Professional Documents
Culture Documents
Usefulness of Code of Ethics For Professional Accountants in Resolving Ethical Conflicts in The Philippines
Usefulness of Code of Ethics For Professional Accountants in Resolving Ethical Conflicts in The Philippines
net/publication/344447880
CITATIONS READS
0 3,615
2 authors:
Some of the authors of this publication are also working on these related projects:
Stock Price Determinants: Evidence from Philippine Stock Exchange Index Firms View project
All content following this page was uploaded by Ed Mark Pelare Rustico on 02 October 2020.
and
ABSTRACT
The collapse of some of the world’s most successful businesses has been partly attributed to
professional accountants’ misconduct and questionable ethical behavior along with the
company’s mismanagement. This paved the way for the accountancy profession to take steps in
ensuring that accountants will act in a manner that promotes the general welfare of the society,
hence, the promulgation of the code of Ethics. The purpose of this study is to evaluate the
usefulness of the Code of Ethics in resolving ethical conflicts faced by the professionals. Also
the paper determines the ethical dilemmas faced by accountants in the Philippines and describe
the frequency of their encounter with such dilemmas. Using a descriptive-relational approach,
the researchers surveyed a total of 265 CPAs and found out that Filipino accountants in general,
rarely face ethical conflicts. Over-all, accountants rated the code of ethics as “useful” in
resolving ethical issues. The study concluded that there is a significant association between the
frequency of encountering ethical issues and usefulness of code in resolving them. As CPAs
view the code of ethics as a useful tool in resolving ethical dilemmas, the less frequent they see
themselves faced with those dilemmas because through the provisions of the code, they are able
to mitigate the circumstances that will likely lead to them deviate from the mandate of the
profession. Despite the over-all positive view about the code of ethics, regulators and members
of the profession can still take steps to further improve the awareness of professionals about
matters in ethics through continuous review of Continuing Professional Development programs
and strengthening ethics education.
Financial scandals have shifted the focus from the technical competence of accounting
professionals to their ethical behavior (Zhatkin, Y., Gurvitš, N. & Strouhal, 2017). Recent global
financial crises that hit major financial powerhouse countries has brought so much concern about
the roles of professional accountants in ensuring quality financial reporting. For instance, the
collapse of Enron was attributed partly by its external auditor, Arthur Andersen LLP, signing off
its financial statements even though “debt-laden partnerships … were left off its balance sheet”
(Schroeder, 2001). The audit firms, have become too dependent of their audit clients’ consulting
fees (Berenson, 2001), which likely puts them in a situation where objectively may be impaired.
In the case of WorldCom, accounting scandal took the form of capitalizing lease payments rather
than expensing it, thus overstating operating cash flows and earnings before interest, taxes,
depreciation and amortization (Reinstein, Moehrle, Reynolds- Moehrle, 2006).
In a study by Bhutta and Saeed (2011), they concluded that “corporate accounting
scandals are not the direct consequence of hard economic conditions” but reflects that
management’s poor implementation of corporate governance, and “where there is a perceived
lack of independence on the part of specific audit professionals” (Bhutta & Saeed, 2011). Along
with the other ‘white collar crimes’ in which the accounting profession is involved, Enron’s case
was a trigger point for regulations to be made to oversee the practice of the profession.
Following this huge accounting scandals, the American Institute of Certified Public
Accountants (AICPA) made a commitment to promote exacting compliance to a strict code of
professional conduct through the passage of the Sarbanes-Oxley Act of 2002, “which created the
Public Company Accounting Oversight Board (PCAOB) to set and enforce standards for auditors
of public companies” (Tschopp, Wells & Barney, 2004). Many countries, then followed through,
either by adopting the same, or having their own set of regulations. In the Philippines, the
Philippine Institute of Certified Public Accountants (PICPA) adopted the code of Ethics,
promulgated by the International Federation of Accountants (IFAC). The latest issue of which
was made in May 2013.
