Tax in the Bluegrass
Yoda inspired ethics rules for CPAs
Issue 3
July 27, 2023
By Mark A. Loyd, JD, CPA
When was the last time you reviewed the AICPA Principles of Professional Conduct? The Principles guide CPAs in their professional conduct. May some parallels be drawn between these Principles and the teachings of Master Yoda?
Preamble
“To be a Jedi is to face the truth, and choose. Give off light, or darkness, Padawan. Be a candle, or the night.” Yoda in Dark Rendezvous (2004).
The Principles’ Preamble contemplates a standard above that of the baseline drawn by the law. CPAs have responsibilities to the public, to clients and to colleagues requiring “self-discipline above and beyond the requirements of laws and regulations.” Principles 0.300.010. Indeed, “The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.” 0.300.010.02. The Principles’ adopt a truly aspirational tone.
Responsibilities
“A Jedi must have the deepest commitment, the most serious mind.” Yoda in The Empire Strikes Back (1980).
“In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.” Principles 0.300.020.01. CPAs have responsibilities to the public, their clients, and to colleagues, with CPAs’ collective efforts being required to improve the art of accounting, maintain the public’s confidence and to self-govern. Principles 0.300.020.02. Note the Principles’ emphasis on not only professional but moral judgment.
The public interest
“You must feel the force around you. Here. Between you, me, the tree, the rock, everywhere, yes. Even between the land and the ship.” Yoda in The Empire Strikes Back (1980).
Public is in the name – Certified Public Accountant. “Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate a commitment to professionalism.” Principles 0.300.030.01. The public is comprised of many groups – “clients, credit grantors, governments, employers, investors, the business and financial community, and others who rely on the objectivity and integrity of members to maintain the orderly functioning of commerce.” Principles 0.300.030.02. CPAs may encounter conflicting pressures from these groups, and in resolving them, CPAs should act with integrity. Principles 0.300.030.03.
CPAs should perform “their responsibilities with integrity, objectivity, due professional care, and a genuine interest in serving the public.” Principles 0.300.030.04. They should provide quality services, enter into fee arrangements and offer services in a manner that demonstrates professionalism. Id.
Integrity
“Already know you, that which you need.” Yoda in Return of the Jedi (1983).
Integrity is fundamental to the CPA profession. Principles 0.300.040.02. “To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity.” Principles 0.300.040.01. Integrity requires honesty within the constraints of client confidentiality, accommodating inadvertent error and honest difference of opinion but not deceit or subordination of principle. Principles 0.300.040.03.
When faced with the absence of rules, standards or guidance or with conflicting options, a CPA must be informed by asking themself: “Am I doing what a person of integrity would do? Have I retained my integrity?” Principles 0.300.040.04.
Should not black and white decisions be easy? Don’t join the Dark Side, Anakin; stay with the Light Side. “Twisted by the Dark Side, young Skywalker has become. The boy you trained, gone he is ... Consumed by Darth Vader.” Yoda in Revenge of the Sith (2005). Obviously, decisions are not always easy – even when they seem binarily straightforward.
CPAs’ integrity guides them to chose the option that is right and just.
Objectivity and independence
“You will find only what you bring in.” Yoda in The Empire Strikes Back (1980).
“A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.” Principles 0.300.050.01. Broken down a bit more, objectivity is a state of mind characterized by impartiality, intellectual honesty and freedom from conflicts of interest, whereas independence requires freedom from relationships that could be seen to impair the objectivity of a CPA in public practice in rendering attestation services. Principles 0.300.050.02. CPAs in public practice performing attestation services must also be independent in fact and appearance. But, all CPAs whether in private practice (like CPAs working in industry or government) or in public practice must perform auditing, tax or consulting services with an objective state of mind.
Due care
“Do… or do not. There is no try.” Yoda in The Empire Strikes Back (1980).
CPAs should always do their best. "A member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.” Principles 0.300.060.01. “The quest for excellence is the essence of due care.” Principles 0.300.060.02.
Excellence requires competence (i.e., the ability to do something), which is derived from education and experience. Principles 0.300.060. Learn it and do it. And, excellence also requires diligence, i.e., prompt, careful and thorough effort. Id.
The Principles contemplate that CPAs give their best 100 percent effort all of the time.
Scope and nature of services
“Decide you must, how to serve them best. If you leave now, help them you could; but you would destroy all for which they have fought, and suffered.” Yoda in The Empire Strikes Back (1980).
This Principle brings it all together. “A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.” Principles 0.300.070.01. Accordingly, in taking on an engagement, a CPA must contemplate whether or not they can do so with integrity (not subordinated to personal gain and advantage), with objectivity (and independence, if an attest service), and with due care, i.e., with competence and diligence. Principles 0.300.070. Put simply, is this an appropriate engagement to take on in the first place?
“In a dark place we find ourselves, and a little more knowledge lights our way.” Yoda in Revenge of the Sith (2005).
Light your way, the Principles may, when an ethical challenge you face.
About the author: Mark A. Loyd, JD, CPA, is a partner of Dentons Bingham Greenebaum LLP in Louisville and chairs its Tax and Finance group. Loyd chairs the Society’s Editorial Board. He can be reached at mark.loyd@dentons.com; 502.587.3552.
