Ethics and the Tax Profession: Restoring the Public Interest Focus

2010 ◽  
Vol 10 (1) ◽  
pp. 13-35 ◽  
Author(s):  
Martin Stuebs ◽  
Brett Wilkinson
Keyword(s):  
Public Interest ◽  
Adverse Outcomes ◽  
Fraud Triangle ◽  
Accounting Profession ◽  
Public Accounting ◽  
Tax System ◽  
Accounting Firms ◽  
The Public ◽  
Fundamental Causes ◽  
Tax Practice

ABSTRACT: Tax practice is an integral component of the public accounting profession. Although accountancy as a profession embraces a strong public interest notion, there is an inevitable tension in tax practice between serving the client and maintaining the integrity of the tax system. Resolving this tension necessitates an ethics-infused judgment process. Ethical failures over the past decade have weakened the tax profession and called into question the extent to which practitioners in fact operate in a manner consistent with the public interest. In this paper, we explore the fundamental causes of the ethical problems that have plagued the tax profession and provide a roadmap for reform of the tax profession. Using Cressey’s (1953) fraud triangle as a framework, we first examine the normative ideal for the tax profession. We then examine the recent tax shelter abuses perpetrated by the major public accounting firms and find results consistent with our expectations under the fraud triangle analysis. In essence, ethical breakdowns resulted from the loss of a public interest emphasis, which in turn led to the explicit pursuit of commercial gain at the expense of the public interest. That the frauds were perpetrated within the context of a profession founded on a public interest notion is particularly concerning. In response to the problems observed, we identify key cultural reforms needed within the accounting academy, the accounting profession, and the tax system in order to restore trust and the public interest character of the tax profession to center stage and so guard against further adverse outcomes.

A reflective analysis of the “new audit” and the public interest

2010 ◽  
Vol 6 (3) ◽  
pp. 300-329 ◽  
Author(s):  
Timothy J. Fogarty ◽  
John T. Rigsby
Keyword(s):  
Public Interest ◽  
Motivating Factors ◽  
Public Accounting ◽  
Accounting Firms ◽  
Content Type ◽  
Social Good ◽  
The Public ◽  
New Business ◽  
Recent Developments ◽  
Audit Approach

PurposePrior to the sudden collapse of large companies following the turn of the century and the implication that the auditing of these enterprises had failed, the large public accounting firms sought to re‐engineer the audit. A comprehension attempt to convert that which had been designed as a social good into one more aligned with a commercial logic was halted by the legislative response to this departure from classic professionalism. Recent developments suggest that change in this direction is regrouping. The purpose of this paper is to provide a reflective analysis of the thoughts of the authors on the early development of the new audit approach.Design/methodology/approachMost of the information in the piece was garnered from conversations with public accounting partners during the era in question. Logical argumentation derived from the academic and theoretical literature is the primary method.FindingsAttributes of the firms' strategies during this period are outlined. Features of the new audit are developed, especially as they vary from the traditional audit. These techniques and approaches are analyzed in terms of their ability to serve the public interest. This paper argues that motivating factors of the new audit will continue to be a force even in the more hostile regulatory environment of today.Practical implicationsAn appreciation of the findings of the study is useful in maintaining a level of skepticism about changes to the audit that are advocated by audit firms. Users of audit services, regulators, and legislators would benefit from an appreciation of the recent past. The motivating factors underlying these changes to audit environment continue to operate over time as the social purposes of the audit are less likely to be converted by the firms to ones that can be commercially exploited.Originality/valueThe study contributes insights into the origins of the new business audit approach and related strengths and limitations. These factors should be considered as the approach is developed and moves forward into the future in order for the audit approach to be effective in performing its social functions.

An Historical Overview and Comparison of Women and African-Americans in the Accounting Profession: 1960s–1990s

2002 ◽  
Vol 2 (1) ◽  
pp. 41-67 ◽  
Author(s):  
Ida B. Robinson-Backmon ◽  
Leslie W. Weisenfeld
Keyword(s):  
African Americans ◽  
Historical Overview ◽  
Accounting Profession ◽  
Public Accounting ◽  
Accounting Firms ◽  
Advancement Opportunities ◽  
The Public ◽  
The Past ◽  
The 1960S ◽  
Better Than