Studies have been made in other nations, establishing whether presence of the code of
ethics improves the behavior of accountants in terms of dealing with ethical conflicts. However,
results of these studies differ (Kaptein and Schwartz, 2008). Studies reviewed by the proponents
looked into the usefulness of code of ethics in affecting the ethical behavior of people but not in
resolving ethical dilemmas. The approaches used were general and no specific provision of the
code of ethics were dealt with. While it is true that the Code of Ethics for Professional
Accountants is enforced in the Philippines for quite some time, the authors were not able to find
a study that looks into the usefulness of the specific provisions of the code of ethics in resolving
specific ethical dilemmas.
Hence this study is undertaken to evaluate the usefulness of code of ethics from the
perspective of accountants in the Philippines, in view of the specific ethical issues and conflicts.
In addition, the study also looks into the significant relationship between frequency of
encountering ethical issues and the perceived usefulness of the Code of Ethics in resolving such
issues. Finally, the views of the participants regarding which provisions need amendment were
also tackled. It is in the authors belief that this study will help the regulators of the profession to
look into the applicability of the specific provisions of the code so that its usefulness is
maximized.
LITERATURE REVIEW
Importance and Usefulness of the Code of Ethics. The importance and usefulness of
the code of ethics are underscored in different literatures covering such topics. The recent
corporate scandals have led to loss of public’s trust and interest for some services of the
accounting profession and the development of the code of ethics may regain and strengthen
public confidence (Avram, n.d.). The presence of code of ethics, according to Pflugrath,
Matinov-Bennie and Chen (2007), has a positive impact on the quality of judgments made by
professional accountants highlighting that, in the context of greater general experience, the code
leads to higher quality of judgment. As cited by Jamnik (2011), the survey of Cohen and Pant in
1991indicated that the AICPA Code of Professional Conduct and its enforcement are viewed as
effective for the professional body. Gberegbe, Idorigie and Nkanbia-Davies conducted a study in
Nigeria, attempting to establish whether the professional code of ethics indeed influence
accounting practices (2016). The proponents concluded that code of ethics influences accounting
practices and should be used to regulate professional conduct as it acts as deterrent to unethical
behavior and support to preserve entrenched professional integrity (Gberegbe, Idorigie and
Nkanbia-Davies, 2016). This is consistent with the study of Lamberton et al. (2005) as cited by
Pflugrath, Matinov-Bennie and Chen (2007), which revealed that most managers believed that
the code of ethics is an important factor in resisting unethical behavior. Codes of ethics are
important since they implicitly set limits for unethical behavior and are intended to offer
guidance in ambiguous situations. The codes can perform several organizational functions, such
as making explicit the ethical values that were previously unstated or unclear, alert employees as
to what actions are unethical and unpunishable, and help firms shift accountability of actions
from the organization to the individual (Gellerman, 1989). In another study, Ghazali and Ismail
concluded that accountants who understand the code of conduct are expected to be stricter in
judging questionable ethical situations. As cited by Yallop (2012), Wotruba, Chonko and Loe
(2001) found out that perceived usefulness of codes of ethics is positively related to the degree of
familiarity with the code. Code familiarity is seen as a factor that influences the extent to which
the code is used and, in turn, has an impact on the employee’s behavior. In other words, the
usefulness of the code of ethics is maximized when people are knowledgeable of it.
Some authors argue that the presence of code of ethics do not necessitate improved
ethical behavior. Laczniak and Inderrieden (1987) found the presence and endorsement of a
firm’s code of ethics to have little impact on the behavior of managers (MBA students). Pater
and Van Gils (2003) reported a negative relationship between management consultants’ ethical
behavior and their organizations’ possession of a written code of ethics. On another paper, Baker
(2014) argued that “the ethical discourse of the profession can be found more in the self-forming
practices of the profession rather than its code of ethics”. With this, he believes that accountants
become an ethical being who self-regulates as he/she gains experience, rather than by complying
with the code of ethics. In a study by Adams et. al in 1995, it was revealed that most CPAs who
were surveyed resolve conflict (in relation to confidentiality) in accordance with the code of
ethics but such decisions do not always reflect their belief of what is morally right. Cleek and
Leonard (1998) concluded as well that the code of ethics is not influential in a person’s ethical
decision making.
The conflicting results of the studies mentioned as to whether the code of ethics is useful
in improving the ethical behavior or is indeed effective is consistent with the findings of Kaptein
and Schwartz (2008).
