Over the past few years, many accounting systems have been employed by many countries in the world. With this, there arises a certain fact that there must have at least a uniform standard to which all accountants must comply with. But the universal standard has yet to be established.
Now, the State of Florida’s accounting code of ethics has come into play primarily because the policymakers acknowledge that there is a great need to regulate the practice of public accounting to assure the competence of practitioners as well as the accuracy of their output.
Their output of most accountants are being used by the public to protect them from dishonest practitioners and to prevent the practitioners, on the other hand, to commit any fraudulent acts. Hence, it is necessary to protect public interest and public welfare and to regulate the practice of public accountancy in the state. It has been said that in order to fully understand the code of ethics, a thorough discussion on certain issues like the Accountant-Client Privileged, Work Product Doctrine, Consequence in Violating the Code and Sarbanes-Oxley Act should be delved with.
Under the Florida Statute 90.5055, the State of Florida has been providing an Accountant-Client Privilege. In the same law, a communication between an accountant and the accountant’s client is “confidential” if it is not intended to be disclosed to third persons other than: those to whom disclosure is in furtherance of the rendition of accounting services to the client and; those reasonably necessary for the transmission of the communication (“Accounting-Client Privilge”. MegaLaw.com:1).
To illustrate, a client has a privilege to refuse to disclose, and to prevent any other person from disclosing, the contents of confidential communications with an accountant when such other person learned of the communications because they were made in the rendition of accounting services to the client. This privilege includes other confidential information obtained by the accountant from the client for the purpose of rendering accounting advice. The privilege may be claimed by the client; a guardian or conservator of the client; the personal representative of a deceased client; a successor, assignee, trustee in dissolution, or any similar representative of an organization, corporation, or association or other entity, either public or private, whether or not in existence; the accountant, but only on behalf of the client (“Accounting-Client Privilge”. MegaLaw.com:1).
However the statute also includes limitation such as where no accountant-client privilege can be said to be existing when: the services of the accountant were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or should have known was a crime or fraud; A communication is relevant to an issue of breach of duty by the accountant to the accountant’s client or by the client to his or her accountant; A communication is relevant to a matter of common interest between two or more clients, if the communication was made by any of them to an accountant retained or consulted in common when offered in a civil action between the clients (“Accounting-Client Privilge”. MegaLaw.com:1).
The Accountant-Client privilege in Florida only applies to Florida Department of Revenue audits (West, John. “Seminar on Tax Controversy” p.4.). The privilege does not involves criminal matters and preparation of returns, however it is extended to tax advice. In addition, the relationship of the accountant and the client — in terms of any audit or other investigation in a professional capacity — and all the information that the accountant have obtain in its professional capacity in his client, shall be considered as privileged communications in all courts of Florida. Furthermore, no accountant can be a witness against any of the said matters, except with an express consent of his client or his lawyer.
Under the work-product doctrine, “tangible material or its intangible equivalent” that is collected or prepared in anticipation of litigation is not discoverable, and may be shielded from discovery by a Protective Order, unless the party seeking discovery can demonstrate that the sought facts can only be obtained through discovery and that those facts are indispensable for impeaching or substantiating a claim. That is, the party unable to obtain the information has no other means of obtaining the information without undue hardship (“Work-product doctrine”. Wikipedia: The Free Encyclopedia: 1)
Under the rule 3.220(g)(1), Florida rules of Criminal Procedure provides that Work Product as a disclosure shall not be required of legal research of records, correspondence, reports or memoranda, to the extent that they contain the opinions, theories, or conclusions of the prosecuting or defense attorney, or members of their legal staff (“Florida Rules of Criminal Procedure” ).
The State of Florida position on accounting work product is discuss in the case of Southern Bell Tel. And Tel. Co. v. Deason, 632 So. 2D 1377, 1384 (Fla.1994). According to the said case mentioned that there are two types of work product, the opinion work product and fact work product. The work product doctrine is that one party is not entitle to prepare his case through the investigative work product of his adversary where the same or similar information is available through ordinary investigative techniques and discovery procedures. Fact work product traditionally protects that information which relates to the case and is gathered in anticipation of litigation. Opinion work product consists primarily of the attorneys mental impressions, conclusions, opinions, and theories. Whereas fact work product is subject to discovery upon a showing of “need and undue hardship”, opinion work product generally remains protected from disclosure (http://www.3dca.flcourts.org/3d03-1359.pdf). Basically the state believes that work product is anything about legal matters, which includes the lawyers skills like evaluating, preparation, creating strategies and tactics, and willingly to expand it, this also includes paralegals or any assistants of the lawyers.
