Ethical Effects Of Accounting

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Accounting is the system of recording and summarizing business and financial transactions; as well as analyzing, verifying, and reporting the results of a business to external and internal users (John, J. Wild, 2016 pg. 4). External users can be anywhere from potential investors to an audit agency. Internal users are people within the company that can use the information to get a picture of how the business is doing. In society, accounting is used to show the world how a business is performing in order for them to make a decision to invest in the company, use its services, or to pull out their investments. Businesses use financial statements in order to find areas they need to fix such as; cutting some expenses, whether it is worth keeping…show more content…
People have found ways to cheat money out of companies and customers through different types of fraud and schemes. Sometimes workers, our society, and business owners are not watching out for the clues. Fraud can be described all opportunities a person can devise by which an individual resort to, to obtain an advantage over another by deceiving, and creating false accomplishments (G. Michael Lawrence, Joseph T. Wells, 2004). A scheme can be described as a large scale systematic plan or arrangement for gaining assets or putting an idea into effect. The effects that corrupt financial accounting has on businesses and society needs to be further analyzed, as well as possible solutions and can be done through three objectives: Understanding the different types of corruption found in accounting, identifying and analyzing the effects corruption, and making people aware of solutions put in place to limit the amount of corruption happening that are going…show more content…
Due to embezzlement a company can incur losses with the continual movement of money in employee’s pockets. Inflation on the other hand, is not bad in the short-term for businesses, but effects society the most. If businesses are ever caught practicing illegal activities, their reputation will be at stake with consumers, potential investors, partners, etc. The most important thing a business should have with its clients is trust and without it a business is likely to fail. Companies might see the need to inflate their inventory to recover lost resources and in turn can provoke other companies to outdo them. With the losses of its market share, resources and time it will also lose its customers, partners, and the general public trying to convince them that they are still worth putting their trust in. The shareholders and investors start to pull out of the business because of loss of confidences that the company can provide them a secure holding in their finances. With bribery, asset misappropriation and embezzlement a company’s resources are not being used the way that they should be, causing the company to be inefficient. Resources that would be used for important operations within the business to secure customers, partners, and clients are instead being wasted or benefiting the people who misusing
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