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Code Violations In Texas

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THE IMPACT OF ETHICS EDUCATION ON DISCIPLINARY ACTIONS; A COMPARISON
BETWEEN TEXAS AND OHIO
Executive Summary
In 2005, Texas began requiring the completion of a Board approved, university-level ethics course prior to sitting for the CPA exam in Texas. In 2004, Ohio began requiring regular ethics CPE for the first time. This paper evaluates the changes in the number of disciplinary actions and the type of code violations in these two states after implementation of new ethics requirements.
The results indicate that as a percentage of violations, Texas has seen a significant increase in felony convictions, while Ohio has seen significant increases in problems related to licensing, practice, and conduct unbecoming.
These results provide support …show more content…
This change was in conjunction with the added requirement that all licensed CPAs in Texas complete a Board approved four hour ethics course biannually. These new mandates were, in large part, a reaction to the devastating accounting scandals that surfaced in the early 2000s – including Enron, based in
Houston, Texas.
Hurtt and Thomas (Hurtt & Thomas, 2011) surveyed public accountants in Texas who were licensed between 2005 and 2010 and asked them for their perceptions of the impact of the required three hour university ethics course requirement. They found that respondents were generally in agreement that the course improved their ethical reasoning abilities. They were somewhat less positive about the impact the of the biennial ethics course required for licensed CPAs. Hurtt and Thomas also found that the number of reported ethics violations declined significantly over the 2005 – 2010 time period, which they interpreted as indicative of the success of mandatory ethics education. Although there are indications that ethical behavior among CPAs in Texas has generally improved, there do not appear to be any studies that examine changes …show more content…
Figures 2a and 2b show disciplinary actions broken down by type for each state.
Figure 1a Figure 1b
Figure 2aFigure 2b
As previously indicated in the literature (Hurtt and Thomas, 2011), overall disciplinary actions in Texas were generally lower after 2005, although there was an upward trend between 2006 and 2010. Specifically, the trend after 2005 indicated an increase in suspensions and revocations and a decrease in scope limitations/other and reprimands as disciplinary actions.
The number of disciplinary actions per 1,000 CPAs in Ohio was consistently higher than Texas over the entire study period. There was no consistent trend with respect to total disciplinary actions after 2004, when ethics CPE became a requirement in Ohio.
However, revocations were higher after 2004. To determine the significance in the changes in disciplinary actions, Texas cases were divided into three groups: 2000 – 2004, 2005, and 2006-2010. Ohio cases

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