Although a reasonable body of research exists with respect to women and some for African-American accountants, no study has provided a comparison of both groups' experiences across similar periods. The purpose of this paper is to provide an historical overview and comparison of these two groups of accountants for the period 1960–1999 in an attempt to illuminate the reasons for their accomplishments and lack of accomplishments in the public accounting profession. A review of the 1960s indicates that although discrimination against women was evident, white females fared slightly better than African-Americans, who were virtually nonexistent in the U.S. public accounting profession (Hammond 1997). During the 1970s both groups were excluded from any meaningful participation and were discriminated against when employed in public accounting. An explanation for this phenomenon was provided in 1976, as a result of the Metcalf hearings, when the Big 8 accounting firms admitted that they had not sought out women and African-Americans in the past and indicated it would take time to train and develop these individuals to qualify for partnership levels (Wescott and Seiler 1986). While the number of women in the profession had increased dramatically by the 1980s the Big 8 firms' records with respect to women partners were among the worst when compared to other professions (Maupin 1991). By 1989 only 4.1 percent of partners were women and Big 8 Accounting firms showed very little interest in recruiting African-Americans, which led Mitchell and Flintall (1990, 59) to conclude that “although there are more black CPAs than in the past, proportionately blacks fare no better than they did in 1968.” During the 1990s the representation of African-Americans and women in top-level positions remained marginal since the ranks of partners, principals, directors, and senior managers continued to be filled primarily by white males (Kinard et al. 1998). Research with respect to both groups indicated that they thought their career advancement opportunities had been limited and by the end of 1999 women were still underrepresented in senior positions and African-Americans were still underrepresented at all levels in the public accounting profession.

scholarly journals PERBEDAAN PERSEPSI TENTANG KARIER DI KANTOR AKUNTAN PUBLIK ANTARA MAHASISWA DAN STAF KANTOR AKUNTAN PUBLIK

2017 ◽  
Vol 13 (2) ◽  
pp. 202
Author(s):  
Kurnia Kurnia
Keyword(s):  
Student Perceptions ◽  
Accounting Students ◽  
Work Experiences ◽  
Accounting Profession ◽  
Public Accounting ◽  
Accounting Firms ◽  
The Public ◽  
Significant Difference ◽  
Accounting Environment ◽  
Staff Experiences

The objective of this study is to examine the perception differences about a career in accounting firms between students and staffs in public accounting. It was hypothesized that there was a significant difference between student expectations about career in accounting firms and the experiences of CPA firm professionals. The survey was conducted to collect information on the differences between the job expectations of accounting students and the actual work experiences of accounting staff. To evaluate the differences between the two groups, t-tests was performed.The results indicate few significant differences between accounting students and accountant staff’ perceptions. Students expectations were higher than accountants staff experiences for almost every questions. These differences between expectations and experiences may cause employee dissatisfaction, increased turnover rate or the loss of quality people in the accounting profession. Some approaches could be taken to eliminate at least some of the differences between student perceptions and accountant staff experiences. One approach would be communicated more accurately to students the realities of the current public accounting environment. The other approach would begin changing the public accounting environment in ways that can attract the best and brightest students to chose accounting profession.

scholarly journals PERBEDAAN PERSEPSI TENTANG KARIER DI KANTOR AKUNTAN PUBLIK ANTARA MAHASISWA DAN STAF KANTOR AKUNTAN PUBLIK

2018 ◽  
Vol 13 (2) ◽  
pp. 199-218
Author(s):  
Kurnia Kurnia
Keyword(s):  
Student Perceptions ◽  
Accounting Students ◽  
Work Experiences ◽  
Accounting Profession ◽  
Public Accounting ◽  
Accounting Firms ◽  
The Public ◽  
Significant Difference ◽  
Accounting Environment ◽  
Staff Experiences

The objective of this study is to examine the perception differences about a career in accounting firms between students and staffs in public accounting. It was hypothesized that there was a significant difference between student expectations about career in accounting firms and the experiences of CPA firm professionals. The survey was conducted to collect information on the differences between the job expectations of accounting students and the actual work experiences of accounting staff. To evaluate the differences between the two groups, t-tests was performed.The results indicate few significant differences between accounting students and accountant staff’ perceptions. Students expectations were higher than accountants staff experiences for almost every questions. These differences between expectations and experiences may cause employee dissatisfaction, increased turnover rate or the loss of quality people in the accounting profession. Some approaches could be taken to eliminate at least some of the differences between student perceptions and accountant staff experiences. One approach would be communicated more accurately to students the realities of the current public accounting environment. The other approach would begin changing the public accounting environment in ways that can attract the best and brightest students to chose accounting profession.

scholarly journals Pengaruh Pengalaman dan Tekanan Ketaatan Terhadap Audit Judgment

2018 ◽  
Vol 5 (1) ◽  
pp. 58-65
Author(s):  
Nila Kadir ◽  
David H.M Hasibuan
Keyword(s):  
Linear Regression Analysis ◽  
Financial Statements ◽  
Critical Issue ◽  
Third Party ◽  
Accounting Profession ◽  
Public Accounting ◽  
Accounting Firms ◽  
The Public ◽  
Audit Judgment ◽  
Public Accounting Firms

