State Board Report

November 2011

Thirty-eight states have rules about “discreditable acts,” but they have no explanation of what such acts might be, Nathan T. Garrett, NASBA President 1992-3, told the Annual Meeting during a panel session organized by the Center for the Public Trust. Three states prohibit employment discrimination in language they have developed, and 13 reference the American Institute of CPAs’ rule which says a member who is determined by a court of competent jurisdiction to have violated any of the antidiscrimination laws – federal, state or local – will be presumed to have committed an act discreditable to the profession. Mr. Garrett contends that “ethical behavior” is defined by codes of ethics.

“For purposes of encouraging moral behavior, I say to you that our State Boards and our membership organizations need rules stating clearly that violation of the laws against employment discrimination is unethical,” Mr. Garrett told the NASBA audience. “I urge you to look carefully at your rules to see if employment discrimination is clearly prohibited. If it is not, or if you have no rule at all, I urge you to add the AICPA language.”

Mr. Garrett cited the final report of the US Treasury Department’s Advisory Committee on the Auditing Profession which stated: “…this under-representation of minorities in the profession is unacceptable from both a societal and business perspective.” He believes an explicit non-discrimination rule will steer more minorities and other protected groups into the profession.

Other speakers on the panel were moderator CPT Chairman Larry Bridgesmith and panelists Keith T. Darcy, executive director of the Ethics and Compliance Officer Association, and James P. Patton, founder of KPAC Solutions.

Mr. Darcy observed: “There has been a profound loss of trust in this time. You can’t legislate trust and it is built in very small steps. Get wired to the conversations going on out there. It is time to put a stake in the ground and stand up for what is right and good.”

Mr. Patton, whose company buys failing businesses and then builds them up so they can be profitable when they are sold, advised: “The ethics you hold people accountable to is critical.” He explained that the mission statements given to the companies he acquires all contain components of ethics and morals.

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