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Ethics for Governmental CPAs in Florida

Ethics for Governmental CPAs in Florida. 2013. Today’s Discussion Leader is…. William Blend, CPA, CFE Moore Stephens Lovelace, P.A. Winter Park ( 407) 740-5400 wblend@mslcpa.com. For More Information. FICPA Member Service Center (800) 342-3197 (in Florida) or (850) 224-2727

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Ethics for Governmental CPAs in Florida

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  1. Ethics for Governmental CPAs in Florida 2013

  2. Today’s Discussion Leader is… William Blend, CPA, CFEMoore Stephens Lovelace, P.A. Winter Park (407) 740-5400 wblend@mslcpa.com

  3. For More Information FICPA Member Service Center (800) 342-3197 (in Florida) or (850) 224-2727 www.ficpa.org/ethics Ethics Sponsor ID (FBOA): 3461 QAS Sponsor ID: 014 DBPR live presentation ID: 4980

  4. Schedule

  5. Housekeeping Details • Course evaluations • Confirmation of attendance • DBPR and BOA course ID numbers • Type of credit – Ethics (ETH) • Participant request - enter/leave quietly • Participant request - cell phones • Other matters

  6. Chapter1 Background and Overview p. 1-1

  7. Learning Objectives • Explain Florida’s ethics requirement for CPE • Define the term “ethics” • Describe the origins of ethical behavior • Explain how the AICPA’s Code of Professional Conduct applies to CPAs licensed in Florida • Apply the AICPA’s Ethics Decision Tree to workplace situations • Describe an auditor’s ethical responsibilities under the Government Auditing Standards (Yellow Book) p. 1-1

  8. Why are we here? 61H1-22.001 p. 1-1

  9. Why are we here?(cont.) 473.312 Continuing Education (c) Not less than 5 percent of the total hours required by the board shall be in ethics applicable to the practice of public accounting. This requirement shall be administered by providers approved by the board and shall include a review of the provisions of chapter 455 and this chapter and the related administrative rules. p. 1-1

  10. Why are we here?(cont.) • 80 hours over a two-year reporting period • 20 hours of Accounting and Auditing • 20 hours of Behavioral – maximum • 4 hours of Ethics • No limitation or requirement for Technical Business p. 1-1

  11. Why are we here? (cont.) • Florida became the 37th state to establish an ethics requirement • Outlined by Florida Board of Accountancy (see 61H1-33.003) • FICPA’s support is in line with national support p. 1-2

  12. Yellow Book CPE Requirements • 80 hours over a two-year reporting period, essentially, 80 hours of CPE • CPE to “directly enhance the auditor’s professional proficiency” • 24 hours directly related to governmental topics • 20 out of the 80 hours to be completed in any one year p. 1-2

  13. Which Ethics Policies to Follow? Policies may contradict. Are you responsible to follow more than one? p. 1-4

  14. Major Course Topics • Relationship of Florida laws and rules to national standards • Florida Statutes, Chapter 455, 473, and FAC 61H1 • Issues of competency in public accounting • Auditor’s ethical responsibilities – Yellow Book p. 1-4

  15. Major Course Topics(cont.) • The relationships of ethics and independence rules and implications to public accounting • Government auditing standards – independence requirements • Ethical responsibilities to clients other practical considerations • Future implications for CPAs p. 1-4

  16. The discipline dealing with what is good and bad with moral duty and obligation. What areEthics? p. 1-5

  17. Ethical Behavior Defined “The term, ethical behavior, refers to how an organization ensures that all its decisions, actions, and stakeholder interactions conform to the organization’s moral and professional principles. These principles should support all applicable laws and regulations and are the foundation for the organization’s culture and values. They define ‘right’ from ‘wrong’ behavior.” --National Malcolm Baldridge Quality Award p. 1-6

  18. Ethics – Key Definitions Ethics are: • A set of moral principles or values • A theory or system of moral values • The principles of conduct governing an individual or a group • A guiding philosophy p. 1-6

  19. Ethics As a System Key expressions include: 1. What ought a person to do? 2. What ought a person to not do? 3. What attitudes are viewed as good? 4. What behaviors are viewed as good? 5. Why are they viewed as good? p. 1-6

  20. Ethics and Philosophy • Ethics has traditionally been considered a part of philosophy • Philosophy is a study of the principles of any activity • It is a systematic examination of basic concepts such as: • Truth • Existence • Reality • Causality • Freedom p. 1-6

  21. Ethics and Psychology Behavioral sciences include: • Psychology • Sociology • Cultural Anthropology p. 1-7

  22. Ethics and Religion • Religion has a concern with moral conduct influencing normal behavior • Religions may have different sets of ethical values depending on the religion • Ethics is often a common ground for different religions p. 1-7

  23. Teaching of Ethics Can one teach someone to be ethical? No, it is either in one’s self or it is not. Can one teach someone what is ethical behavior? Yes, it is a system of values or principles for actions. p. 1-8

  24. Responding to a Crisis • The ethics requirements in the CPA profession in Florida (and maybe everywhere) most likely come as a response to a crisis. • The responses have been at many levels: • Regulatory • Educational • Personal p. 1-8

  25. Ethics and the CPA Profession • The ethics of our profession begin with the individual • Organizational ethics are guided by individualethics • CPA reputation has been based on core values for over 100 years • Honesty • Integrity • Trustworthiness p. 1-9

