Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 20

On January 16, 2008, the SEC charged two former employees of PricewaterhouseCoopers LLP with insider trading. According to the SEC’s complaint, Gregory B. Raben, a former PwC auditor, and William Patrick Borchard, a former senior associate in PwC’s Transaction Services Group, used their access to sensitive information about PwC’s clients to allow Raben to buy stock ahead of a series of corporate takeovers. According to the complaint, Raben netted trading profits of more than $20,000 by buying stock ahead of public announcements disclosing the acquisitions and then selling his shares. Is there anything wrong with a CPA using insider information? Evaluate the actions of Raben and Borchard from an ethical perspective.

Step 1 of 2

AICPA

AICPA stands for the American Institute of Certified Public Accountants. It is founded in 1887. AICPA is set up in the United States and it is the national professional organization of Certified Public Accountant.

Role of AICPA

1. It set a standard of ethics for the best practice for accounting.

2. Create guidelines with the new legislation.

3. In relation to accepted accounting practice (CPA) its monitors service quality.

AICPA is designed to resolve the issue related to the audit and preparation of an audit report by the CPA. The AICPA’s provide a higher professional manner benefits to the public, employers, and clients. There are more than 40,000 members in 128 countries in AICPA including government, industries, and international associates.

Common stock:

Common stock is also called equity shares. These shareholders are the owners of the company. These stockholders have voting right at the management of the company.