Journal of Business Ethics

, Volume 99, Supplement 1, pp 49–59 | Cite as

It’s Time for Principles-Based Accounting Ethics

  • Albert D. SpaldingJr.Email author
  • Alfonso Oddo


The American Institute of certified public accountants (AICPA) has promulgated a Code of Professional Conduct, which has served as the primary ethical standard for public accountants in the United States for more than 20 years. It is now out of date and needs to be replaced with a code of ethics. Just as U.S. generally accepted accounting principles are being migrated toward “principles-based accounting” as part of a convergence with international financial reporting standards, a similar process needs to occur with ethics. This article organizes the primary rules of the AICPA Code around five essential virtues: objectivity, integrity, inquisitiveness, loyalty, and trustworthiness. These virtues correspond to the general principles set forth in the Code of Ethics for Professional Accountants of the International Federation of Accountants (IFAC). From this virtue ethics perspective, various rules of the AICPA Code are critiqued as being inadequate at best, and poorly crafted at worst. The article concludes with the proposition that principles-based ethics serves the profession and the financial reporting process better than the current rules-based approach.


Ethics Accounting standards Rules-based Principles-based International accounting 


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Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.Associate Professor of Legal StudiesWayne State University, School of Business AdministrationDetroit, MichiganUSA
  2. 2.Professor of AccountingNiagara University, College of Business Administration, Niagara UniversityNYUSA

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