Ethical Issues and Dilemmas Faced by Accountants. Jackling, Cooper, Leung &
Dellaportas (2007) surveyed IFAC Members as to their perceived likelihood of the ethical issues
normally faced by accountants. Conflict of interest including self-interest threats are perceived
by the professional bodies to be the most likely occurring ethical issue faced by accountants in
public accounting practice and business entities. While these issues were also relatively
significant in the government and not-for-profit sectors, familiarity threat was the most likely
issue to be faced by accountants in this employment category. Other ethical issues identified in
this study are self-review threat, client/management advocacy, intimidation threats, earnings
management issues, competency issues, fraudulent activities and whistle blowing issues
(Jackling, Cooper, Leung & Dellaportas, 2007). Some of the identified issues by the previous
study is also consistent with that of the issues identified by Finn, Chonko and Hunt (1998) and
Likierman (1989) particularly the conflict of interest and independence. Other issues identified
were client requests to alter tax returns and commit tax fraud, client requests to alter financial
statements, personal-professional problems, and fee problems (Finn, Chonko and Hunt,1998). A
study in Nigeria by Akadakpo and Enofe (2013) identified conflict of interest as an ethical issue
that 33.8% of accountants surveyed “just often” to “very often” experience. The specific areas
where conflict of interest is observed are in presentation of report/reporting financial
information, Tax matters/compliance with technical standards, Honesty, integrity, probity,
objectivity and independence, Giving or Receiving gratification and audit (Akadakpo and Enofe,
2013). The Code of Ethics of Professional Accountants in the Philippines, the 2006 version, has
identified a number of potential ethical conflicts. Such conflicts were used by the authors as basis
for the conflicts that may be faced by the accountants.
METHODS
Research Design. Descriptive-relational research design was primarily used in this study.
According to Kothari (2004), descriptive research covers fact finding enquiries of different
kinds, the purpose of which is to provide description of the state of affairs as it exists at present.
The descriptive research design is appropriate in this study for it describes the ethical
conflicts/issues faced by CPAs in their profession, their frequency of encountering such issues
and their view of the relative usefulness of the provisions in code of ethics in resolving the
issues/conflicts identified. Attempting to establish relationships between variables, this study is
likewise a relational one. This method is appropriate to the study since the researchers
determined the extent of relationship between two or more paired variables or two or more sets
of data (Ardales, 2008).
Participants of the study. Participants of the study are Certified Public Accountants who
were granted CPA designation by the Professional Regulations Commission (PRC). All CPAs,
whether or not holding a valid license, in the course of this study, were identified as participants.
Due to inability to determine the exact population, the researchers have decided to conduct the
survey to a total of 300 CPAs. Two hundred seventy-two questionnaires were retrieved, 265
where processed while seven questionnaires were rejected because material portions of the
questionnaires were not answered.
Research Instrument and Data Gathering Procedures. The researchers made use of
the self-constructed questionnaire. The first part of the questionnaire aimed to identify the ethical
conflicts/issues faced by CPAs and the frequency of their encounter of such issues/conflicts. In the same
manner, the participants were asked of their views of the usefulness of the code of ethics in resolving the
identified issues and conflicts. This part of the questionnaire contained 28 issues and conflicts identified
in the code of ethics. The participants rated their frequency of encounter with the issues by encircling the
number along with the issues. The numbers represented their responses as follows:
To rate the usefulness of the provisions, the participants were asked to indicate their responses as follow:
The data gathering was primarily effected by sending out questionnaires to research
participants. Students were asked to help out in distribution and collection of the questionnaires
to facilitate timely retrieval. Social media and email were also utilized by the participants to
distribute and retrieved the questionnaires.
Statistical treatment of data. All data gathered were processed through SPSS. The
objectives that deal with the ethical issues/conflicts the participants encounter, their frequency of
encounter, usefulness of provisions in resolving issues and conflicts and the provisions they feel
need amendment were all answered through descriptive statistics. Frequency counts, cross
tabulations, mean and percentages and tables were used to analyze and present these types of
data. For the objective addressing whether significant relationship exists between frequency of
encounter of ethical issues/conflicts and the usefulness of code of ethics in resolving such issues,
Monte-Carlo Simulation was used. This is because there were statistical assumptions (expected
number of cells with less than five observations were less than the actual data) that were violated
and thus the ordinary Pearson Chi Square was rendered inappropriate.