Each company is required to provide information on the financial statements in accordance with applicable standards that have been set. Therefore, the company needs further examination in order to meet accountability to investors and creditors and the public that may affect the valuation of the company. Such informations should be useful and presented appropriately and accurately for users of financial statements. To fulfill this obligation, the company requires the services of a third party audit of the so-called independent auditor as the party in charge of examining and giving an opinion on the report presented by management. In recent decades, audit failure cases are rare and have led to the crisis of confidence regarding the inability of the accounting profession in the audited financial statements. The emergence of this crisis is indeed justified, because quite a lot of financial statements of a company that received an unqualified opinion, but it went bankrupt after the opinion was issued. To prevent the occurrence of cases of failure of the audit, the auditor is required to be professional. Professionalism has become a critical issue for the accounting profession because it can describe the performance of the accountant. Professionalism of auditors can be reflected by the accuracy of the auditor in making judgments in the audit assignment. Many factors affect the performance of an auditor in making audit judgments, among other experiences and compliance pressure. The purpose of this study was to determine the effect of experience and stress adherence to audit judgment. Research was conducted on public accounting firms in Bandung. Respondents are auditors working in the public accounting firms in Bandung. Of the 40 questionnaires distributed, there were 33 questionnaires were returned and could be processed for further testing. The analytical method used in this research is multiple linear regression analysis and processed using SPSS 16. Results of research on the influence of experience and stress adherence to audit judgment shows that the experience had no effect on audit judgment, while the pressure obedience significantly effecting on audit judgment. Audit experience does not affect the judgment audit because the auditor with different experiences will have the same audit consideration. Auditor with experience <1 year, 1-5 years, 6-10 years or> 10 years will have the same audit consideration when obtaining evidence, and the same information anyway. Compliance pressure affects the audit because the auditor's judgment tends to follow orders from superiors so that would affect the auditor's judgment. An auditor who is under pressure will tend to take the safe road, not at risk, and tend to be dysfunctional. It also indicates that the auditor does not have the courage to disobey the orders of their superiors and the client's desire to change audit firm even if the instruction is not appropriate. Surely few are willing to take risks to find another job and losing clients as a consequence against the orders of superiors and clients wishes improper deviated from professional standards.

scholarly journals Auditors As Advocates For Their Clients: Perceptions Of The Auditor-Client Relationship

2011 ◽  
Vol 15 (2) ◽  
pp. 73 ◽  
Author(s):  
J. Gregory Jenkins ◽  
D. Jordan Lowe
Keyword(s):  
Considerable Importance ◽  
Future Research ◽  
Accounting Profession ◽  
Public Accounting ◽  
Senior Managers ◽  
Accounting Firms ◽  
The Public ◽  
National Accounting ◽  
Client Relationship

<span>Recently auditors have come under increasing criticism for appearing to act as advocates on behalf of their audit clients. Such criticisms strike at the very heart of the public accounting profession the publics trust of the auditors. Given the considerable importance of this issue we conducted a survey of one national accounting firms auditing managers and senior managers to ascertain their attitudes regarding such advocacy. Results suggest that some members of the firm view their role somewhat differently than the traditional watchdog role commonly ascribed to them. Implications of our study as well as suggestions for future research are discussed.</span>

A Proposed Framework Emphasizing Auditor Reliability over Auditor Independence

2003 ◽  
Vol 17 (3) ◽  
pp. 257-266 ◽  
Author(s):  
Mark H. Taylor ◽  
F. Todd DeZoort ◽  
Edward Munn ◽  
Martha Wetterhall Thomas
Keyword(s):  
Public Interest ◽  
Auditor Independence ◽  
Public Confidence ◽  
Sufficient Condition ◽  
Necessary And Sufficient Condition ◽  
Accounting Profession ◽  
The Public ◽  
Necessary And Sufficient

This paper introduces an auditor reliability framework that repositions the role of auditor independence in the accounting profession. The framework is motivated in part by widespread confusion about independence and the auditing profession's continuing problems with managing independence and inspiring public confidence. We use philosophical, theoretical, and professional arguments to argue that the public interest will be best served by reprioritizing professional and ethical objectives to establish reliability in fact and appearance as the cornerstone of the profession, rather than relationship-based independence in fact and appearance. This revised framework requires three foundation elements to control subjectivity in auditors' judgments and decisions: independence, integrity, and expertise. Each element is a necessary but not sufficient condition for maximizing objectivity. Objectivity, in turn, is a necessary and sufficient condition for achieving and maintaining reliability in fact and appearance.

A Theoretical Framework of the Relationship between Public Accounting Firms and Their Auditors

2005 ◽  
Vol 17 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Elizabeth Dreike Almer ◽  
Julia L. Higgs ◽  
Karen L. Hooks
Keyword(s):  
Future Research ◽  
Public Accounting ◽  
Accounting Firms ◽  
The Public ◽  
Sociology Of Professions ◽  
Rich Description ◽  
Public Accounting Firms ◽  
Current Article ◽  
The Relationship ◽  
Significant Attention

The behavior of auditors in the context of their employment by public accounting firms has received significant attention in the accounting literature. The current article extends this literature by providing a framework that identifies what auditing professionals contribute and receive as a result of their work efforts, as well as related influences. Using agency theory modified with fundamental ideas from the sociology of professions literature, we develop a model of the auditor-public accounting firm employment relationship. This framework is grounded in a timely, contextually rich description of the public accounting work environment, and the pressures and incentives faced by auditors. Propositions for future research are suggested that arise from understanding the auditor-firm relationship.

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