Ethics are rules about good and bad. Ethical in business is a major complement to the success of businesses. Business success is not only seen from company results but also reflected in the behavior and lunge the Business Actors in the process of doing business.
However, p is no practice many companies put aside ethics to achieve profits doubled. Emphasizes the particular interests, thus shifting corporate priorities in building awareness in the community. The trend has led to manipulation and fraud to further lead to the achievement of the company's interests. Practice these deviations occur not only in the company in Indonesia, but there is also a significant cases abroad.
Based on the above, then the code of conduct is very important for any profession whatever it is. Code of conduct regulate its members and explain what is good and bad and what can and can not do as a member of the profession both in touch with colleagues, subscriptions, communities andemployees.
Business Ethics of Certified Public Accountants
In carrying out his profession an accountant in Indonesia are governed by a code of professional conduct by the name of the Indonesian Accountants Association code of ethics which is an order of ethical and moral principles that provide guidance to accountants to deal with clients, fellow members of the profession and also with the public. In addition to the code of ethics of accountants is also a tool or a means for clients, users of financial statements or the public in general, about the quality or the quality of services rendered as a series of ethical considerations as stipulated in the code of professional conduct.
The case of Enron, xerok, merck, vivendi universal and bebarapa other similar cases have proved that ethics is indispensable in business.Without ethics in business, so of trade will not function properly. We must recognize that accounting is a business, and the primary responsibility of business is to maximize profit or shareholder value. But if this is done without regard to ethics, then the result is very detrimental.
There are five rules of ethics established by the Indonesian Institute of Accountants-Certified Public Accountants Compartment (IAI-KAP). Five ethical rules are:
1. Independence, integrity, and objectivity
A. Independency.
In performing their duties KAP members must always maintain an independent stance in providing professional services as stipulated in the Public Accountants Professional Standards set by IAI. The independent mental attitude must include independent in fact (in facts) and in appearance (in appearance)
B. Integrity and Objectivity.
In performing their duties KAP members must maintain the integrity and objectivity, should be free from conflicts of interest (conflict of interest) and should not allow factors of material misstatement (material misstatement) knows or divert (subordinated) consideration to other parties.
2. Common standards and accounting principles
A. General Standard.
KAP members must adhere to the following standards and their interpretations issued by the relevant regulatory bodies established standards IAI:
a) Professional Competence.
KAP members may only perform professional services provision that is decent (reasonably) expected to be completed with professional competence.
b) Accuracy and precision Professional.
KAP member shall perform professional services provision with professional precision and accuracy.
c) Planning and Supervision.
KAP members are required to plan and supervise adequately any implementation of the provision of professional services.
d) Relevant data were Adequate.
KAP members are required to obtain relevant data that is sufficient to ground worthy of the conclusions or recommendations with respect to the implementation of professional services.
e) Compliance with the Standards.
KAP members who carry out the assignment of services auditing, attestation, review, compilation, management consulting, taxation or other professional services, shall comply with the standards issued by the governing body standards set by IAI.
B) Principles of Accounting.
KAP members are not allowed:
a) Express opinions or provide confirmation that the financial statements or other financial data of an entity are presented in accordance with generally accepted accounting principles or
b) Stating that he did not find the need of any material modifications that should be made on reports or data to conform to generally accepted accounting principles, if the report contains irregularities that have a material effect on reports or data in its entirety from the accounting principles set forth by the governing body standards IAI set. In exceptional circumstances, reports or data may contain irregularities as mentioned above. In these conditions member of the firm can remain in compliance with the provisions of this clause for members of the firm can demonstrate that the report or data will be misleading if it does not contain irregularities such that, by making the irregularities and the estimated impact (when practical), as well as the reasons why compliance with the accounting principles Generally accepted will produce a report that is misleading.
3. Responsibility to clients
A. Client Confidential Information.
KAP members shall not disclose confidential client information without the consent of the client. This provision is not intended to:
a) KAP members freed from his professional obligations in accordance with ethical rules compliance with the standards and principles of accounting
b) affect the obligations of members of KAP in any way to comply with the legislation in force as the official call tracer official investigation or prohibit compliance KAP members against regulatory requirements.
c) prohibits a review of professional practice (review quality) in accordance with the authority of a member of the IAI or
d) prevent a Member from the filing of the grievance or commenting on investigations conducted by the body established IAI-KAP Member to enforce discipline. Members are involved in the investigation and the review above, should not use it to benefit their personal self or disclose client information should be kept confidential knew in the execution of their duties. This prohibition shall not restrict Members in the provision of information in connection with the investigation or discipline as stated in item (4) above or professional practice review (review quality) as mentioned in (3) above.