Results with significant association, as determined by chi-square test, were further tested
to measure the degree of association between the variables. For this type of test, Cramer’s V test
was used. It is a measure of association appropriate for contingency tables larger than two by
two, and whose measure ranges from 0-1 without negative, since the values of nominal measures
are not ordered (Nominal Association: Phi and Cramer's V, n.a.). Results of Cramer’s V test are
interpreted as follows:
Table 3. Interpretations of Cramer’s V Degree of Association
Degree of Association Interpretation
1.00 Perfect Relationship
0.50 - 0.99 Redundant
0.35 - 0.40 Worrisomely Strong
0.30 - 0.35 Strong
0.25 - 0.30 Moderately Strong
0.20 - 0.25 Moderate
0.15 - 0.20 Weak
0.00 - 0.15 Very Weak
0.00 No relationship
Frequency of Encountering Ethical Issues and Dilemmas. The participants were asked
as to the frequency of their encounter of the issues in the course of their professional work. Table
6 shows the frequency of how often CPAs encounter the said issues. For ease of interpretation,
the mean score for each ethical issue was likewise computed. Over-all, CPAs never to rarely
experience ethical issues and conflicts. As seen on the table, the ethical issue with the highest
mean score is the discovery of a significant error during a re-evaluation of the work of the
professional accountant. This is closely followed by having a close business relationship with a
client or with other high officials within the company with influence in business decisions, and
the concern about the possibility of losing a client or losing employment.
Focusing on the frequency counts of the ethical issues and conflicts, the Table 6 reveals
that the ethical issue with the most “Always” count is fear of losing client / employment,
followed by close business relationship, and reporting on system designed and reviewing own
work. Accepting gifts or preferential treatment and the discovery of a significant error during
review of the work are likewise issues that were said to be always encountered. Issues about
“fear of losing client / employment” and the “close business relationship” are issues and ethical
conflicts that are classified as circumstances that may create self-interest threats. The code of
ethics for professional accountants describes that self-interest threats may “occur as a result of
the financial or other interests of a professional accountant or of an immediate or close family
member” (Code of Ethics for Professional Accountants in the Philippines, 2008). True indeed,
these issues create self-interest threats and thereby, causing conflict between the accountant’s
role as advocate of public interest and as a private individual with needs and wants. This result is
consistent with Jackling, Cooper, Leung & Dellaportas (2007) who stated that Conflict of
interest including self-interest threats are perceived by the professional bodies to be the most
likely occurring ethical issues faced by accountants in public accounting practice and business
entities. Another type of threat that was “always” encountered by CPAs is self-review threat,
covered by ethical issues on reporting on system designed, reviewing own work and the
discovery of a significant error during review of the work. Self-review threats occur when a
previous judgment needs to be re-evaluated by the professional accountant responsible for that
judgment (Code of Ethics for Professional Accountants in the Philippines, 2008). Clearly, the
engagement of CPAs, especially those in public practice, has gone beyond assurance services. At
times, clients would ask CPAs to perform consultancy engagements while such clients are also
assurance clients. As such, CPAs are placed in a situation where they will be reviewing their own
work, thus, compromising their objectivity. This may lead to serious consequences such as the
case of Enron, where Arthur Andersen performed both non-audit and audit services (Berenson,
2001) to the former, thereby impairing the latter’s objectivity in performing the audit service.
Accepting gift or preferential treatment is an issue that is classified as giving rise to familiarity
threat, which is defined by the code to occur when, because of a close relationship, a professional
accountant becomes too sympathetic to the interests of others. Just like the issues mentioned
above, receiving gifts, especially when those are of high value, may create circumstances where
CPAs can no longer refuse requests of clients/employees because of the ‘debt of gratitude’.
The ethical issue with the most “Never” count is holding share options for conversion,
closely followed by promoting shares of listed FS audit client, and holding share options in
employing organizations. The issues here can be noticed as those that are in connection with
shares of stock. The result is expected. When the researchers conducted the survey, it only
covered the CPAs in Negros Occidental, a province in the Philippines. Most clients in part of the
country are non-public, with very limited corporations whose shares are traded in the market.
