The purpose of this research is to examine harm to users of accounting information stemming directly from the use of that information. Harm to users of accounting information has resulted from instances of (1) deficiencies in generally accepted accounting procedures (GAAP), (2) inadequate performance on the part of professional accountants, and (3) outright fraud (Dingell, 1988, E2161).
ACCOUNTABILITY IN PUBLIC ACCOUNTING
An important development which is in the process of occurring in contemporary American public accounting is a change in the way in which professional public accountants are held accountable for their actions ("National Commission on Fraudulent ...", 1987, 3-6). In the past, public accountants have often been able to (or, at least, have attempted to) avoid accountability on the grounds that either (1) the responsibility for any fraudulent action belongs with the client, and not with the professional accountant, or (2) their actions were in accordance with generally accepted accounting practices ("National Commission ...", 1987, 12). Such excuses are unacceptable in the late 1980s (Dingell, 1988, E2161).
The regulatory issues confronting the profession are concerned with ways in which standards of professionalism and accountability may be improved. In part, these issues were addressed in changes to standards for the profession. These standards were proposed by the AICPA (American Institute of Certified Public Accountants). They were voted on by AICAP members between early-December 1987 and early-January 1988 (Cottle, 1988, 76-80). These changes to professional standards are an attempt at self-regulation. If self-regulation does not result in less fraud and higher professional competence, the profession may expect to see regulation by government.
The first of the six changes is related to revision of the Code of Professional Ethics for public accountants. This change was approved by 92 percent...