The AICPA Professional Code of Conduct is a set of rules and guides that regulates the registered (CPAs) Certified Public Accountants in the United States. The (AICPA) American Institute of Certified Public Accountant is the professional body that enforces the code of conduct and requires its members to adhere to the code of conduct while undertaking their duties and responsibilities ( Spalding and Lawrie, 2017) . The professional code of ethics has established the guidelines which are aimed at protecting the integrity of the accounting profession. The set standards protect the auditor’s independence and ensure that the accountants exude integrity and objectivity in their course of duty ( Jenkins, Popova, and Sheldon, 2016) . The aim of the AICPA professional code of conduct is to ensure that the registered auditors perform their tasks without any conflict of interest or corrupt dealings that may detrimentally affect the credibility of the profession.
In the case presented, Jon Williams is in a conflicting situation as he is required to issue advice to the clients who have distrust. Jon is also conflicted because he has a close relationship with Chris Barnes who is also his tax client. Barnes request Jon to inform him of any moves by Raul to transfer his shares to Sandra. However, according to the AICPA Professional Code of Conduct, Jon should not maintain any monitoring or control over the internal matters of the client’s company. Additionally, the professional code of conduct restricts Jon from acting as the client’s stock transfer agent ( Spalding and Lawrie, 2017) . The auditor cannot also influence the recommendations that need to be implemented by the clients ( Jenkins, Popova, and Sheldon, 2016) . Based on section 101 that provides for the auditor’s independence, William is required to avoid any situation that might compromise his integrity or lead to a situation of conflict of interest.
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When Raul transfers his shares to Sandra, then Jon is bound to suffer as he will have lost a client since Sandra files her tax returns through a different auditing firm. Additionally, Jon’s friend will also suffer as he will have the minority of the shares. Therefore, it is important for Jon to protect his independence as an accountant and offer professional recommendations to his clients without fear or favor. First, Williams should be alive to the fact that authorizing or consummating transactions on behalf of the customers may compromise his independence ( Spalding and Lawrie, 2017) . Additionally, being in possession of the client’s assets as well as monitoring and supervising the performance of his client’s transfer of shares are unethical ( Spalding and Lawrie, 2017) . Therefore, William should be impartial to the matter so that he can protect the integrity of the accounting profession as well as upheld the AICPA Professional Code of Conduct.
The first alternative action that Jon can take as a professional auditor is to talk to Barnes on the ethical implications of monitoring the internal matters of the client’s Company. Barnes requests to be informed about Raul’s plan to transfer the shares. However, Jon should reject the proposal even though Barnes is his close friend. By informing Chris on Raul’s plans, then Jon will be compromising the independence as well as the integrity of his firm. However, Jon can ask Chris to express his concerns directly Raul who is the founder and president of the company. As such, the auditor is required to foster a scenario in which the matter is settled internally without involving him. As the company’s stockholder with one-third of the shares, Chris can request for a shareholders meeting that will be aimed at discussing the transfer of shares in the company. Therefore, Jon should ask Chris to follow the due process that is independent of the auditor to address his grievances. Through an open discussion, Barnes will be able to learn Raul’s intentions of transferring the shares to Sandra. Additionally, Chris will also have an opportunity to give his opinion over the contagious matter.
In the second alternative, Jon can discuss the issue of share transfer with Raul. Through the closed-door meeting, Jon should let Raul understand the concerns of Chris about the transfer of shares to Sandra. The auditor should also inform Raul on the possible legal implications of transferring shares to a third party without the consent of the other stockholder. To eliminate the legal suits in the company, Jon should advise Raul on the need to involve both Barnes and Sandra over the transfer of shares. Even though Raul wants to reward Sandra for her hard work in the company, transferring his one-third of the firm’s share to Sandra without Chris’s consent is unethical and also illegal. Therefore, Jon should ask Raul to talk to the other stockholders before making the decision of transferring the shares. Typically, the process of buying internal shares may be complicated if some stockholders are not involved. Additionally, Sandra may not have the required financial resources to purchase all the stocks that are currently owned by Raul. The monetary value of the shares which are being sold should be decided by all stakeholders to avoid the case of insider trading.
The third alternative that Jon can take is to advice Raul to transfer his shares equally to both Sandra and Chris. The transition will be smooth if the ratio of stock that is owned by the other two shareholders remains the same even after Raul retires. By selling the shares to Chris and Sandra, both parties will contend and Chris may not sue the company over insider trading. Jon’s firm will also benefit from the increased shares of Chris who is his client.
References
Jenkins, J. G., Popova, V., & Sheldon, M. D. (2016). In Support of Public or Private Interests? An Examination of Sanctions Imposed Under the AICPA Code of Professional Conduct. Journal of Business Ethics , 1-27.
Spalding, A. D., & Lawrie, G. R. (2017). A critical examination of the AICPA’s new “Conceptual Framework” ethics protocol. Journal of Business Ethics , 1-18.