Hence shares of stocks and/or options are seldom faced by CPAs.
Table 6. Frequency of Encounter of Ethical Issues and Conflicts
Not at Slightly
Don’t Know Somewhat Very
Ethical Issues and Conflicts all useful Useful Missing
(0) Useful (3) Useful (4)
(1) (2)
1 Having loans, guarantees and financial interests that could impair objectivity 35 2 29 79 118 2
Having a close business relationship with a client or with other high officials
2 27 4 25 82 125 2
within the company with influence in business decisions
3 Concern about the possibility of losing a client or losing employment 29 8 32 91 103 2
4 Potential employment with a client 33 5 29 89 107 2
Contingent fees and bonuses, the value of which could be affected by the
5 39 5 29 77 113 2
decisions made by the professional accountant
The discovery of a significant error during a re-evaluation of the work of the
6 31 6 24 78 123 3
professional accountant
Reporting on the operation of financial systems after being involved in their
7 38 3 30 91 101 2
design or implementation.
Having prepared the original data used to generate records that are the
8 39 5 26 86 107 2
subject matter of the engagement.
A member of the assurance team being, or having recently been, a director
9 or officer of that client who may significantly influence the subject matter of 47 9 30 71 106 2
engagement
Performing a service for a client that directly affects the subject matter of the
10 42 6 33 86 96 2
assurance engagement.
Promoting shares in a listed entity when that entity is a financial statement
11 55 7 36 71 94 2
audit client.
Acting as an advocate on behalf of an assurance client or employer in
12 45 8 40 82 88 2
litigation or disputes with third parties.
A member of the engagement team having a close or immediate family
13 relationship with a director or officer or employee of the client may 44 9 32 70 108 2
significantly influence the subject matter of engagement
A former partner of the firm being a director or officer of the client or an
14 employee in a position to exert direct and significant influence over the 49 10 36 67 101 2
subject matter of the engagement.
Accepting gifts or preferential treatment from a client, employer or external
15 32 4 29 71 127 2
parties, unless the value is clearly insignificant.
Continued on next page…
Not at all Slightly
Don’t Know Somewhat Very
Ethical Issues and Conflicts useful Useful Missing
(0) Useful (3) Useful (4)
(1) (2)
16 Long association of senior personnel with the assurance client. 41 7 35 77 103 2
17 Being threatened with litigation. 52 14 28 69 101 1
Being pressured to reduce inappropriately the extent of work performed in
18 42 11 32 75 103 2
order to reduce fees.
19 Inappropriate personal use of corporate assets 32 8 26 85 111 3
A dominant personality attempting to influence the decision making
20 32 10 26 84 112 1
process
21 Pressure to act contrary to law or regulation 34 8 30 59 133 1
22 Pressure to Act contrary to technical or professional standards. 30 5 29 68 132 1
23 Pressure to Facilitate unethical or illegal earnings management strategies 41 10 37 59 116 2
Pressure to Lie to, or otherwise intentionally mislead (including misleading
24 38 14 25 63 123 2
by remaining silent) others
Pressure to Issue, or otherwise be associated with, a financial or non-
25 44 10 32 60 117 2
financial report that materially misrepresents the facts
Holding, directly or indirectly, share options in the employing
26 organization, the value of which could be directly affected by decisions 50 11 41 60 101 2
made by the professional accountant
Holding , directly or indirectly, share options in the employing
27 52 12 37 67 95 2
organization which are, or will soon be, eligible for conversion
Qualification for share options in the employing organization or
28 50 9 41 65 98 2
performance related bonuses if certain targets are achieved.
Responses: 0 – Don’t Know; 1 – Not at all useful; 2 – Slightly Useful; 3 – Somewhat Useful; 4 – Very Useful
Usefulness of the Code of Ethics Vs. Frequency of Encounter. It is the aim this paper
to investigate whether there appears to be a relationship between the frequency of encountering
ethical issues and dilemmas and the perceived usefulness of the code of ethics in resolving such
issues. Chi-square test of association was then used to test the significance of the association and
the relationship was then measured using Cramer’s V test.
