come of age and contribute to global competitiveness. American accountants joined with British accountants working in United States to found The American Association of Public Accountants (AAPA), which later became AICPA, in 1887. The AAPA's goal was to members with resources, information and leadership that enable them to provide valuable services in highest professional manner to benefit public... (AICPA website 2010). Part of goal of AAPA was to demonstrate that accounting was and should continue to be a respected skill. In 1905, Robert H. Montgomery brought Lawrence R. Dicksee's book, Auditing: A Practical Manual for Auditors, to United States from England. This became first American textbook written specifically for auditors. Montgomery stated that there were three objects to audit: * The detection of fraud * The detection of technical errors * The detection of errors of principle Montgomery stressed transaction testing and told auditor he should look for weakest points in a company's accounting system, namely Where is fraud most likely to creep in? …
Publication Year: 2011
Publication Date: 2011-07-01
Language: en
Type: article
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