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CHAPTER 11 Accounting for Decision Making 393

authority, fidelity, and civility must be passed from one generation to the next—a
fundamental process of the family.
Theodore Roosevelt, the twenty-sixth president of the United States, empha-
sized the importance of ethics education: “To educate a person in mind and not in
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morals is to educate a menace to society.” Cal Thomas made the following assess-
ment: “If we want to produce people who share the values of a democratic culture,
they must be taught those values and not be left to acquire them by chance.” Amer-
6
ican Accounting Association president G. Peter Wilson said that in the classroom,
educators need to increasingly emphasize the value of integrity, which has long
been a mainstay of accountants’ reputation. 7

Role of Professional Organizations
Specific responsibilities of the accounting profession are expressed in the various
codes of ethics set forth by major organizations such as the American Institute of
CPAs. The AICPA’s first principle of professional conduct states: “In carrying out
their responsibilities as professionals, members should exercise sensitive profes-
sional and moral judgments in all their activities.” A profession is based on three
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fundamental components.
• A generally accepted body of knowledge
• A widely recognized standard of attainment
• An enforceable code of ethics
A code of ethics is a crucial element in forming a profession. Ethics codes are
fundamental to major accounting professional organizations, such as the American
Institute of CPAs, the Institute of Internal Auditors, and the Institute of Manage-
ment Accountants. Exhibit 11.7 shows the introduction to the Code of Ethics of the
Institute of Internal Auditors.

EXHIBIT 11.7
Introduction to the Code of Ethics of the Institute of Internal Auditors

The purpose of The Institute’s Code of Ethics is to promote an ethical culture in
the profession of internal auditing.
Internal auditing is an independent, objective assurance and consulting activity
designed to add value and improve an organization’s operations. It helps an
organization accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness of risk management, control,
and governance processes.
A code of ethics is necessary and appropriate for the profession of internal
auditing, founded as it is on the trust placed in its objective assurance about risk
management, control, and governance. The Institute’s Code of Ethics extends
beyond the definition of internal auditing to include two essential components:
1. Principles that are relevant to the profession and practice of internal auditing;
2. Rules of Conduct that describe behavior norms expected of internal auditors.
These rules are an aid to interpreting the Principles into practical applications
and are intended to guide the ethical conduct of internal auditors.
The Code of Ethics together with The Institute’s Professional Practices Frame-
work and other relevant Institute pronouncements provide guidance to internal
auditors serving others. “Internal auditors” refers to Institute members, recipi-
ents of or candidates for IIA professional certifications, and those who provide
internal auditing services within the definition of internal auditing.

Source: From Institute of Internal Auditors www.theiia.org. Copyright © 2004 by The Institute of Internal
Auditors, 247 Maitland Avenue, Altamonte Sprints, FL 32710, USA. Reprinted with permission.

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.