A certified public accountant (CPA) holds a license regulated by state accountancy boards to practice accounting, and as a certified professional is held to a high standard of conduct. A CPA has demonstrated superb knowledge of accounting rules and regulations by passing a comprehensive examination and completing professional experience requirements, which vary by state. A CPA, unlike a non-CPA accountant, must adhere to the Code of Professional Conduct issued by the American Institute of Certified Public Accountants (AICPA).
Rule 102 within the AICPA's Code of Professional Conduct is familiar to all CPAs and addresses integrity and objectivity in simple language. A member must maintain integrity and objectivity, be free of conflicts and not knowingly misrepresent facts or subordinate his judgment to others'. The principles of integrity and objectivity govern the Code of Professional Conduct, and CPAs make professional judgments within the context of Rule 102.
Attest vs. Non-Attest Clients
The rules governing gift acceptance differ for attest clients and non-attest clients. An attest engagement is one in which the CPA issues a report or an assertion -- for example, an audit engagement in which the CPA issues an opinion on the fairness of a company’s financial statements. A CPA may not accept a gift from an attest client, unless the value of the gift is clearly insignificant to the recipient. For non-attest engagements, a CPA may accept a gift that is “reasonable in the circumstances” without impairing objectivity or integrity.
Factors to Consider
In determining whether a gift is reasonable, the AICPA outlines factors and circumstances the CPA should consider in exercising proper judgment. They include the nature, occasion and cost of the gift or entertainment. A CPA should also consider the timing of the gift, the frequency of gifts and whether other clients, vendors or customers also participated in the gift or entertainment.
The Professional Ethics Division of the AICPA investigates complaints and violations related to gifts and entertainment. After a complaint is filed, the CPA may respond to the complaint as the division conducts its investigation, and the findings of the investigation range in accordance with the severity of the offense. The division may declare there is no finding, describe a required corrective action, or admonish, suspend or expel the CPA from practice.
- AICPA Code of Professional Conduct; Section 113: Acceptance or Offering of Gifts or Entertainment; July 2010
- AICPA Code of Professional Conduct; Section 114: Acceptance or Offering of Gifts or Entertainment to or from an Attest Client; July 2010
- AICPA.org: Definition of Ethics Sanctions/Disposition
- AICPA.org: Code of Professional Conduct; Rule 102 – Integrity and Objectivity; July 2010