Results revealed that except for one ethical issue, which is “Holding, directly or
indirectly, share options in the employing organization, the value of which could be directly
affected by decisions made by the professional accountant”, there is a significant association
between the frequency of the encountering the ethical issues by the CPAs and their perceived
usefulness of the code of ethics in resolving that specific issue. In addition, Cramer’s V tests
reveal that the strongest association was observed in the ethical issue involving ‘Long
association of senior personnel with the assurance client’ at 0.264. For the other ethical
dilemmas, weak to moderate associations were observed, ranging from 0.0161 to 0.250. It can
be said, that when CPAs view the code as a helpful tool in resolving an ethical issue, the less
likely they encounter such an issue or dilemma. As the accountants understand the provisions of
the code, they are able to apply such provisions and this limits their exposure to circumstances
where they will face concerns that threaten their compliance to the fundamental principles as
embodied in the code. This result supports the claim of Pflugrath, Matinov-Bennie and Chen
(2007) that in the context of greater general experience, the presence of code of ethics has a
positive impact on the quality of judgments made by professional accountants highlighting that,
the code leads to higher quality of judgment.
Table 8. Association between Perceived Usefulness of the Code of Ethics in Resolving Ethical Issues and the Frequency of Encounter of
Such Issues
Frequency of Encountering Issues and Perceived Usefulness of Code of
Ethics
Issues / Conflicts p-value Significant? Cramer's V Degree of Association
1 Long association of senior personnel with the assurance client. 0.000 Yes 0.264 Moderately Strong
The discovery of a significant error during a re-evaluation of the work of the
2 0.000 Yes 0.250 Moderate
professional accountant
3 Concern about the possibility of losing a client or losing employment 0.000 Yes 0.246 Moderate
Having prepared the original data used to generate records that are the subject
4 0.000 Yes 0.241 Moderate
matter of the engagement.
5 Having loans, guarantees and financial interests that could impair objectivity 0.000 Yes 0.240 Moderate
Being pressured to reduce inappropriately the extent of work performed in
6 0.001 Yes 0.229 Moderate
order to reduce fees.
Performing a service for a client that directly affects the subject matter of the
7 0.001 Yes 0.227 Moderate
assurance engagement.
A member of the assurance team being, or having recently been, a director or
8 officer of that client who may significantly influence the subject matter of 0.001 Yes 0.226 Moderate
engagement
9 Potential employment with a client 0.001 Yes 0.219 Moderate
Contingent fees and bonuses, the value of which could be affected by the
10 0.000 Yes 0.216 Moderate
decisions made by the professional accountant
Reporting on the operation of financial systems after being involved in their
11 0.000 Yes 0.210 Moderate
design or implementation.
Promoting shares in a listed entity when that entity is a financial statement
12 0.002 Yes 0.209 Moderate
audit client.
A former partner of the firm being a director or officer of the client or an
13 employee in a position to exert direct and significant influence over the 0.001 Yes 0.207 Moderate
subject matter of the engagement.
A member of the engagement team having a close or immediate family
14 relationship with a director or officer or employee of the client may 0.002 Yes 0.202 Moderate
significantly influence the subject matter of engagement
Having a close business relationship with a client or with other high officials
15 0.000 Yes 0.199 Weak
within the company with influence in business decisions
Continued on next page…
Frequency of Encountering Issues and Perceived Usefulness of Code of
Ethics
Issues / Conflicts p-value Significant? Cramer's V Degree of Association
Acting as an advocate on behalf of an assurance client or employer in
16 0.003 Yes 0.196 Weak
litigation or disputes with third parties.
Pressure to Issue, or otherwise be associated with, a financial or non-
17 0.008 Yes 0.196 Weak
financial report that materially misrepresents the facts
18 Pressure to Act contrary to technical or professional standards. 0.004 Yes 0.188 Weak
Qualification for share options in the employing organization or
19 0.007 Yes 0.188 Weak
performance related bonuses if certain targets are achieved.
20 Being threatened with litigation. 0.005 Yes 0.187 Weak
Pressure to Lie to, or otherwise intentionally mislead (including misleading
21 0.004 Yes 0.182 Weak
by remaining silent) others
Holding , directly or indirectly, share options in the employing organization
22 0.013 Yes 0.182 Weak
which are, or will soon be, eligible for conversion
Accepting gifts or preferential treatment from a client, employer or external
23 0.007 Yes 0.180 Weak
parties, unless the value is clearly insignificant.