B. Professional Fee
C. magnitude Fee
Members amount of fee can vary depending on, among others: the risk assignment, the complexity of the services provided, the level of expertise required to carry out such services, the cost structure of the firm concerned and other professional considerations.KAP members are not allowed to get clients by offering a fee that could damage the image of the profession.
D. Contingent Fee
Contingent fee is the fee set for the implementation of a professional service without a fee to be charged, unless there is a specific finding, in which the amount of the fee depends on the specific findings or results. Fee considered contingent if established by a court or regulatory body or in terms of taxation, if the basis of the determination is the result of legal settlements or findings of regulatory agencies. KAP members are not allowed to establish a contingent fee if the assignment can reduce independency.
4. Responsibility to peers
A. Responsibility to colleagues.
Members are required to maintain the image of the profession, by not doing the words and actions that may damage the reputation of colleagues.
B. Communication between public accountant.
Members shall communicate in writing with the predecessor when it receives a public accountant audits replace public accountant or a precursor for the same fiscal year and other public accountant appointed by type and period as well as different aims.Public accountants predecessor shall respond in writing request the communication of accountants adequately substitute.
Public accountants are not allowed to receive that kind of assignment attestation and attestation period is the same as the first assignment accountant appointed client, unless the assignment is implemented to comply with laws or regulations made by the competent authority.
5. Responsibilities and other practices
A. Our actions and words that discredited.
Members are not allowed to perform actions and / or speak words that demean the profession.
B. Advertising, promotion and other marketing activities.
Members in carrying out the practice of public accounting allowed finding clients through advertising, marketing promotions and other marketing activities to the extent not degrading the image of the profession.
C. Commission and Referral Fee.
a) The Commission
The Commission is a reward in the form of money or goods or other forms given or received to / from client / other parties to obtain assignments from clients / parties.
KAP members are not allowed to give / receive commissions when giving / receiving the commission may reduce independence.
b) Referral Fee (Referral).
Referral fees (referral) is the compensation paid / received to / from other providers of professional services public accountant.Referral fees (referral) is only allowed for a fellow professional.
Recently one of the bodies which have functions to prepare and develop professional standards and code of professional conduct public accountant qualified by reference to international standards, namely the Indonesian Institute of Accountants (Certified) has developed and established a professional standards and code of ethics profession quality applicable to public accounting profession in Indonesia. Ethical principles or codes of conduct accountant accountant itself includes an eight-point declaration (IAI, 1998, in Ludigdo, 2007). All 8 points of the statement are the things that should be owned by an accountant. Item 8 of the undescribed as follows:
1. Responsibility Profession (In carrying out its responsibilities as professionals, each member must always use moral judgment and professional in semuakegiatan does. As a professional, members have an important role in society. In line with this role, members have a responsibility to all users of their professional services . members should also always be responsible for working with fellow members to develop the accounting profession, maintain public trust and responsibility in the profession to regulate itself, the collective efforts of all members is required to maintain and enhance the traditions of the profession)
2. Public Interest (Each member is obliged to always act within the framework of public service, honor the public trust, and show commitment to the professionalism. The main characteristic of a profession is the acceptance of responsibility to the public. The accounting profession holds an important role in the community, where the public from the accounting profession which consists of clients, lenders, governments, employers, employees, investors, the business and financial world, and others rely on the objectivity and integrity of accountants in maintaining the functioning of the business in an orderly manner. this dependence raises the responsibility of accountants against the public interest . the public interest is defined as the interest of the people and institutions that served members as a whole. this dependence causes the attitudes and behavior of accountants in providing services affect the economic welfare of society and the state. the main interest accounting profession is to make users of accounting services understand that the services of an accountant to do with the level the highest achievement in accordance with the ethical requirements necessary to achieve the level of achievement. And all members bind themselves to respect the public trust. Public for the trust given to him, members must continually demonstrate their dedication to achieve a high level of professionalism)
3. Integrity (To maintain and enhance public confidence, each member must fulfill their professional responsibilities with integrity as high as possible. Integrity is an element of character that underlie the emergence of professional recognition. Integrity is the quality of the underlying public trust and are a benchmark (benchmark) for members in testing decisions taken. Integrity requires a member to, among other things, being honest and forthright without sacrificing secret service recipients. Service and the public trust should not be defeated by personal benefit. Integrity can receive unintentional mistakes and disagreements are honest, but not accept cheating or elimination of the principle)
4. Objectivity (Each member should maintain objectivity and free from conflicts of interest in fulfilling the obligations of professional, objectivity is a quality that gives value for services rendered members. The principle of objectivity requires that members be fair, impartial, honest intellectually, not prejudiced or biased, and free from conflicts of interest or under the influence of others. Members work in many different capacities and should demonstrate objectivity them in various situations. Members in public practice provide attestation services, tax, and management consulting. the others prepare financial statements as a subordinate, conduct internal audit services and work in the capacity of finance and management in industry, education, and government. They also educate and train those who want to go into the profession. Whatever the merit and capacity, members must protect the integrity of its work and maintain objectivity)