The Following are situation where a violation of the code may result in criminal and/or civil liabilities:
If an account discloses any confidential client information without the specific consent of the client shall be liable for damages and suspension of his license. The code provides that a member in public practice shall not disclose any confidential client information without the specific consent of the client. This code provides for the protection of their clients. It should be known to the accountant that they should protect their clients from being endanger and being undue advantage to his competitors.
An accountant shall not seek to obtain clients by advertising or other forms of solicitation in a manner that is false, misleading, or deceptive. Solicitation by the use of coercion, over-reaching, or harassing conduct is prohibited. This code is protect the integrity of the profession. The code prohibits any representation that will cause to a person to a state of confusion and misunderstanding. Furthermore, any violation of this code is tantamount to damages and revocation of license.
The accountant is liable when knowingly misrepresented in the preparation of financial statements or records. This violations also include making or permitting false materials and misleading entries in a financial statement or records; Failure to correct the mistake in the financial statements or records that are materially false and misleading; And signs or permits a document contain information that are false and misleading
On July 30, 2002 a controversial law was signed by President George W. Bush named as the Sarbanes-Oxley Act. The said law introduces highly significant legislative changes to financial practice and corporate governance regulation. The law includes creation of the public company accounting oversight board (PCAOB); a requirement that public companies evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting, and that independent auditors for such companies attest to such disclosure; certification of financial reports by chief executive officers and chief financial officers; Auditor independence, including outright bans on certain types of work for audit clients and pre-certification by the company’s Audit Committee of all other non-audit work; etc. Basically the purpose of the law is to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws (“Introduction to Sarbanes-Oxley”. The Sarbanes-Oxley Community Forum:1 ). Sarbanes-Oxley act is a long, complex and specific law, it improves the parameters in transparency and accountability. It sets a stricter sanctions to enable the law to be followed.
The Sarbanes-Oxley Act will strengthened the professional and ethical standards of accountants. The law gives an enhanced sanction, criminally as well civilly, will make the accountant not to ignore the ethical standards of accountants. This will prevent fraud cause by the accountant. The law it self is a safety measure to protect the interest of the accountants client and the state as well from the unnecessary or fraudulent act that can an accountant do. According to Section 406 of the Act, all public companies, including foreign issuers, must, in their annual report, disclose whether or not the company has adopted a written code of ethics. This section of the law is about the existing code of ethics of the company which includes the executive officer, financial officer and accounting officer. The rule does not change the existing code of ethics, but it only ask to amend it that would comply with the rule. Basically, the law only provides to enhanced the capacity of the existing code of ethics, which should be designed to prevent fraud or other illegal behavior and promote the following:Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; Full, fair, accurate, timely and understandable disclosure in reports and documents that an issuer files with, or submits to, the SEC and in other public communications made by the issuer; Compliance with applicable governmental laws, rules and regulations; Prompt internal reporting of code violations to “an appropriate person or persons” identified in the code; and Accountability for adherence to the code (“The Sarbanes-Oxley Act: Code of Ethics and Audit Committee Requirements”. The PubCo White Papers:1).
(2002). . In Florida Rules of Criminal Procedure (pp. ). Tallahassee, Florida: Continuing Legal Education Publication. Retrieved May 2, 2007, from http://dlis.dos.state.fl.us/barm/ccr/rules_of_criminal_procedure.pdf
Introduction to Sarbanes-Oxley . (, ). Retrieved May 3, 2007, from http://www.sarbanes-oxley-forum.com/
The Sarbanes-Oxley Act: Code of Ethics and Audit Committee Requirements. (, ). Retrieved May 3, 2007, from http://www.pubcowhitepapers.com/whitepapers/paper/the-sarbanes-oxley-act–code-of-ethics-and-audit-committee-requirements
Work-product doctrine. (, ). Retrieved May 3, 2007, from http://en.wikipedia.org/wiki/Work-product_doctrine
MegaLaw.com, . Florida Code Search. (, ). Retrieved May 2, 2007, from http://www.megalaw.com/fl/flstatutes.php?Mode=Display_Statute&[email protected][email protected]=Ch0090/[email protected]=-%3E2006-%3ECh0090-%3ESection+5055
West, John, et. al. .In Seminar on Tax Controversy (pp. 4-6). Sarasota, Florida: . Retrieved May 3, 2007, from http://www.abelband.com/uploadimages/Tax_Controversy_Seminar.PDF
Cite this State of Florida’s Accounting Code of Ethics
State of Florida’s Accounting Code of Ethics. (2016, Dec 14). Retrieved from https://graduateway.com/state-of-floridas-accounting-code-of-ethics/