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The AICPA Code of Professional Conduct determines the ethical principles that guide employees behavior and decision, especially Certified Public Accountants (CPA), to handle various issues via specific statements. The code sets standards for auditor objectivity, integrity, independence, liabilities to colleagues and clients and defines acts disreputable to the accounting profession. The paper aims to discuss how the AICPA Code of Professional Conduct applies to PCQ in the context of the fraud committed by Alfred Simmons, CPA, a senior accountant at PCQ. The paper will also examine the partners compliance with the code and PCQs responsibility after the fraud disclosure.
Application to PCQ
The primary sections that were not followed by PCQ are Section ET 52 (Responsibilities), Section ET 54 (Integrity), Section ET 55 (Objectivity and Independence), and Section ET 57 (Scope and Nature of Services). Specifically, Section ET 52 implies that in all their activities, accountants should be governed by professional and moral judgments (American Institute of Certified Public Accountants, 2013). Integrity requires accountants to execute professional duties with the highest sense of honesty, while Objectivity and Independence assumes maintaining objectivity while providing auditing and resolving conflicts of interest. PCQ did not meet these rules since Simmons did not make ethical, honest, objective decisions but were motivated by personal gain.
PCQ also did not adhere to Section ET 301 because its CPA revealed the clients private information by employing his inside knowledge to advise the outside collaborators concerning impending deadlines and giving confidential documents that help prepare false claims. Moreover, according to Section ET 302, a CPA should not perform any professional services, including an audit, review, compilation, or examination of a financial statement, for a contingent fee (American Institute of Certified Public Accountants, 2013). In the given situation, Simmons prepared false documentation and measures, anticipating to receive 10 percent of the gain from the fraudulent claims. Finally, PCQ did not follow Section ET 501 since Simmons committed a discreditable act, namely, fraud.
The Partners at PCQ
Alfred Simmonss partners, namely PCQs five non-employees, including Alice Hohn, who participated in the scheme, also did not observe the rules of the AICPA Code. In particular, Section ET 203, named Accounting Principles, indicates that a member should not state affirmatively that an entitys financial data or statements are presented under standard accounting principles if not in reality (American Institute of Certified Public Accountants, 2013). Furthermore, a member cannot assert that he or she does not know about any significant changes that should be made to meet these principles, especially if such statements have deviations from the code. Thus, in the given case, the partners were aware of counterfeit financial statements, supporting documentation, and other points in the scheme. However, did not take appropriate measures to cease the fraud and did not notify respective bodies about this.
PCQs Responsibility
PCQs responsibilities after the discovery of the fraud should primarily be formulated under Section BL 730. It claims that a CPA membership should be suspended in case of deliberate assistance in the preparation and submission of a fraudulent or false clients tax return (American Institute of Certified Public Accountants, 2013). Together with other PCs non-employees, Alfred Simmons willingly participated in preparing knowingly false documents, which ultimately resulted in the misappropriation of over $6 million from the fund.
In conclusion, the paper has discussed how the AICPA Code of Professional Conduct applies to PCQ in the context of the fraud committed by means of Alfred Simmons, CPA, a senior accountant at PCQ. The main sections that were not followed by PCQ include Section ET 52, Section ET 54, Section ET 55, Section ET 57, Section ET 301, Section ET 302, and Section ET 501. Simmonss partners, namely PCQs five non-employees who participated in the scheme, also violated the rules of the AICPA Code, primarily Section ET 203. Lastly, after discovering the fraud, PCQs responsibilities should primarily be formulated under Section BL 730 that indicates the termination of a CPA membership.
References
American Institute of Certified Public Accountants. (2013). Code of professional conduct and bylaws. American Institute of Certified Public Accountants.
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