5. Competence and Prudential Professionals (Each member must carry out their professional services with caution, competence and diligence, and have an obligation to maintain the knowledge and professional skills at the level required to ensure that a client or employer to benefit from professional services and engineering the most cutting-edge. this implies that members have an obligation to carry out professional services as well as possible according to his ability, in the interests of service users and consistent with the responsibilities of the profession to the public. Competence gained through education and experience. members should not portray himself expertise or experience that they have. competence indicate the presence of the achievement and maintenance of a level of understanding and knowledge that allows a member to provide services with ease and ingenuity. In the case of the assignment of professionals exceeds competence of members or the company, members are required to conduct a consultation or submit a client to another party more competent.Each member is responsible for determining the competence of each or judge whether the education, guidance and adequate consideration needed to be responsible to be fulfilled)
6. Confidentiality (Each member shall respect the confidentiality of information obtained during professional services and should not be put on or disclose such information without consent, unless there is a right or obligation of professional or legal to express it. The public interest and the profession demands that professional standards relating to confidentiality defined that there is guidance on the nature of nature and extent of the obligation of confidentiality and on the circumstances in which the information obtained during professional services can or should be disclosed. Members have an obligation to respect the confidentiality of information about a client or employer obtained through professional services rendered. the obligation of confidentiality continued even after the relationship between members and clients or service ends)
7. Professional Conduct (Each member should behave consistent with the reputation of the profession is good and avoid actions that may discredit the profession. The duty to avoid behavior that could discredit the profession must be met by the members as a manifestation of its responsibility to the recipient of services, third-party, other members, staff, employers and the general public)
8. Technical Standards (Each member should carry out professional services in accordance with the technical standards and professional standards that are relevant. In accordance with his expertise and with caution, members have an obligation to carry out the assignment of service recipients during the assignment in line with the principles of integrity and objectivity. The technical standards and professional standards must be adhered member is a standard issued by the Indonesian Accountants Association, the International Federation of Accountants, regulatory bodies, and setting the relevant legislation)
Social Responsibility (social responsibility) public accounting firm as a Business Entity. Corporate social responsibility is not an institution granting donations or free services. Social responsibility of public accounting firms include the main characteristics of the public accounting profession, especially the attitude altruism, that put the interests of the public and also pay attention to fellow CPAs than the pursuit of profit.
Milton Friedman explained that the primary responsibility of business is to use resources and to design measures to increase profits along fixed follow or comply with the rules of the game. It can be said that business should not marred by fraud and irregularities. On the utilitarian structure, activities to meet their own interests are allowed. To meet their own interests, everyone has a different way and sometimes clashing with each other.According to Smith pursue personal interests are allowed as long as not violating the law and justice or truth. Business must be created and organized in a manner beneficial to the community.
As a business entity like entities other businesses, public accounting firm is also required to be concerned with the state of society, not just in terms of money by giving a donation, but more complex, which means the public accounting firm is also required to be a social responsibility to the community , However, the public accounting firm social responsibility of an institution is not a donation or giving free service. But covering the main characteristics of the public accounting profession, especially the attitude of altruism, namely the interests of the public and also pay attention to fellow CPAs than the pursuit of profit.
Crisis In Accounting Profession
The accounting profession is a danger that the crisis if every auditor or attestor acting on the wrong track, and audit opinion would be worthless. An accountant will be awkward to use tax preparers and financial journalists but the audit function that became the heart of accounting will be cut out of practice to donate almost futile abuse.
The company carries out supervision of auditors who are working to implement the internal control, financial, administrative, sales, data processing and marketing functions among the crowds.
Public accountant is a container that can assess whether the financial statements are in accordance with the principles of accounting or auditing.Differences public accountant with the company's other services, namely services rendered by the firm will be used as a tool for making decisions.
Obligations of KAP is rendered used for make a decision or have social responsibility on their business activities.
For accountants behave ethically will affect the image of the firm and to build public trust and will treat clients well and honestly, then not only increase revenue but also provide a positive influence for employees of KAP.Ethical behavior will provide more benefits for managers KAP KAP compared to other employees. Gaps are in addition to audit also do consulting, financial reports, preparing tax reports. Therefore, there is a gap diatara accounting profession and accounting profession must.
