Every business involves opportunities for fraudulent behavior leading to an increased demand for ethical auditors. Nowadays, auditors face a multitude of ethical issues, and it is even more problematic when auditors fail to meet the standards of professional conduct prescribed by the American Institute of Certified Public Accountants (AICPA). The objective of this paper is to analyze auditors' compliance with the code of professional conduct in relation to the effectiveness of their audits. The law requires auditors to report to the SEC any fraudulent activity discovered during the course of an audit. This is where Article I of Section 51 of the AICPA Code of Professional Ethics comes into play. The auditor may discover illegal acts or fraud while auditing a company's financial statements. In such cases, the auditor must determine his or her responsibilities in making appropriate judgment and reporting the discovery or suspicion of such fraudulent activities. Tyco International is an example of the failure of auditors to enforce their responsibilities. Former Tyco CEO Dennis Kozlowski and former CFO Mark Swartz sold stock without investor approval and misrepresented the company's financial position to investors to boost stock prices (Crawford, 2005). The auditors (PricewaterhouseCoopers) helped cover up the executives' actions by not revealing their findings to the authorities as it is believed they must have been aware of the ongoing fraud. Another example would be the Olympian scandal. The Japanese company, which produces cameras and medical equipment, used venture capital funds to cover its losses (Aubin & Uranaka, 2011). Allegedly, ... middle of paper ... initial information is not relevant to their job and they use that information to their advantage. American Express Tax & Business Services, a subsidiary of American Express Corporation, has acquired CPA practices throughout the United States. This practice by a non-CPA firm may encourage its employees to not serve the public interest since the firm is not subject to as many regulations as a CPA firm would be. A financial firm that provides accounting services poses a conflict of interest for its CPA employees. For example, the CPA provides accounting services along with financial services such as insurance sales. The CPA would approve the company's insurance products which may influence the objectivity of the CPA regarding the product offered to third parties (Ponemon, 1996). The scope and nature of the services provided greatly influence the accountant.