CPA Regulation (REG)

Certified Public Accountant Regulation (REG) covers ethics, federal tax procedures, business law, and professional responsibilities for aspiring CPAs.

Basic Concepts

Ethics and Professional Responsibilities

Understanding Ethics in Accounting

Ethics is the backbone of the accounting profession. It’s not just about following the rules—it’s about building trust with clients, employers, and the public. Accountants are expected to uphold integrity, objectivity, and independence in all their professional activities.

Core Ethical Principles

  • Integrity: Always be honest and forthright.
  • Objectivity: Avoid conflicts of interest.
  • Professional Competence: Maintain skills and knowledge.
  • Confidentiality: Protect client information.
  • Professional Behavior: Comply with relevant laws and regulations.

The AICPA Code of Professional Conduct

The American Institute of Certified Public Accountants (AICPA) sets out a detailed code that guides CPAs in ethical decision-making. This code covers independence, integrity, and due care.

Independence in Practice

Independence means being unbiased, especially when auditing or attesting financial statements. CPAs must avoid financial relationships or situations that could influence their judgment.

Real-World Impact

Ethical breaches can lead to loss of license, legal penalties, and damaged reputations. Practicing good ethics not only keeps you compliant, but also makes you a trusted advisor.

Quick Recap

Ethical behavior ensures the credibility and reputation of the accounting profession, and is essential in every CPA's career.

Examples

  • A CPA refuses to manipulate financial statements for a client, upholding integrity.

  • During an audit, a CPA discloses a potential conflict of interest to maintain objectivity.

In a Nutshell

Ethics and professional responsibilities guide CPA behavior, ensuring trust and compliance in accounting.

Key Terms

Integrity
Adhering to moral and ethical principles; honesty.
Independence
The avoidance of relationships or circumstances that could bias professional judgment.