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Arizona Accountancy Code of Ethics

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Essay title: Arizona Accountancy Code of Ethics

Arizona Accountancy Code of Ethics

University of Phoenix

Contemporary Business Law I


October 19, 2008

As in any profession, ethics are extremely important, however in accounting they are of particular importance because clients depend and rely upon accountants for their professional expertise in areas such as financial statements, tax preparation, auditing, financial consulting and so forth. Without ethics and the laws that guide ethical practices and behavior, accountants could easily misguide clients or put a company's stakeholders at risk for their own selfish needs. Criminal behavior such as in the case of Enron and Arthur Anderson would be all too common as greedy managers and unscrupulous accountants cover up their financial impropriety.

The Board of Accountancy for the State of Arizona, along with the American Institute of Certified Public Accountants, governs the accounting profession in Arizona with specific ethics codes, rules, and laws. According to the Arizona State Board of Accountancy website,, "The Arizona State Board of Accountancy provides input into the legislative process, proposes and implements, where needed and authorized, changes in local and national accountancy regulations. It promotes improvements in procedures and standards and is involved in referendums and industry changes as a source of information, advice and community leadership. The primary responsibility of the Arizona State Board of Accountancy is to protect the public's economic welfare by establishing and enforcing standards of qualification and accounting practice of person certified as Certified Public Accountants or Public Accountants and accounting firms registered by the Board."

Client Privilege

Under section 32-749, a certified public accountant or public accountant practicing in Arizona is required to keep client information confidential, with several exceptions:

1) Information connected to the criminal or bankruptcy laws of Arizona or the United States.

2) A subpoena issued in Arizona or an Arizona state agency where the use of the information is connected with an investigation, public hearing or other proceeding.

3) Information connected to compliance in regard to ethical investigations or practice monitoring programs that are pre-approved and conducted by the board of accountancy or other private professional organizations, which include quality and peer reviews.

Section 32-749 also states that compliance with practice monitoring programs or an ethical investigation conducted by the board or does not destroy a client's confidentiality and privilege, nor does it relieve the CPA or PA of the obligation of confidentiality.

Work Product

Under section 32-744, Ownership and the custody of working papers, which are defined in sect; 32-744 as statements, records, schedules, and memoranda prepared in the course of carrying out professional services, are the property of the CPA or PA with the following exceptions:

1) An expressed agreement between the professional and the client.

2) The reports submitted to the client by the professional.

3) Records that are already part of the client's records.

Section 32-744 also states that without the consent of the client, no work product may be sold or transferred "to anyone other than surviving partners, stockholders or members or new partners, new stockholders, new members of the firm or any combined or merged firm or successor in interest to the firm" (Arizona State Board of Accountancy, 2003). With a reasonable notice, clients may request copies of the professional's work product in regards to their own records.

Civil and Criminal Conduct

When civil or criminal legal action has been initiated against the CPA or PA for violations of accounting or auditing standards, such as negligence, fraud, or breach of fiduciary duty, subsection D of sectiton 32-744 requires the CPA or PA to retain all records pertaining to the legal action for three years after resolution.

Civil and Criminal charges can be brought against accountants, their firms and employees of the firm for many different violations of conduct. Depending upon the charges, the

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