24 Inappropriate personal use of corporate assets 0.021 Yes 0.172 Weak
25 Pressure to Facilitate unethical or illegal earnings management strategies 0.029 Yes 0.167 Weak
26 A dominant personality attempting to influence the decision making process 0.024 Yes 0.166 Weak
27 Pressure to act contrary to law or regulation 0.048 Yes 0.161 Weak
Holding, directly or indirectly, share options in the employing organization,
28 the value of which could be directly affected by decisions made by the 0.058 No NA NA
professional accountant
Significance level at 0.05
Amendments to provisions of the code of ethics and the reasons thereof. The
researchers asked the participants to identify the provisions they feel need amendment and their
corresponding reasons thereof. The proposed amendments/changes from the participants actually
differ but some seem to be similar. A number of participants proposed changes for provisions
covering professional fees being standardized, imposition of fines and fees for violations, the
preparation of financial statement for assurance clients and stricter policies on ensuring
competence among CPAs. The standardization of fees is proposed since small auditing firms feel
that their services is valued less by clients relative to their size and competing with big firms in
terms of pricing will do them more harm than good. Stricter implementation including fines are
recommended since participants view other professionals as lenient in the observance of the
code.
CONCLUSION
Results of the study revealed that, over-all Filipino accountants rarely face a number of
ethical issues. Accountants viewed the provisions of the code of ethics as useful in resolving
specific ethical issues and dilemmas. The safeguards embodied in the code of ethics provide
guidance to the accountant as they face ethical concerns. The study showed that as CPAs are
exposed to scenarios where questionable acts are observed, they run to the code of ethics as their
guide to going out of that scenario. As CPAs view the code of ethics as a useful tool in resolving
ethical dilemmas, the less frequent they see themselves faced with those dilemmas because
through the provisions of the code, they are able to mitigate the circumstances that will likely
lead to them deviate from the mandate of the profession. Hence, the study concludes that there is
a significant association between the frequency of encountering ethical issues and the perceived
usefulness of the code in resolving them. Appreciation of the code of ethics is realized through
education acquired both during undergraduate studies and continuously by the aid of the
continuing professional development programs in place in the profession. While the over-all
view of the accountants of the usefulness of the Code of Ethics for Professional Accountants in
the Philippines remains positive, improvements can still be made to more efficiently and
effectively realize the benefits of the code.
Despite the over-all positive view about the code of ethics, regulators and members of the
profession can still take steps to further improve the awareness of professionals about matters in
ethics through continuous review of Continuing Professional Development programs and
strengthening ethics education
REFERENCES
Adams, B. Malone, F. & James, W. (1995). Confidentiality decisions: The reasoning process of
CPAS in Resolving ethical dilemmas. Journal of Business Ethics. Vol. 14, No 12;
ProQuest pg. 1015 – 1020
Akadakpo, B. & ,Enofe, A. (2013) Impact of Accounting Ethics on the Practice of Accounting
Profession In Nigeria. IOSR Journal of Business and Management (IOSR-JBM). e-
ISSN: 2278-487X, p-ISSN: 2319-7668. Vol 12, No. 1. pp. 45-51
Ardales, V. B. (2008). Basic Concepts and Methods in Research 3rd edition. Ermita, Manila:
Educational Publishing House.
Baker, C. (2014) An examination of the ethical discourse of the US public accounting profession
from a Foucaultian perspective. Journal of Accounting & Organizational Change;
Bradford Vol. 10, No. 2, pp.216-228.
Berenson, A. (2001). Enron debacle may spur accounting reforms. N.Y. Times News Service.
Journal Record; Oklahoma City, Okla
Bhutta, N. & Saeed, M. Accounting scandals in the context of corporate social reporting. Journal
of Database Marketing & Customer Strategy Management (2011) 18, 171–184.
doi:10.1057/dbm.2011.25
Calamba, S. & Rustico E. (2018). Awareness of Code of Ethics among CPAs in the Philippines.
(unpublished)
Cleek, M.A., Leonard, S.L., (1998), Can corporate codes of ethics influence behaviour?,
Journal of Business Ethics, 17 (6): 619-630.