The rise of fraud in financial statements, directly or indirectly lead to the accounting profession. A row of cheating has occurred either outside or in Indonesia. The accounting profession is currently facing the spotlight especially after a number of accounting scandals of a few companies of the world. Disclosure of the case manipulation by Enron company is the trigger of the crisis in the world accounting profession and the disclosure of accounting manipulation cases such as the case of WorldCom, Xerox Corp, and Brands Corp. And in Indonesia, namely the case of Kimia Farma, PT Bank Lippo, and an additional case of rejection of the financial statements. Telkom by the SEC, adds to the long list of mistrust towards the accounting profession.
In the Congress of Accountants World (Word Congress Of Accountants "WCOA" 16th held in Hong Kong also concluded that the credibility of the accounting profession as the main foundation is at stake. As the main foundation, without a credibility of the profession will be destroyed. It is caused by several scandals related to the accounting profession that has happened. However, the accounting profession can only resolve this crisis by taking the way of increasing the independence, credibility and public trust. Therefore the president of the International Federation of accountants IFAC urged the accountants comply with the rules of the profession to gain the trust of society in order to crisis of the accounting profession is no longer the case.
Regulation Enforcement Ethics in the Context of Public Accounting Firm
Anyone committing unethical hence the need for the handling of such unethical actions. but if many similar violations committed by members of the public or members profession then it is questionable whether the rules in force still needs to be fixed maintained or considered to be developed and adapted with changes and development of the environment.
In general code of conduct applicable to the accounting profession in keselurahan if you look at the code of ethics of accountants Indonesia contents largely over the public accounting profession. In fact, IAI has compartments accountant educators, management accountant compartment compartments besides public accountant. Need to think about the code of conduct concerning the management accountant, accountant educators, accountants state (BPKP, BPK, taxes).
Often the case and the news concerning biasannya public accountant.The case for the community often considered the violation of the code of ethics, but is often the case in fact constitute a violation or violations of auditing standards IFRSs.
Apart from the above to be able to enforce the code of ethics there are some things that must be done and it seems like they in line with one general policy board IAI period of 1990 s / d 1994yaitu:
1) Improvement of the existing code of conduct on code interpretation publication ethics that exist both in response to cases of complaints and complaint of fellow accountants or the general public. It is already conducted from updating the code of conduct IAI seminar, hotel Daichi 15 juni 1994 in Jakarta and the 7th congress in Bandung and still continues to be done by the management committee dansedang code of conduct today.
2) The judicial process either by a professional regulatory body or council profession consideration and follow-up (a written warning, temporary dismissal and dismissal as a member IAI).
3) There should be a section in the IAI took the initiative to filed a complaint with either the professional oversight bodies on violation of the code of conduct although no complaints from other parties but the attention of the wider community.
In Indonesia, through PPAJP - Dep. Keu., The government implemented regulations that aims to provide guidance and oversight related to ethics enforcement against public accounting firms. This is done in accordance with regulations made by the professional association of its members. Keep in mind that there have been changes in the institutional professional associations AP. Currently, the association of the AP under the auspices of the Institute of Certified Public Accountants Indonesia (IAPI). AP previous association is part of the Indonesian Institute of Accountants (IAI), the Public Accountants Compartment.
Recent developments indicate that the authority of the international world public accounting arrangements began to be withdrawn to the government side, starting with the United States that make up the Public Company Accounting Oversight Board (PCAOB). PCAOB is a semi-governmental institution established by the Sarbanes Oxley Act of 2002. This corresponds to a decline in public confidence in the weak regulation conducted by professional associations, especially since the Enron and Wordcom that bankrupted Arthur Andersen as one of the Big-5, ie large public accounting firms worldwide. Previously, the authority of a very large professional associations, among others:
(i) the creation of standard accounting and auditing standards;
(ii) examination of audit working papers; and
(iii) imposing sanctions.
With such broad authority associations, it is estimated that professional associations may act less independently if it is relevant to the interests of its members. In connection with these developments, the Indonesian government through the Draft Law on Public Accountant (AP Draft Law, the Ministry of Finance, 2006) draw supervision and oversight authority into the hands of the Minister of Finance, in addition to permanent delegate some authority to the professional associations.
The AP in the bill, the regulation of public accounting tightened along with the proposed heavy disciplinary sanctions and administrative fines were great, especially in the case of violations of the application of the Public Accountants Professional Standards (SPAP). In addition to the criminal sanctions also added fake public accountant (or person claiming to be a public accountant) and to the public accountant who violate the implementation of SPAP. The whole regulation is intended to improve the quality of financial reporting, improve public confidence and protect the public interest through improved auditor independence and audit quality.