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Sex and Professional Ethics, Round 2

In case you need to be caught up, the controller at Ventas and the audit partner at EY were banging. So Ventas fired their controller, and Ventas fired EY, and EY fired the audit partner.

EY also said that putting the sausage in the ham wallet was a flagrant violation of professional standards. Over the past year, I’ve been teaching a CPE course on ethics called “How to Cheat Your Way to the Highest Levels of Professional Ethics.” As a result, I’ve become intimately familiar1 with the AICPA Code of Conduct, and I don’t remember it saying mattress jousting violates independence rules.

It does, however, say that CPAs are supposed to be independent “in fact and appearance,” and in my opinion no two parties appear independent when they’re fucking.

So to clarify the impact of sex on auditor independence, I wrote to the AICPA Professional Ethics Division. The first email reply that I received from them came from an AICPA Ethics Division robot.

Thank you for contacting the AICPA Professional Ethics Division. We have received your inquiry and will respond within 2 business days.

But what if I want to have sex now?

Inquiries are answered in the order in which they are received.

Which is unfortunate if someone's real ethical inquiry was answered after my smartass inquiry about stuffing the envelope with Schedule D.

If you prefer, you can contact the Professional Ethics Division Hotline … and a Technical Manager will contact you by phone within 1 business day.

Because that’s how you turn the Ethics Hotline into a phone sex line. “Tell me again how an auditor/client orgy impairs independence, and this time talk slower.”

The second email response was maybe more interesting, not at all more enlightening, and it was sent by a human named Brandon.2

Hi Greg,
Thanks for the email.

That was the first lie “Brandon” told.

You are correct that the AICPA Code does not specifically address sex, nor does it specifically include sex as a factor in defining spousal equivalent or immediate family member.

Those last few words were pretty creepy, Brandon.

As in any case where a situation is not specifically addressed by a Rule or Interpretation of the Code, you would need to use the Conceptual Framework in ET Section 100-1, which uses a risk-based "threats-safeguards" approach.

Just like most adults use a risk-based “threats-safeguards” approach to condoms.

You identify threats to independence, evaluate the significance of the threat, and apply safeguards when possible to reduce those threats to an acceptable level. … Professional judgment is involved of course and the threats and any safeguards applied must be documented.

Okay. Let’s give it a try.

Step No. 1: Identify the Threat

Clearly sexual intercourse is a familiarity threat which is defined as, “Members having a close or longstanding relationship with an attest client or knowing individuals … who performed nonattest services for the client3. A sexual relationship is a close relationship, especially if you’re hung like Greg Kyte.

Step No. 2: Evaluate the Significance of the Threat

According to the Conceptual Framework, threats are considered to be at an acceptable level if “it is not reasonable to expect that the threats would compromise professional judgment.” Sex undoubtedly impairs the professional judgment of male accountants. Conversely, a female with impaired judgment may possibly have sex with a male accountant. Therefore, this threat is not at an acceptable level.

Step No. 3: Apply Safeguards

Abstinence is the only 100 percent effective way to prevent the loss of independence. Safeguards in the accounting profession should be modeled after those implemented in youth abstinence programs since those safeguards have proved so effective.

Safeguard No. 1: Take the “I won’t fuck clients” pledge.
Safeguard No. 2: Provide everyone in your firm with a Purity Independence Ring to remind them of their pledge.
Safeguard No. 3: Only do it in the butt.

Problem solved.

1Not like that.
2Or a robot pretexting as a human named Brandon
3Sex is a nonattest service.