This document discusses ethical standards and guidelines for government accountants and financial professionals from several professional organizations. It summarizes key principles from codes of ethics from the Government Accounting Standards Board, American Institute of Certified Public Accountants, Association of Government Accountants, and Government Financial Officers Association which emphasize integrity, objectivity, competence, public interest, and accountability. It also discusses factors that can contribute to ethical issues and fraud in government accounting such as lack of internal controls and the fraud triangle of pressure, opportunity, and rationalization.

1. Governmental Accounting Ethic
s
Providing accountability to maintain
the public trust

2. Introduction :
A 2017 Government Accounting Standards Board (GASB)
White Paper described the differences between accounting
and financial reporting for governments and for-profit busi
nesses.
While both private sector and public sector financial repo
rting focus on making economic choices, government fin
ancial information is also needed for social and political d
ecision making by government officials.

3. Ethical standards guiding government accountants
:
Several professional organizations provide ethical guidelines f
or government accountants and financial professionals.
These organizations provide :
● the ethical standards for those conducting the govern
ment audits.
●codes of conduct for CPA doing government account
ing work.
●codes of conduct for two organizations that emphasi
s ethics for their members.

4. ●Examples of organisations provides the ethical g
uidelines for the governments for their works are :
*American Institute of Certified Public Accountants (AICPA).
*The Association of Government Accountants (AGA).
*The Government Financial Officer Association(GFOA).
*The US Government Accuntability Office (GAO).

5. •GAO provides ethical guidelines for those engaged in auditin
g government organizations in accordance with generally accepted go
vernment standards (GAGAS). The recent version of government auditi
ng standards is commonly called the yellow book.
•These GAO ethical auditing standards are consistent with man
y of the principles contained in the AICPA code of professional
conduct and contribute to government audits that ensure the a
ccountability demanded by the public.

6. •The AICPA Code of professional conducconduct applies to
all AICPA members when carrying out their professional res
ponsibilities. This include government accountants and thos
e who audit government organizations.
•This code of conduct provides detailed definitions and
guidance on principles and rules, along with interpretation
s of the rules that guide professional conduct.

7. Table 14.1A Government Auditing Standards – Summaries of
Key Ethical Principles and Independence
Guidelines
Government Auditing Standards Ethical Principles – The Public Inte
rest
3.07–3.08 Government auditors serve the public interest and maintai
n the public trust by maintaining integrity, objectivity, and independe
nce when performing their duties.
Integrity
3.09–3.10 Government auditors perform their duties with integrity, w
hich focuses on objective and nonpartisan information and leads to
honest judgments and reports that are free from bias.

8. Objectivity
3.11 Auditors maintain objectivity when performing their duties, whi
ch focuses on independence of mind and appearance, remaining i
mpartial, and avoiding conflicts of interest.
Proper Use of Government Information, Resources, and Posi
tions
3.12–3.15 Government auditors use official information appropriatel
y, safeguard government resources, and abide by applicable laws a
nd regulations pertaining to the performance of their duties. They re
cognize the importance of disclosing information properly and main
taining transparency desired by the public. They do not use their po
sition for improper personal financial gain.

9. Professional Behavior
3.16 Professional behavior involves government auditors perfo
rming their duties honestly and abiding by applicable legal, re
gulatory, and professional standards, while not engaging in in
appropriate conduct that would be perceived as problematic b
y the public.
Independence
3.17–20 Generally Accepted Government Auditing Standards r
equire that auditors and their organizations be independent fro
m the audited entity during the professional engagement and
any period covered by the financial statements. Auditors shoul
d take actions to maintain their objectivity and impartiality relat
ing to all aspects of the engagement.

10. Table 14.1B Amer ican Institute of CPAs (AICPA)
– Summaries of Principles of Professional Conduc
t
0.300.020 Responsibilities
.01–.02 Members are professionals who have a vital duty to societ
y. They should make professional and ethical decisions that prom
ote public confidence in the profession.
0.300.030 The Public Interest
.01–.05 The profession has a significant responsibility to the publi
c including clients, credit grantors, governments, employers, inve
stors, and the business and financial community. AICPA members
should carry out their duties professionally and with integrity, whic
h serves the public interest and honors the public trust.

11. 0.300.040 Integrity
.01–.05 Integrity involves carrying out professional duties ho
nestly while maintaining high levels of objectivity, independe
nce, and due care expected of AICPA members. These prof
essionals should abide by both the letter and the spirit of et
hical guidelines, and where standards are not clear or do n
ot exist, strive to maintain the integrity expected of them. Th
is will reinforce the public confidence and trust in these prof
essionals.

12. 0.300.050 Objectivity and Independence
.01–.05 AICPA members are required to maintain objectivity and
independence, which are related topics. Objectivity involves bei
ng impartial and avoiding conflicts of interest. Maintaining objec
tivity leads AICPA members to be independent in fact and appe
arance as they engage in public practice. This involves an ongo
ing independence assessment regarding clients to avoid conflic
ts of interest. Members not engaged in public practice should
maintain objectivity as they perform professional services relatin
g to financial statement preparation, consulting, auditing, or tax
.

13. 0.300.060 Due Care
.01–.06 Due care involves sustaining a high level of co
mpetence and striving for excellence when carrying out
professional responsibilities. Competence includes acq
uiring knowledge and understanding and maintaining th
e expertise needed to perform the requested services. T
his includes an ongoing commitment to learning and pr
ofessional development throughout one’s career.

