The annual ethics requirement didn’t always exist. It used to be a one-shot deal: after passing the exam, I had to complete a comprehensive professional ethics exam before being eligible for my license. A subsequent series of scandals rocked the accounting profession. Among the most well-known is the Enron case, which became public in 2001 and resulted in the CPA firm Arthur Andersen LLP surrendering its license to practice. Arthur Andersen, once among the largest five CPA firms in the world, was convicted of obstruction of justice after it shredded documents related to its audit of Enron.
In the wake of scandals, Congress passed the Sarbanes-Oxley Act in 2002. Across the country, states implemented reforms, including annual ethics requirements. Accounting textbooks embraced the concept of teaching ethics along with debits and credits.
The number of accounting scandals has slowed to a trickle: more than 20 such scandals were revealed in 2002 but only four in the last five years. The increased emphasis on ethics has had the desired effect.
Meanwhile, in political land, ethics violations seem to pop up every day. The Office of Congressional Ethics, an independent, non-partisan entity responsible for reviewing allegations of misconduct against Congressional members and their staffs, reported investigating 36 cases so far in the 113th Congress. Over the years, high profile ethics cases have included Democrat Charlie Rangel and Republican Michelle Bachmann.
Closer to home, we find former Newport News delegate Phil Hamilton in prison for trying to arrange a job for himself in exchange for a state budget amendment that funded the position. Former governor Bob McDonnell and his wife are awaiting sentencing after being convicted of corruption charges. And, of course, the latest to be ensnared in an ethics scandal is Virginia Beach mayor Will Sessoms.
Ethics is, at its core, an understanding of the difference between right and wrong. At issue is not whether Sessoms did something wrong but rather whether what he did gave the appearance of being wrong. The McDonnell conviction was a case study in this: the claims that he and his wife did nothing wrong fell on deaf ears. I’m convinced the jury convicted him because they could not see past his gross unethical behavior. Just because something is legal doesn’t make it ethical.
In the wake of the Sessoms disclosures, the mayors from Norfolk and Suffolk resigned bank board positions. While I applaud them for doing so, it shouldn’t have taken the Sessoms investigation to make them realize the potential for conflicts of interest.
Among the required handouts for the CPA annual ethics course in Virginia is a list of the 10 myths of ethics. The first item: just because something is legal doesn’t mean it is right.
The annual ethics training that is required of CPAs serves as a reminder for us to be vigilant in identifying and resolving ethical dilemmas. Our elected officials need a reminder like that as well.
Perhaps then they wouldn’t wind up on the front pages of the newspapers – or, even worse, in jail.