Fall 2025

Ethical leadership is the backbone of any organization, but it is exceptionally crucial in public accounting. Integrity, transparency, and trust are the hallmarks of the CPA profession. Ethical and professional conduct is important when producing, reviewing, and analyzing financial reports. Ethical leadership also contributes to the confidence in your organization held by the public and other stakeholders. Firms that value and prioritize ethical leadership foster an environment that promotes accountability and encourages the reporting of unethical practices.

Maintaining trust with the public, employees, and other stakeholders is crucial to demonstrating the overall vitality of your firm and its operations. Prioritizing ethical leadership sets the tone for the organization, ensuring that any financial information it is associated with is presented fairly and with greater transparency. With a public commitment to ethical conduct and transparency, stakeholders will have more confidence in your firm’s work product.

That is not to say this is easy. The tone of an organization starts at the top of the house. Ethical leadership requires a great deal of skill and responsibility. The firm’s overall financial health is directly determined by its ethical leadership – from upholding all legal and regulatory compliance requirements to ensuring transparency and accountability.

Fostering a culture of ethical practices and one based on integrity and honesty should act as a deterrent to unethical activities throughout the entire organization. A culture focused on ethical leadership sets integrity and responsible decision-making as the top priorities for all to understand and embrace. In addition to the many other benefits created by this culture, ethical leadership creates more trust and collaboration among employees.

Ethical leadership is much more than a commitment from the top; it is a demonstration of behavior that permeates every conversation and decision at every level. In the CPA profession, ethical leadership must exist throughout an organization, and no CPA should subordinate their judgment to another. In such an environment, ethical conduct is not only demonstrated but also recognized and rewarded.¹ Ethical leaders are committed to fostering a culture aligned with the organization’s values in every way.

Firms committed to ethical leadership can set the tone through the objectives outlined in this column.

Define core values and principles, and make them available and continuously present. Values and principles need to be part of the vision and mission of the firm. They need to become part of the organization’s culture. Posting the values throughout the office serves as a good reminder of their importance. Frequent touchpoints about the firm’s values and how employees connect to them are another good option. This keeps employees connected to their work and offers them opportunities to align with the firm’s core values.

The AICPA and PICPA codes of professional conduct are a good start, but they must be expanded upon and tailored to your specific circumstances. This expanded code of conduct should outline the expectations of how all members of the firm – not just CPAs – should contribute to the principle of ethical leadership. The code should also communicate the repercussions of potential misconduct. The document should be reviewed regularly, with an opportunity given to all stakeholders to provide feedback or propose changes on any evolving issues. Needless to say, those updating the code of conduct will need to keep an eye on regulatory bodies such as the SEC, IRS, PCAOB, state boards of accountancy, and so on.

Create a culture that allows employees to feel comfortable speaking about or reporting unethical practices without fear of retaliation. Where practicable, a whistleblower hotline can be an effective method of curtailing ethical abuses. A significant percentage of all frauds and unethical behavior is caught by tips and whistleblowers. An ongoing commitment to ethics training helps ensure all employees and stakeholders fully embrace the expectations of ethical conduct. Training provides exposure to different challenges and ways to navigate them when they are encountered. In addition to training, a culture of ethical leadership will entail leading by example, consistently demonstrating solid decision-making skills. Leaders should communicate with transparency their expectations and any potential shortcomings or concerns, and hold themselves and all stakeholders accountable.

Provide open opportunities for communication, encouraging all employees to share potential unethical situations. These open spaces or sessions could use real or hypothetical case studies, providing the tools for employees to navigate and provide feedback. The open spaces for communication also connect stakeholders to the priority placed on ethics and serve as a reminder of expectations.

Integrate ethical leadership practices into the overall governance structure. By doing this, employees will understand the parameters and the proper channels to follow when bringing forward any situation potentially questioning ethical practices. A culture that prioritizes ethical leadership is open to every decision being based on ethical considerations and provides clear mechanisms for those who want to share concerns.

Implement ways to incentivize and reward ethical behavior, tangibly connecting everyone to expectations. When employees are recognized and rewarded, it serves as a model for others to embrace. It also provides an opportunity to enforce clear guidelines on what will and will not be tolerated. By making this a priority, any potential unethical situations are handled promptly and fairly.

Prioritize a culture based on continuous improvement. This encourages ongoing assessment of how your stakeholders are contributing to your ethical practices and standards. Continuous improvement also requires your firm to adapt any policies and standards to evolving situations in the workplace.

These principles serve as a roadmap to building a culture of ethical leadership and forming the backbone of your firm’s operations and core values. Making ethical leadership your priority sets your firm up for continued success, with a committed management and trustworthy employees. 

Mark Koscinski, CPA, DLitt, is an associate professor of accounting practice at the Moravian University School of Business and Economics. He can be reached at koscinskim@moravian.edu.