14. The AGA code of ethics identifies four objectives that h
elp achieve professionalism and positively contribute to
the public interest (credibility, professionalism, quality o
f service, confidence). along with four basic principles,
as described in Table 14.2A: integrity, objectivity, profe
ssional competence and due care, and confidentiality.
The AGA Code of Ethics also prescribes eight professional
conduct rules that guide member behavior, including adheri
ng to applicable laws and standards of conduct, exercising
integrity and professional care when performing duties, and
avoiding conflicts of interest.

15. Table 14.2A Association of Government Accounta
nts (AGA) – Code of Ethics Summaries of AGA Co
de of Ethics Principles and Professional Conduct
Integrity Performs duties honestly, with respect for others, and
as guided by laws and professional standards.
Objectivity When making decisions and providing services, do s
o without prejudice, bias, or conflict of interest

16. Confidentiality Do not reveal confidential information obtained
while performing professional services, unless reporting miscond
uct to appropriate authorities.
professional competence and due care Maintain professio
nal knowledge and skills to accomplish tasks both effectively a
nd efficiently, while supervising subordinates to a similar high s
tandard of performance.

17. The GFOA recognizes the important role of finance offici
als in serving the public and the special trust associated
with their positions. Recognizing the potential ethical cha
llenges that can face finance officials, the GFOA has dev
eloped a code of ethics that helps it members meet their
public service obligations. The GFOA Code of Ethics is c
ontained in Table 14.2B.
integrity and honesty, respecting others and treating them fai
rly, Producing results for my community, diversity and inclusi
on, reliability and consistency.

18. Ethical problems and fraud that damage accounta
bility and public trust
The fraud triangle developed by criminologist Donald R. Cressy is helpul
in explaining the actions of individuals who engaged in unethical behavi
or and ultimately commit fraud including government accountants and fi
nancial professional. The three sides of the triangle are:
1-pressure or incentives
2-opportunity
3-rationalization

19. pressure deals with the motivation to commit the frau
d. Factors that might contribute to this motivation incl
ude financial pressure due to personal finances or pro
blems.
opportunity relates to the fraudster’s ability to obtain
something of value. Lack of internal controls such as
poor segregation of accounting functions can contri
bute to the perceived opportunity to commit fraud.
Rationalization relates to the fraudster’s reason(s) f
or committing the fraud that the individual uses to j
ustify the inappropriate behavior

20. There are two studies regarding the government fraud
:
The first study states that 71% of the responding auditors were aw
are of fraud in their own agency, and the majority of these frauds r
elated to the misappropriation of funds and theft. The study conclu
ded that government fraud was a major problem and was expected
to increase.
The second study found that local governments with a stronger ethica
l environment experienced less fraud.
Ethical environment considerations included whether
managers demonstrated actions regarded as unethical, whether imp
roper behavior was accepted without adverse negative consequenc
es, and whether such negative consequences would result if the go
vernmental organization benefited from the unethical behavior in qu
estion.

21. Another study said that weak internal controls significantly increa
sed the potential fraud.
Some of the internal control deficiencies included:
•A lack of segregation of duties.
•Transaction Authorisation problems.
•A lack of independent checks.
•Safeguarding assets.
•Inadequate documentation.

22. The Association of Certified Fraud Examiners global study on
occupational frauds and abuse stated that:
The most common type of fraud is asset misapprehensio
n
Then, corruption
And finally, financial statements fraud.

23. The ACFE study also considered age, gender, tenure with their res
pective organizations, and whether those who committed fraud act
ed alone; all had an effect on the median fraud losses at
government organizations.
The median age for government fraudsters was 45; for those over t
he median age, the median loss was much greater than the median
loss for those under the median age.
Men committed 68% of frauds, and the median loss was $200,000
,
while the median loss for women was $51,000.
Those who had worked at their organizations for over five years em
bezzled $150,000, while those who had been at their organizations
for less than five years stole an average of $100,000.

24. Internal control measures that help prevent and detect frau
d
For government organizations, systems and processes for accountabili
ty include establishing successful fraud prevention and detection progr
ams. This section examines characteristics of sound prevention and d
etection programs of government organizations, with a focus on intern
al controls designed, implemented, and maintained by government ac
countants and finance officials.
The Committe of Sponsoring Organizations (COSO) updated the int
ernal control - Integrated Framework.
“COSO believes the Framework will enable organizations to effectively
and efficiently develop and maintain systems
of internal control that can enhance the likelihood of achieving the entit
y’s objectives and adapt to changes in the business and operating envir
onments”

25. The five components of internal control identified in the original
framework were retained in the 2013 Integrated Framework:
1 Control environment,
2 Risk assessment,
3 Control activities,
4 Information and communication, and
5 Monitoring activities
*The resulting Standards for Internal Control in the Federal Gov
ernment commonly referred to as the Green Book.

26. The green book includes proper segregation of duties, along wi
th preventing asset misappropriation associated with cash recei
pts and billing, disbursement and purchasing, and payroll.
As noted, segregation of duties is considered one of the most useful
measures to prevent fraud. Local government fraud prevention, noted
that poor segregation of duties contributes to the opportunity to misa
ppropriate assets and government fraud potential increases when one
individual has control over more than one of the following functions:
1 Custody of assets
2 Reconciliations
3 Authorization
4 Bookkeeping

27. Thanks