Реферат: Accounting Ethics Essay Research Paper Accounting Ethics

client retention. Independence, one may argue, never existed before;

however an assumption is made that independence, t o some extent,

historically exists. With the competitive structure now present the

process of gaining a new, and retaining an existing, client has become

increasingly costly and time consuming. One may then infer that once a

client is obtained, a firm would wish to do business with that client for

an extended number of years, in order to realize the benefit of expenses

incurred. Put simply, a firm would not look kindly toward a partner who

lost a new client. This, inherently, decreases auditor indep endence

during the first several years of the engagement. The partner overseeing

the audit must always concern himself with the consequences of losing the

engagement. Previously, firms worked mostly with longstanding clien!

ts and the relationship developed

The second major area of ethical effect is that of integrity.

Competition has resulted in some firms damaging the integrity of the

profession. This damage has occurred mainly through pricing practices.

Two deviant practices have become commonplace in today’s market. These

are below cost pricing, and discount pricing. Many firms have adopted

policies of below cost pricing as a tool of market penetration,

(Formichella p.199) implications regarding the motives and integrity of

these firms must be explo red. Is it reasonable to assume that a firm

would be willing to absorb a loss from an engagement, or would a more

practical assumption state that firms which lowball would seek means to

cut service costs at the expense of quality? It is not possible to answer

this question; however its mere existence creates a damaging effect on the

integrity, or at least perceived integrity, of the profession.

The second pricing strategy which is cut-rate pricing provokes

similar questions. In his commentary Mario Formichella states the

following: