CODE OF ETHICS FOR
PROFESSIONAL ACCOUNTANTS
And Accounting Fraud Cases
Presented by:
Dra. AMBAR WORO HASTUTI , M.Si.
RIA MENNITA, A.Md.Li., S.Akun., M.Ak.

Table of Content
INTRODUCTION
The purposes of this study and why Code of Ethics should be
conducted by IAI/IAPI/IFAC
CODE OF ETHICS
The list of Ethic Codes
ACCOUNTING SCANDAL
The Big Accounting Scandals: Enron & WorldCom
SUMMARY
LITERATURE

Introduction
 Ethics refers to a system or code of conduct based on moral duties
and obligations, that indicates how should behave.
 Professionalism refers to conduct, aims, or qualities that
characterize or mark a profession or professional person.
 The International Federation of Accountants (IFAC) Code of Ethics
for Professional Accountants issued by International Ethics Standard
Board for Accountants establishes acceptable behavior. No IFAC
member body is allowed to apply less stringent standard.
 The Code is in two parts, which are Part A dan Part B & C. Part A
establish the fundamental principles of professional ethics for
professional accountant. Whereas, Part B & C is the Code Illustrate,
how the conceptual framework is to be applied in specific situations.
 Auditor are frequently faced with situations that may test their
professionalism, ethical character and independence (Eg. Opinion
Shopping).
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CODE OF ETHICS FOR
PROFESSIONAL ACCOUNTANTS
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For more, Eilifsen et.al., 2013

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CODE OF ETHICS FOR
PROFESSIONAL ACCOUNTANTS
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Need for Ethics
• To function in an
orderly manner.
• Ethics Criteria, is
about the right
principles, proper
procedure and fair
treatment.
Why People Act
Unethically
• Person’s ethical
standard differ
from General
Society
• The Person
choose to Act
Selfishly
Ethical Dilemmas
• Auditor should be
Assertive.
• Rationalizing
Unethical Behavior
• Everybody Does
It
• If it’s legal, it’s
ethical
• Likelihood of
Discovery and
Consequences
• Resolving Ethical
Dilemmas using
ETHICAL
FRAMEWORK.
For more, Elder et.al., 2009

PART A:
The Code of Ethics

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PROFESSIONAL ACCOUNTANTS
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Part A Identifies the responsibility and public interest, it defines
the public interest as “The collective well-being” of the
community of people and institutions that the members serve’.
This community consist of clients, credit providers,
governments, employers, employees, investors, the business
and financial community, and others
Principles of professional ethics: Integrity, Objectivity,
Professional Competence and Due Care, Confidentiality,
Professional Behavior, Profession Responsibility, Public
Interest, and Technical Standard
Principle Approach: Threats, Safeguard and Conflict
Resolution
Specific guidance on Professional Conduct
For more, Elder, et.al., 2009 & Mulyadi,
2014

The Details of Code of Ethics Principles
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CODE OF ETHICS FOR
PROFESSIONAL ACCOUNTANTS
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Integrity
Auditor must be
Straightforward and
honest.
Practice fair dealing and
truthfulness.
Objectivity
Not Compromise their
professional judgement
Maintain an impartial
attitude
Professional Competence
and Due Care
Maintain professional
knowledge, skill in
appropriately level and be
diligent in the application of
their own knowledge & skills.
Refrain from offering / providing
services that they’re not
competent & work in accordance
with relevant & professional
standard

Cont.
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CODE OF ETHICS FOR
PROFESSIONAL ACCOUNTANTS
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Confidentiality
Respect the confidentiality of
information acquired through their
professional work/ relationship
Not Disclose such confidential
information
Professional Behavior
Auditor must retain from any conduct,
including omissions
Auditor should not exaggerate their
qualifications/capabilities, & should not
make disparaging
reference/unsubstantiated
comparisons to competitors.
For more, Elder, et.al., 2009
For more (Bahasa), & Mulyadi,
2014

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CODE OF ETHICS FOR
PROFESSIONAL ACCOUNTANTS
9
CONT.
Profession
Responsibilities
Using moral judgment and
professionality in any
activities.
As a professional, auditor
had important role in
society. The should do their
responsibility on their job,
be cooperate, always
improve maintain public
trust and self-regulation.
Public Interest
Auditor should accept their
responsibility to public.
Auditor maybe has pressure
during their job or in the form
of conflict of interest. So
they should had integrity &
objectivity.
Dedication with
professionalism
Technical
Standard
Do their job with relevant
technical and professional
standard. Fit & relevant to
their competency with all the
principles.
Technical & Professional
Standard  IAI, IFA, BPKP
& relevant laws.
For more, Elder, et.al., 2009
For more (Bahasa), & Mulyadi,
2014

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CODE OF ETHICS FOR
PROFESSIONAL ACCOUNTANTS
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Ethics Code in IAI divided into four part: (1) Prinsip
Etika, (2) Aturan Etika, (3) Interpretasi Aturan Etika,
(4) Tanya dan Jawab.
100 : Independensi, Integritas dan Objektifitas
200 : Standar Umum dan Prinsip Akuntansi
300 : Tanggung Jawab kepada Klien
400 : Tanggung Jawab kepada Rekan Seprofesi
500 : Tanggung Jawab dan Praktik Lain
For more (Bahasa), & Mulyadi,
2014

Principles Approach
Adopt principle approach to
anticipate situations that may
generate an ethical problem.
THREATS
Self interest, self review,
advocacy, familiarity and
intimidation
SAFEGUARDS
The profession, legislation and
regulation and the work
environment
CONFLICT RESOLUTION
Relevant facts, ethical issues,
fundamental principle,
established internal
procedures and alternative
course.
SPECIFIC GUIDANCE ON
PROFESSIONAL CONDUCT

PART B & C:
The Code Contains
210: Professional Appointment
220: Conflict of Interest
230: Second Opinions
240: Fees & Other Types of Remunerations
250: Marketing Professional Services
260: Gifts and Hospitality
Custody of Client Assets
280: Objectivity – All Services
290: Independence – Assurance Engagements

Summary
The Professional activities of CPAs are governed by
IAPI Code of Ethics, and auditor of public companies
are also subject to oversight by OJK/BPKP-RI.
Foremost ethical responsibilities of CPAs are needed
to their independency and as guidance on
permissible financial and another interest.
The fundamental ethics are integrity, objectivity,
professional competence and due care,
confidentiality and professional behavior.
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PROFESSIONAL ACCOUNTANTS
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ENRON WORLDCOM
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PROFESSIONAL ACCOUNTANTS
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CASE
GARUDA INDONESIA

• Enron was launched during the dot-com boom, and by 2001 it was executing online trades worth about $2.5 billion a day. Enron also invested
in building a broadband telecommunications network to facilitate high-speed trading.
• As the boom years, Enron faced increased competition in the energy-trading business.
• Under pressure from shareholders, company executives began to rely on dubious accounting practices, including a technique known as
“mark-to-market accounting,” to hide the troubles”.
1
• Mark-to-market accounting allowed the company to write unrealized future gains from some trading contracts into current income
statements, thus giving the illusion of higher current profits.
• Furthermore, the troubled operations of the company were transferred to so-called special purpose entities (SPEs), which are essentially
limited partnerships created with outside parties. Although many companies distributed assets to SPEs,
• Enron abused the practice by using SPEs as dump sites for its troubled assets. Transferring those assets to SPEs meant that they were kept
off Enron’s books, making its losses look less severe than they really were.
2
• Throughout these years, Arthur Andersen (BIG5) served not only as Enron’s auditor but also as a consultant for the company.
• In October Enron shocked investors when it announced that it was going to post a $638 million loss for the third quarter and take a $1.2 billion
reduction in shareholder equity owing in part to Fastow’s partnerships
• In 2006, Enron’s executive were convicted on varios charges of conspiracy & fraud. Arthur Anderson was found guilty of shredding evidence
and lost its license to engage in public accounting
3
ENRON SCANDAL
Notes:
The motive for the accounting crime is to inflate financial
performance so that it looks very high to get investors'
attention. Even Enron also hides its debts to deceive the public.
- The Fall of a Wall Street
Relevance to fraud triangle: motive, opportunity &

20XX presentation title 17
The Sarbanes-Oxley Act of 2002 is a federal law
that established sweeping auditing and
financial regulations for public companies.
Lawmakers created the legislation to help protect
shareholders, employees and the public from
accounting errors and fraudulent financial
practices.
One of the background of this Act is Enron Case.
SARBANES-OXLEY ACT

WORLDCOM SCANDAL
1
• The fraud was
uncovered in
June 2002 when
the company's
internal audit unit,
led by the vice
president Cynthia
Cooper, discovered
over $3.8 billion of
fraudulent
balance sheet
entries.
• Eventually,
WorldCom was
forced to admit that
it had overstated
its assets by over
$11 billion.
2
• The driving factor
behind this fraud
was the business
strategy of
WorldCom's CEO,
Bernie Ebbers. In
the 1990s, Ebbers
was clearly
focused on
achieving
impressive
growth through
acquisitions
3
• The scandal overall
stunned the
accounting
economy. The
former CEO of
WorldCom, Bernie
Ebbers was the
prime individual
to blame for the
scandal..
• The parties
indirectly involved
are KAP Arthur
Andersen and the
Worldcom
controller, namely
David F. Myers.
4
• Misappropriation
of assets (Asset
Misappropriation)
• False statement or
false statement
(Fraudulent
Statement)
• Fraudulent
statements
(window dressing).
• Corruption
Notes:
GONE Theory (www.jdih.bpk.go.id):
1. Greed
2. Opportunity
3. Need
4. Exposure

GARUDA INDONESIA SCANDAL
1
Pada tanggal 28 Juni 2019, PT. Garuda
Indonesia (Persero) Tbk resmi
dinyatakan bersalah dan dikenakan
sanksi oleh beberapa lembaga seperti
Kementerian Keuangan, Otoritas Jasa
Keuangan (OJK), dan Bursa Efek
Indonesia (BEI) atas kecurangan
pengakuan pendapatan pada laporan
keuangan di tahun 2018.
1.Oktober 2018, Manajemen Garuda
dan PT. Mahata Aero Teknologi (Mahata)
melakukan perjanjian selama 15 tahun
bahwa Mahata akan melakukan dan
menanggung seluruh biaya penyediaan
dan biaya lainnya pada CALK 47e.
2.Garuda mengakui penghasilan dari
perjanjiannya dengan Mahata sebagai
suatu penghasilan dari kompensasi
atas Pemberian hak oleh Garuda ke
Mahata.
2
Manajemen Garuda mengakui
sekaligus pendapatan perjanjian
tersebut sebesar USD 239.94 juta
dengan USD 28 juta diantaranya
merupakan bagi hasil yang didapat dari
PT. Sri Wijaya Air. Padahal perjanjian
belum berakhir dan diketahui bahwa
hingga tahun buku 2018 berakhir, tidak
ada satu pembayaran yang telah
dilakukan oleh pihak Mahata meskipun
telah terpasang satu unit alat di Citilink.
Dalam perjanjian tidak tercantum term
of payment yang jelas, jaminan dari
perjanjian tersebut. serta perjanjian
dapat berubah dengan mengacu kepada
kemampuan finansial Mahata.
Dari pengakuan pendapatan ini, PT.
Garuda Indonesia (Persero) Tbk terbukti
melakukan pelanggaran Peraturan OJK
Nomor 29/POJK.04/2016 tentang
Laporan Tahunan Emiten atau
Perusahaan
3
Pada akhirnya, Bursa Efek Indonesia
(BEI) memberikan peringatan tertulis
III dan mengenakan denda sebesar Rp
250 juta kepada Garuda Indonesia,
serta menuntut perusahaan untuk
memperbaiki dan menyajikan laporan
keuangan.
Otoritas Jasa Keuangan (OJK)
mengenakan denda masing-masing
sebesar Rp 100 juta kepada Garuda
Indonesia dan seluruh anggota
direksi.
.
Bagi Kantor Akuntan Publik (KAP), OJK
membekukan Surat Tanda Terdaftar
(STTD) selama 1 tahun kepada KAP
Kasner Sirumapea. Di sisi lain,
Kementerian Keuangan juga
membekukan izin terhadap KAP Kasner
Sirumapea selama 12 bulan.
Skandal keuangan yang dialami Garuda
Indonesia ini merupakan contoh kasus
kecurangan laporan keuangan atau
fraud jenis Fraudulent Statements.

REFERENCES
Elder, Randal J., Mark S. Beasley, Alvin A. Arens, & Amir Abadi Yusuf. (2009). Auditing and Assurance Services, 12th Editions,
Singapore: PEARSON.
Eilifsen, Aasmund, Messier, William F., Glover, Steven M, & Prawitt, Douglas F. (2014), “Auditing & Assurance Services”, Third
International Edition, New York : Mc Graw Hill Education.
Mulyadi. (2014). Auditing, 6th ed. Jakarta: Salemba Empat.
Yustunius Prastowo (2019), Kasus garuda dan Misteri Akuntansi. https://money.kompas.com/read/2019/07/18/152000526/kasus-
garuda-dan-misteri-akuntansi?page=all, accessed 11 December 2021
Kemenkeu (2019), Ini Putusan Kasus Laporan Keuangan Tahunan PT Garuda Indonesia 2018,
https://www.kemenkeu.go.id/publikasi/berita/ini-putusan-kasus-laporan-keuangan-tahunan-pt-garuda-indonesia-2018/, accessed 11
December 2021
https://www.investopedia.com/updates/enron-scandal-summary/
https://www.britannica.com/event/Enron-scandal/Downfall-and-bankruptcy
https://www.nytimes.com/2005/03/15/business/chronology-of-events-at-worldcom.html