Code of Ethics for Professional Accountants in the Philippines. (2008). Philippine Institute of
Certified Public Accountants. Effective June 30, 2008.
Finn, D. Chonko, L, & Hunt, S. (1998). Ethical problems in public accounting: The view from
the top. Journal of Business Ethics. Vol 7, No 8. pp 605–615
Gberegbe,F. , Idorigie, G., and Nkanbia-Davies, L. (2016). Does Professional code of ethics
influence Professional Accounting Practice in Rivers State, Nigeria?. Quest Journals
Journal of Research in Business and Management. Volume 4 Issue 1 (2016) pp: 14-21
ISSN(Online) : 2347-3002
Gellerman, S.L. (1989), “Managing ethics from the top down”, Sloan Management Review, Vol.
30 No. 2, pp. 73-9.
Jackling, B., Cooper, B., Leung, P. & Dellaportas, Steven 2007, Professional accounting bodies'
perceptions of ethical issues, causes of ethical failure and ethics education, Managerial
auditing journal, vol. 22, no. 9, pp. 928-944.
Jamnik, A. (2011). Ethical code in the public accounting profession [en línea], Revista Cultura
Económica, 29(81-82).
Kaptein, M., Schwartz, M.S., (2008), The effectiveness of business codes: A critical examination
of existing studies and the development of an integrated research model, Journal of
Business Ethics. Vol 77, No 2: pp 111-127.
Kothari, C. (2004). Research Methodology Methods and Techniques (2nd revised Ed.). New
Delhi: New Age International Publishers.
Laczniak, G.R. and Inderrieden, E.J. (1987), “The influence of stated organizational concern
upon ethical decision making”, Journal of Business Ethics, Vol. 6 No. 4, pp. 297-307.
Lang, M., Karmanska, A. & Jarvis, R. (2016). Accounting and Ethics: Pressure Experienced by
the Professional Accountant. Retrieved from
http://www.efaa.com/cms/upload/efaa_files/pdf/Publications/Articles/20161221_EFAA
_Pressure_Survey.pdf on March 30, 2018
Likierman, A.(1989). Ethical Dilemmas For Accountants: A United Kingdom Perspect. Journal
of Business Ethics; Vol 8, No. 8; ProQuest pg. 617 - 629.
Mohd Ghazali, N. ; Ismail, S. (2013). The influence of personal attributes and organizational
ethics position on accountants’ judgments: Malaysian scenario Social Responsibility
Journal; Bingley. Vol. 9, No. 2, (2013): pp 281-297.
Nominal Association: Phi and Cramer's V. (n.d.) retrived from:
http://www.people.vcu.edu/~pdattalo/702SuppRead/MeasAssoc/NominalAssoc.html on
March 30, 2018
Pater, A. and Van Gils, A. (2003), “Stimulating ethical decision-making in a business context:
effects of ethical and professional codes”, European Management Journal, Vol. 21 No.
6, pp. 762-72.
Pflugrath, G., Martinov-Bennie, N, Chen, L. (2007). The impact of codes of ethics and
experience on auditor judgments. Managerial Auditing Journal; Bradford Vol. 22, Iss. 6,
pg 566 – 589
Professional Regulatory Board of Accountancy Resolution No. 358, Series of 2016. Issued
November 7, 2016. retrieved from
http://www.picpa.com.ph/attachment/542017123547919.PDF
Schroeder, M. (2001). Enron Debacle Spurs Calls for Controls. Wall Street Journal, Eastern
edition; New York, N.Y
Tschopp, Daniel J; Wells, Steve C; Barney, Douglas K. The CPA Journal; New York Vol. 74,
Iss. 7, (Jul 2004): 64-67.
Yallop, A. (2012). The Use and Effectiveness of Codes of Ethics – A Literature Review. The
Proceedings of the International Conference "Marketing - from Information to
Decision"; 5th ed. pp. 502-514.
Zhatkin, Y., Gurvitš, N., Strouhal. (2017). Addressing Ethical Matters in Ukrainian Accounting
Practice. Economics and Sociology, 10(3), 167-178. doi:10.14254/2071-789X.2017/10-
3/12