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CPAs will get new marching orders on spotting illegal acts

Tammy Whitehouse | July 25, 2017

A professional accounting committee has opened a can of worms with a proposal to revise its code of ethics addressing how accountants should respond when they stumble upon illegal activity.

When an accountant learns of some act that may be illegal, should they contact a supervisor? Communicate it to client management? Report it to an outside authority? Consult an attorney? A proposed revision to the ethics code at the American Institute of Certified Public Accountants has touched off a sensitive ethical and legal debate.

The Public Company Accounting Oversight Board has its rules for auditors who are performing audits on public company clients. It points out auditors are not legal experts, so they can’t know in an instant if a particular rotten apple they’ve sniffed out might indeed be an illegal act.

Given that, the standard for auditors tells them to consider a number of possible actions,... To get the full story, subscribe now.