Ideology of the American Public Accounting Profession Coursework

Ideology of the American Public Accounting Profession - Coursework Example The researcher states that public interest is the collective well-being of people and the institutions they serve. Failure to fulfill this mandate can have very serious adverse consequences such as what happened to the Arthur Andersen auditing firm for being complicit in the Enron scandal. This paper examines the role of accounting in serving public interest versus self-interest when accountants and auditors are engaged for their services. I will state the answer to the above question is in the negative in relation to the financial crisis brought about by the bursting of the real estate asset price bubble and the issue of stock buybacks within the context of academic research. Real life as used in this paper refers to actual business and economic conditions; regulations pertain to all the government orders issued to control the conduct of business to protect the public interest. The accounting profession adopted a code of ethics and professional conduct for its members to guide them in serving a public interest. The dilemma that most accountants face often is the conflict of interest between public interest and their self-interest. In conflict-of-interest situations, the tendency is to side with private firms that had engaged their services. The International Federation of Accountants (IFAC) was formed to guide members in 164 countries how to conduct themselves to resolve issues involving professional ethics in diverse areas like public accounting and auditing. The chief ethical dilemma of most accountants is what constitutes timely and full disclosure. Another example would be the issue of what is appropriate to use: historical cost accounting or fair value accounting. There are plenty of materials that discuss the advantages and the disadvantages of either of these approaches. Accounting reports prepared for financial users such as investors and shareholders do have the important bearing on investment decisions because people rely on them. Accounting is used to improve risk disclosure among publicly-listed companies in terms of adequate internal controls so investors feel assured. Financial statements have a public interest when investors use them in evaluating the alternatives in several companies. Professional bodies emphasize to all members to put public interest over and above self-interest and accept full responsibility for all their work. The International Accounting Standards Board (IASB) has guidelines to integrate global capital markets through a common language for financial reporting through the International Financial Reporting Standards (IFRS). It is now used in a hundred nations.