Ethical leadership is the backbone of any organization, but it is exceptionally crucial in public accounting. Integrity, transparency, and trust are the hallmarks of the CPA profession. Ethical and professional conduct is important when producing, reviewing, and analyzing financial reports. Ethical leadership also contributes to the confidence in your organization held by the public and other stakeholders. Firms that value and prioritize ethical leadership foster an environment that promotes accountability and encourages the reporting of unethical practices.

Maintaining trust with the public, employees, and other stakeholders is crucial to demonstrating the overall vitality of your firm and its operations. Prioritizing ethical leadership sets the tone for the organization, ensuring that any financial information it is associated with is presented fairly and with greater transparency. With a public commitment to ethical conduct and transparency, stakeholders will have more confidence in your firm’s work product.

That is not to say this is easy. The tone of an organization starts at the top of the house. Ethical leadership requires a great deal of skill and responsibility. The firm’s overall financial health is directly determined by its ethical leadership – from upholding all legal and regulatory compliance requirements to ensuring transparency and accountability.

Fostering a culture of ethical practices and one based on integrity and honesty should act as a deterrent to unethical activities throughout the entire organization. A culture focused on ethical leadership sets integrity and responsible decision-making as the top priorities for all to understand and embrace. In addition to the many other benefits created by this culture, ethical leadership creates more trust and collaboration among employees.

Ethical leadership is much more than a commitment from the top; it is a demonstration of behavior that permeates every conversation and decision at every level. In the CPA profession, ethical leadership must exist throughout an organization, and no CPA should subordinate their judgment to another. In such an environment, ethical conduct is not only demonstrated but also recognized and rewarded.¹ Ethical leaders are committed to fostering a culture aligned with the organization’s values in every way.

Firms committed to ethical leadership can set the tone through the objectives outlined in this column.

Define core values and principles, and make them available and continuously present. Values and principles need to be part of the vision and mission of the firm. They need to become part of the organization’s culture. Posting the values throughout the office serves as a good reminder of their importance. Frequent touchpoints about the firm’s values and how employees connect to them are another good option. This keeps employees connected to their work and offers them opportunities to align with the firm’s core values.

The AICPA and PICPA codes of professional conduct are a good start, but they must be expanded upon and tailored to your specific circumstances. This expanded code of conduct should outline the expectations of how all members of the firm – not just CPAs – should contribute to the principle of ethical leadership. The code should also communicate the repercussions of potential misconduct. The document should be reviewed regularly, with an opportunity given to all stakeholders to provide feedback or propose changes on any evolving issues. Needless to say, those updating the code of conduct will need to keep an eye on regulatory bodies such as the SEC, IRS, PCAOB, state boards of accountancy, and so on.

Create a culture that allows employees to feel comfortable speaking about or reporting unethical practices without fear of retaliation. Where practicable, a whistleblower hotline can be an effective method of curtailing ethical abuses. A significant percentage of all frauds and unethical behavior is caught by tips and whistleblowers. An ongoing commitment to ethics training helps ensure all employees and stakeholders fully embrace the expectations of ethical conduct. Training provides exposure to different challenges and ways to navigate them when they are encountered. In addition to training, a culture of ethical leadership will entail leading by example, consistently demonstrating solid decision-making skills. Leaders should communicate with transparency their expectations and any potential shortcomings or concerns, and hold themselves and all stakeholders accountable.

Provide open opportunities for communication, encouraging all employees to share potential unethical situations. These open spaces or sessions could use real or hypothetical case studies, providing the tools for employees to navigate and provide feedback. The open spaces for communication also connect stakeholders to the priority placed on ethics and serve as a reminder of expectations.

Integrate ethical leadership practices into the overall governance structure. By doing this, employees will understand the parameters and the proper channels to follow when bringing forward any situation potentially questioning ethical practices. A culture that prioritizes ethical leadership is open to every decision being based on ethical considerations and provides clear mechanisms for those who want to share concerns.

Implement ways to incentivize and reward ethical behavior, tangibly connecting everyone to expectations. When employees are recognized and rewarded, it serves as a model for others to embrace. It also provides an opportunity to enforce clear guidelines on what will and will not be tolerated. By making this a priority, any potential unethical situations are handled promptly and fairly.

Prioritize a culture based on continuous improvement. This encourages ongoing assessment of how your stakeholders are contributing to your ethical practices and standards. Continuous improvement also requires your firm to adapt any policies and standards to evolving situations in the workplace.

These principles serve as a roadmap to building a culture of ethical leadership and forming the backbone of your firm’s operations and core values. Making ethical leadership your priority sets your firm up for continued success, with a committed management and trustworthy employees. 

Mark Koscinski, CPA, DLitt, is an associate professor of accounting practice at the Moravian University School of Business and Economics. He can be reached at koscinskim@moravian.edu.