The Ethics for Internal Auditors in Communicating Inappropriate Financial Procedures to Management

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Ethical dilemmas occur every day in the accounting industry. We have witnessed scandals such as Adelphia, Enron, and WorldCom. They demonstrate the extent of unethical practices. The introduction of Sarbanes Oxley Act and stricter accounting standards have definitely helped mitigate unethical acts. Unfortunately, the incorporation of these systems is not sufficient to accomplish ethical business practices. Businesses use internal auditors to help protect their financial reputation. An internal auditor’s role is to assure the organization’s operations are conducted systematically, properly controlled, and with discipline (The Institute of Internal Auditors Research Foundation 3).

The Internal Auditor position was created, as a result of a rapidly growing American economy, in the mid twenty century. The developing American economy, also known as the golden years, included inappropriate business practice. These practices included, but not limited to, stock manipulations and false business statements. Maintaining an ethical position will avoid the breakdown of organizational progress and the opportunity to correct inappropriate accounting procedures. As the need for proper accounting increased, the demand for internal auditors took place. An internal auditor will review and assure the quality of cash disbursements, cash receipts, corporate governance, ethics, financial reporting controls, fixed assets, project management, sales, and stock controls within an organization (J.L. Vergaert). It is important for the auditors to abide by and ensure the company follows the accounting policies and standards via proper communication and suggestion for correction of any inadequate process found while performing their functions.

In addition t...

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