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

Exercise 13

What is the purpose of having a Global Code of Ethics? Do you think a Global Code is necessary given that codes of ethics already exist for public companies in virtually all countries?

Step 1 of 2

Accounting:

In simple words, accounting is the process of recording, classifying and analyzing the financial information of a company. This is not a single process as it includes many sub-processes under it. It requires specific knowledge.

According to the AICPA Code of Professional Conduct, an accountant should use his professional knowledge and should be responsible for moral judgment in all his activities done in the course of action.

An accounting plan is a systematic method by applying rules, specific accounting treatment to record books of account.

Accounting rules:

Accounting rules are defined as a statement which provides guidelines to record the accounting transaction.

Accounting standard:

This is a set of basic rules and principles set by the Financial Accounting and Standard Board (FASB). These rules help the manager in managing accounts properly. It increases the transparency of accounts. It helps in fair representation of accounts.

Audit:

The audit is defined as a systematic examination of books of accounts of an individual or an organization. Auditing is done by the professional CPA; we call them auditors.

At the end of the accounting period when all the books of accounts are closed, an auditor ensures all the entries recorded in the books of accounts are accurate as required in the law.

Auditing standard:

Auditing standards are guidance to the auditor to serve the auditing step by step to fulfill the audit objectives.