According to the principle of user primacy, the interests of users of financial reports take priority over the interests of preparers of financial reports. When applied to the activities of a standard setter for corporate financial reporting, user primacy is a constitutional claim, stating a general principle for the resolution of conflicts. It is controversial, because it is incompatible with views that standard setting is a collective choice process, where the interests (preferences) of all parties are to count equally. An analysis of the logical foundations of the principle is provided, based on recent work in ethics and social and political philosophy. User primacy is a distributional principle governing the relationship between users and managers. A theoretical framework for the rational choice of a distributional principle governing the disclosure of information in the securities market is provided. The conditions under which a securities market--which includes in its basic structure a standard setter to implement the user primacy principle--would be chosen by rational, disinterested securities market agents are analyzed. A standard setter would be established to enforce user primacy, thereby redressing an imbalance between investors (users) and managers. By acting in accordance with this principle, the standard setter aids all securities market agents in exploiting the potential trading gains provided by such a market. At the same time, investors are protected from possible losses arising from the basic relationship between them and managers of widely held corporations. The analysis is applied to two versions of the user primacy principle prominent in the professional standard-setting literature. Although the analysis is not intended to advocate user primacy, a clear and complete statement of the principle is proposed as a guide to...

[According to the principle of user primacy, the interests of users of financial reports take priority over the interests of preparers of financial reports. When applied to the activities of a standard setter for corporate financial reporting, user primacy is a constitutional claim, stating a general principle for the resolution of conflicts. It is controversial, because it is incompatible with views that standard setting is a collective choice process, where the interests (preferences) of all parties are to count equally. An analysis of the logical foundations of the principle is provided, based on recent work in ethics and social and political philosophy. User primacy is a distributional principle governing the relationship between users and managers. A theoretical framework for the rational choice of a distributional principle governing the disclosure of information in the securities market is provided. The conditions under which a securities market-which includes in its basic structure a standard setter to implement the user primacy principle-would be chosen by rational, disinterested securities market agents are analyzed. A standard setter would be established to enforce user primacy, thereby redressing an imbalance between investors (users) and managers. By acting in accordance with this principle, the standard setter aids all securities market agents in exploiting the potential trading gains provided by such a market. At the same time, investors are protected from possible losses arising from the basic relationship between them and managers of widely held corporations. The analysis is applied to two versions of the user primacy principle prominent in the professional standard-setting literature. Although the analysis is not intended to advocate user primacy, a clear and complete statement of the principle is proposed as a guide to standard-setting bodies.]

Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Facebook Twitter LinkedIn Email Tools Icon Tools Get Permissions Search Site Cite View This Citation Add to Citation Manager Citation KEN McPHAIL, DIANE WALTERS, JAMES C. GAA; Accounting and Business Ethics: An Introduction. The Accounting Review 1 September 2010; 85 (5): 1817–1820. https://doi.org/10.2308/accr.2010.85.5.1817 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentThe Accounting Review Search Advanced Search

Public accountants (auditors) who do not prepare the financial statements of their clients are not directly responsible for them. However, if the statements are deceptive, then the question of their indirect responsibility arises. The various kinds of defenses that auditors might present for being excused from responsibility, and/or blame, are examined and evaluated. Relevant parts of the codes of ethics of the Institute of Chartered Accountants of Ontario (ICAO) and the American Institute of Certified Public Accountants are compared on this basis. The ICAO Code is a better codification of auditors' obligations regarding deceptive financial statements. One implication of the analysis is that the issue of the independence of auditors is more complex than the codes suggest, and needs further clarification. Résumé. Les experts‐comptables (vérificateurs) ne sont pas directement responsables des états financiers de leurs clients qu'ils ne préparent pas. Cependant, si les états financiers sont trompeurs, alors la question de leur responsabilité indirecte se pose. Les différentes sortes de défenses que les vérificateurs pourraient présenter pour ne pas être tenus responsables et/ou blâmés sont examinées et évaluées. Les parties pertinentes des codes de déontologie de l'Institut des comptables agréés de l'Ontario et de l'American Institute of Certified Public Accountants sont comparées sur cette base. Le code de déontologie de l'Institut des comptables agréés de l'Ontario est une meilleure codification des obligations du vérificateur en ce qui a trait aux états financiers trompeurs. Une implication de l'analyse, est que la notion de l'indépendance des vérificateurs est plus complexe que ne le suggèrent les codes et demande d'être clarifiée.