The Influence of Ethical Codes of Conduct on Professionalism in Tax Practice

Darius Fatemi (), John Hasseldine () and Peggy Hite ()
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Darius Fatemi: Northern Kentucky University
John Hasseldine: University of New Hampshire
Peggy Hite: Indiana University

Journal of Business Ethics, 2020, vol. 164, issue 1, No 8, 133-149

Abstract: Abstract Professional integrity is a fundamental principle of the International Ethics Standards Board for Accountants Code of Ethics (IESBA, in Code of ethics for professional accountants, IFAC, New York; IESBA, Code of ethics for professional accountants, IFAC, New York, 2016). This does not apply directly to members of a particular professional body, but rather member organizations from around the globe are required to adopt a code no less stringent than the principles in the IESBA Code. Hence, all professional accountants are required to possess integrity as a core ethical principle. In the USA, certified public accountants must, in addition, also adhere to the principle of client advocacy in relation to their tax clients. Despite extensive prior literature on accounting ethics, firm culture, and ethical codes, no prior research has tested whether the communication of an Integrity ethical standard actually affects practitioners’ actual judgments and decisions. In this study, we use brief interventions to determine whether a prime of two ethical professional standards (Integrity; Advocacy) affects tax practitioners’ recommendations to their clients. One implication for professionalism in tax practice is our finding that a brief intervention of professional standards can directly impact on practitioners’ judgments. Most notably, a joint presentation of Advocacy and Integrity leads to contrasting results that depend on the order of the intervention. In sum, when the Integrity (Advocacy) standard was presented before the Advocacy (Integrity) standard, tax practitioners were significantly less (more) likely to choose a tax-favorable outcome. That is, the order of professional ethical standard intervention significantly affects tax practitioners’ judgments.

Keywords: AICPA; Client advocacy; Code of ethics; IESBA; Integrity; Professional ethics; Tax practitioners (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10551-018-4081-1

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