Most profit making companies understand conducting business within an ethical reporting framework is the proper way to report quarterly results. Often accounting managers are given opportunities to exercise judgment in financial reporting, using their knowledge about the business to improve the effectiveness of financial statements. However, accounting professionals need to perform their job tasks in accordance with laws, regulations, and technical standards while supplying information that is accurate, clear, concise, and timely. At the same time, managers need to be free from pecuniary anxieties, and disclose all relevant information that could influence an intended recipients understanding of the analyses or reports. However, when managers have incentives to produce positive results, profit management can occur while misleading those who review the company’s financial statements.
Ethics plays a vital role in developing accurate and high quality financial statements for management, financial institutions, and investors. As management utilizes financial statements to make decisions regarding the operations of the business, it is necessary to review accurate financial statements to make strategic decisions about the future of the organization. Investors and financial institutions require accurate financial statements to make informed decisions upon whether to invest funds into the organization or the wisdom of lending funds to said organization.
...al and Accounting Ethics Research. Journal of Accountancy, Vol.210 Issue 4 (H.W. Wilson database), 38-41.
This reflects in the content of each article’s practical approach and thorough analysis on various relevant topics in the different fields of accountancy. For instance, under the Essentials section, the reader will find a theme of issues causing a state of transformation within the profession. Since, “The popular press constantly exposes one ethical lapse after another, such as the many recent corporate accounting scandals, cheating scandals in academic research, and organized cheating on college campuses (54). “There is no question that ethical scandals are all around us.” “The State of Ethics in Business and the Accounting Profession,” authors address the issue that is on many businesses, accounting academics, and practitioners’ minds. Can ethics can be taught, whether the profession is placing proper emphasis on the teaching of ethics, and whether the current approach is the correct one. Where the “The Basic Field Guide to Fraud,” focuses on the effect of what happens when the ethical structure of a profession breaks down. “We have seen — with Enron and others — how quickly an unethical environment can destroy value for innocent stakeholders, as well as how swiftly a company can crumble.” The effects of ethical behavior in accounting are far reaching in the economy. Every business entity has an accounting professional provide information at some point in the organization’s life cycle. The cause and effect portrayed in the flow of the two article’s relationship gives the reader an informative analysis of an issue that seems to be plaguing the accounting
Ethics is derived from the greek word ‘ethos’, which means character and the latin word ‘moras’, which means customs. Thus ethics is defined as the personal and professional behaviour with regards to the values, customs, behaviour, principles and morals of society (Senarante, 2011). Professional ethics can be defined as the personal and corporate standards of conduct that is carried out by members of a particular profession. For example, medicine, accounting and engineering. Professional ethics or business ethics cover larger areas than the law, and although an issue may not be illegal, it can be considered as an ethical issue (ATT Ethics, 2013). Business ethics can be defined as the policies and principles that act as operational guidelines
Ethical and legal obligations apply to all members of society. As one in society, the obligation to act in an ethical, law abiding manner on a daily basis is vital to the integrity of daily life. Many professions have their own code of ethics. Financial reporting is not exempt from such ethical and legal standards. One’s lively hood depends on decisions made in the business world. Business transactions are done daily and can impact one’s economic stability. Trust is placed in the hands of corporate America and an obligation of financial reporting to reveal a complete honest and legal picture of an entity’s accounting practices is important in attaining trust. This paper will discuss the obligations of legal and ethical standards of practice in the financial spectrum.
(18) Loeb, Stephen, and Joanne Rockness. "Accounting Ethics and Education: A Response." Journal of Business Ethics 11.7 (1992): 485-90. Web. 23 Jan. 2014
Over the past fifteen years the accounting profession has been hit with a number of scandals. Many of the accounting scandals were due to the attitudes and actions of some of the top executives at some of the largest accounting firms and financial institutions. Their actions led to company closures, clients enduring difficulties and stock market failures. The profession which was once known as a highly trustworthy profession has had their ethical, technical and moral standards questioned.
The aim of this paper is to provide the framework of the current professional accounting code of ethics. What are the ethics and how we define them? In this report we try to determine the main ethical principles that will establish the right and
When working within any professional body, an individual will be subjected to circumstances in which personal ethics will come into play. The Accounting profession is no different as ethical questions arise as part of any working day and can effect how an individual or the company conducts business. These questions can vary greatly in practice from selection of new customers to the rates at which those clients are going to be charged. These ethical questions are raised regularly within the workplace and each employee will react to them differently. The varying reactions will depend on the morality of each individual, or each employees own ‘ethics’. As each employee has their own set of values companies must be alert to the fact that some of their employees may have more ‘flexible’ morals than others. This ‘flexible’ morality can lead to corruption and manipulation within the workplace and can give companies serious problems. As a result of this, all of the main professional accounting bodies have begun to re-introduce mandatory courses teaching ethics to their employees. As well as this, ‘A Guide to professional ethics’ was published which contains a number of different principles in order to govern the behaviour of accountants and also to identify and reduce the greatest areas of risk with respect to unethical behaviour.
The level of accounting quality in terms of earnings management, timely loss recognition and more value relevance were better in firms that applied IAS. All this being presented in a very relevant manner clearly displaying compositions of the firms selected. Evidence showed that there was less earnings management in firms that applied IAS as the IAS left less room for manipulation to results to present desired financial picture of a firm, earnings were less smoothed and hence there was larger variances in earning reported specially with respect to earnings, cash flows and accruals and hence showing the actual picture to users of financial statements. (Lang, ) Secondly, when evaluating value relevance is was concluded that as inherently high as well, the value for listed and regulated firms the relevance was high before and after adoption, hence no significant change. Lastly, with reference to timely loss recognition, again it was evidenced that all loses were timely reported and not allowed to be carried forwards or left to be recognized on the discretion of the management, as consistency in policies is expected to be applied once IASs are adopted. There were some evidence however, that suggested that in some firms belonging to particular industries, in some countries showed no significant variance in time loss recognition and
Financial reporting is an example of an ethical problem for an organization or business. Many busin...