  26. Changes – A Crossroads for the Profession • Increased emphasis on ethics at state and national levels • Changes in our profession • Ownership • Solicitation • Commissions • Sale of financial products • Competitive bidding p. 1-9

  27. Ethics Regulation • Securities and Exchange Commission • PCAOB • AICPA • FICPA • IRS • State Regulatory bodies • Others p. 1-9

  28. Discussion Points • Public perception of accountants • Ethical decision making • Current examples of ethical behavior p. 1-10

  29. AICPA Code of Professional Conduct .02 These principles express the profession‘s recognition of its responsibilities to the public, to clients, and to colleagues. They guide members in the performance of their professional responsibilities and express the basic tenets of ethical and professional conduct. The principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage. p. 1-10

  30. General Questions • Whom does the Code of Professional Conduct govern? • Can the AICPA revoke my license due to a disciplinary matter? • Does the AICPA contact other state CPA societies and regulatory agencies having disciplinary responsibilities? p. 1-11

  31. General Questions (cont.) • Do other state CPA societies and federal and/or state regulatory agencies refer matters to the AICPA? • Am I subject to the same rules of the Code if I practice public accounting or work in business and industry? • How could I have a conflict of interest when I am no longer working in public accounting? p. 1-12

  32. Ethics Decision Trees • For Government • Also one for Auditors and Businesses p. 1-16

  33. Chapter 2 Ethical Beliefs and Behaviors in US Businesses and Government Agencies Learning Objectives … p. 2-1

  34. Learning Objectives • Review the 2011 National Business Ethics Survey • Examine the main points and recommended action steps from Retaliation in the Workplace • Examine the main points and recommended action steps from 2012 Report to the Nations p. 2-1

  35. National Business Ethics Survey • The Ethics Resource Center (ERC) was founded in 1922, and is America’s oldest non profit organization devoted to the advancement of high ethical standards and practices in public and private institutions • 2011 National Business Ethics Survey, 7th in the series • ERC polled over 3,000 employees in the business, government and non profit sectors • Longitudinal research study; identifies context for national trends p. 2-1

  36. Survey Results p. 2-2

  37. Survey Results (cont) p. 2-2

  38. Effects from the Recession • Post-recession employee conduct is similar to behavior during the recession • This phenomenon is a significant factor in the historically low rates of misconduct and high rates of reporting • Historical data shows ethical conduct improves when the economy cools p. 2-3

  39. Social Networkers • Active social networkers report more negative experiences in their workplaces • Also more likely to experience pressure to compromise ethics and to experi­ence retaliation for reporting misconduct than less active social networkers • 32% of active social networkers are more likely to feel pressure than less active networkers and non-networkers p. 2-4

  40. Whistleblowers p. 2-4

  41. Forms of Retaliation • 64% Excluded from decisions and work activity • 62% Received a cold shoulder • 62% Verbally abused by management • 56% Almost lost their job • 55% Not given promotions or raises • 51% Verbally abused by other employees • 46% Cut in pay or hours • 44% Relocated or reassigned • 32% Demoted • 31% Experienced physical harm to person or property • 31% Experienced online harassment • 29% Harassed at home p. 2-5

  42. Organizational Ethics -Links for Government • City Ethics - www.cityethics.org • FirstGov.gov - www.firstgov.gov/ • Dodd-Frank Wall Street Reform & Consumer Protection Act - http://sec.gov/spotlight/dodd-frank.shtml • House Committee on Standards of Official Conduct - www.house.gov/ethics • US Office of Government Ethics - www.usoge.gov p. 2-9

  43. Report to the Nations • Survey conducted by the Association of Certified Fraud Examiners • Global study based on data from 1,388 fraud cases • 2012 Report to the Nations, 7th in the series • Longitudinal research study; identifies context for global trends p. 2-9

  44. Survey Results • Impact of Occupational Fraud – organizations lose 5% of revenue annually • Fraud Detection – takes 18 months to be detected • Victims of Fraud – larger impact to smaller businesses, fewer anti-fraud controls, less able to recover losses • Perpetrators of Fraud – higher levels of authority caused greater losses, most are first-time offenders p. 2-10

  45. Discussion Points • Retaliation and ethical conduct • Whistleblowing p. 2-11

  46. Chapter 3 Assurance Provided by Regulation (Chapter 455) Learning Objectives … p. 3-1

  47. Learning Objectives • Describe the role of the Florida Board of Accountancy per Chapter 455, FS • Describe the complaint process used by the Florida Board of Accountancy • List reasons that would cause the Florida Board of Accountancy to impose disciplinary actions on a CPA per Chapter 455.227, FS p. 3-1

  48. Florida Board of Accountancy • Powers and duties include: • Authority to issue citations • Conduct disciplinary proceedings • Designate violations • Recover costs (455.01(1), FS) p. 3-1

  49. The Division of CertifiedPublic Accountants The Division of Certified Public Accounting is a division within Florida’s Department of Business and Professional Regulation (DBPR) Tallahassee, Florida Department of Business and Professional Regulation Headquarters Gainesville, Florida Section 20.165(2)(c)(2), Florida Statutes, states that the Division of Certified Public Accounting shall be located in Gainesville. p. 3-2

  50. Number of Licenses • The division is responsible for the licensing and regulation of over 31,400 Certified Public Accountants (CPAs) and over 5,200 CPA firms 29,203 Active CPAs 2,228 Inactive CPAs 5,213 Accounting Firms Source: DBPR Division of Certified Public Accounting, May 2013 p. 3-2

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