Numerous scandals have resulted in the credibility of accountants and auditors being questioned in recent times. Concepts like triple bottom-line accounting, corporate governance, business ethics and codes of conducts are indicative of a growing concern with moral issues in the workplace and society in general. Is there a moral value system that can be used by future accountants and auditors to address these challenges, or should the concepts currently in place be emphasized more in the accounting workplace?
There have been countless cases recently of fraud, pay offs and unfaithful presentation in the accounting and auditing professions where assets are overstated and liabilities understated intentionally by big companies. Accountants and auditors are well trained to deal with the financial implications of their actions but their ethical judgment is questionable. A popular moral value system used is the James Rest Model, which contains the four basic psychological components of sensitivity, judgment, motivation and character, which would lead a morally mature person to the most ethical decision.
Moral sensitivity is the awareness that a moral dilemma exists. Moral judgment is to judge which course of action is morally right. Moral motivation is
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Future accountants and auditors should not try to be convinced to act in an ethical manner through the education but rather be more aware with regard to ethical issues in the accounting practices and taught what is the correct manner in addressing the challenge is in the profession. The ethics of the accounting concepts are morally correct if followed thus an emphasis on the principles of honesty and integrity and the duty of the accountants and auditors to their society must be introduced in the tertiary education in order to ensure that these principles are instilled in the students and thus demonstrated in
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.
The controller and accounting staff play a significant role in company ethics. Specifically, they manage all accounting transactions and are responsible for reporting earnings. Julie must demonstrate a strong ethical behavior and instill this value in her employees. In addition, senior management needs to lead their employees to build a company based on high morals and strong ethics. Without the appropriate leadership, the company will suffer as witnessed during the business scandals of a few years back. As stated by Sam DiPiazza, CEO of Prices Waterhouse Coopers, “It has become dramatically clear that the foundation of corporate integrity is personal integrity.” (2003)
...urvey of ethical behavior in the accounting profession. Journal of Accounting Research, 9 (2), pp. 287-306.
In order to recognize moral issues, one should be aware that his/her actions may harm or benefit other individuals. Moral judgment involves evaluating and formulating all the possible solutions to a particular moral issue to determine the ones which have a moral justification (Drumwright et al 440). It involves reasoning around all possible solutions to know the ones that are ethically sound. The third component, moral intention refers to the motivation a particular moral decision over another. When faced with two solutions to a particular dilemma, one may select the one that will increase his individual power or the one which is morally right (Kalshoven et al
Furthermore, ethical conflict often arises in the workplace and creates ethical dilemmas due to conflicts between personal interest and professional duties. Business professionals are required to balance the conflicting pressures of the corporate world with the need to act with integrity (ATT Ethics, 2013). This means they have to be truthful and honest in their professional duties and they have to benefit without exploiting others. They are challenged to remain professional by protecting the interests of the clients and the public, above considerations of self interest during ethical dilemmas (Duska, Duska & Ragatz, 2011). Accountants have ethical responsibilities to themselves, their clients, their employers, their families and their profession as their profession allows them to maintain a fiduciary relationship with the public (Senarante, 2011). These responsibilities are set out in the codes of conduct and the policies of businesses. The Accounting Professional and Ethical Standards Board (APESB110) addresses the potential ethical conflicting threats that occur in the workplace and the safeguards that can be applied to resolve them. The APES encourages members to act in the public interest and it also establishes a framework that requires members to identify, evaluate and address threats in
Ethical issues in business arise because of conflicts between an individuals personal moral philosophies and values and values or attitudes of organization in which a person works and a society in which one lives. Ethical issues can be identified in terms of the major participants and functions of business. Ethical issues related to ownership include conflicts between manager’s duties to the owners and their own interests, also separation of ownership and control of business. Financial issue includes, for example, the accuracy of reported financial documents. Ethical issues can acquire between manages and employees, then employees are asked to carry out assignments they consider unethical. Consumers and marketing issues are related to providing safe desired products for a fear price and not harming people and an environment. Accountants also face ethical dilemma, they have to deal with competition advertising commission. All of this places the accounting profession in situation of ethical risk.
Throughout the course of day-to-day business life, the business professionals come in contact with quite a sum of ethical dilemmas. There are various ways to handle these ethical dilemmas, but failure to follow the appropriate manner could result in an unethical outcome. The ethical guides related to the book definitely help students develop an ethical character that is sure to stand out for highly ethical companies. In addition, there are companies that test how ethical applicants are before hiring them, this in turn makes getting the job more difficult and costly. However, despite the high cost and difficulty said companies stay firm to ethics, guaranteeing they get top-of-the-line employees who will act in an ethical manner. Ethics is defined
Mintz, S. M., & Morris, R. E. (2011). Ethical obligations and decision making in accounting. (2nd ed.). New York, NY: McGraw-Hill/Irwin.
Recall the tale of an impoverished man who steals a loaf of bread to feed his starving family. In the instance when two moral obligations collide, the only way to comply with one is to violate the other. No matter which course is chosen, the other must be ignored.”(Freeman, Engels & Altekruse 2004) Stealing and breaking the law challenges the philosophy of breaking the responsibility of caring for one’s family. Accountants need to think clearly, challenge the possibilities, understand the options, and acknowledge the consequences. The choice to steal bread will vary from one person to another, but as Christians, dying of hunger is more of a reward than a consequence. Accountants can learn from examples of people and companies who have been faced with pressing ethical dilemmas. Accountants can learn from Bernard Madoff and his $61 billion ponzi scheme that ruined thousands of people’s life savings (Freshman 2012), or Enron “circumventing the rules, temporarily changing or suspending the rules, and outright thievery to achieve his objectives” (Gini 2004). Knowledge about the past will lead people to make wise ethical decisions. The world can clearly see the consequences that these people and firms have undergone and do not want to follow in that path. There are responsible businesses, like Frito-Lays who have a major go green campaign. They have a better business by reducing their natural
Accounting ethics has been difficult to control as accountants and auditors must keep in mind the interest of the public while that they remain employed by the company they are auditing. The accountants should take into account how to best apply accounting standards when company faces issues related financial loss. The role of accountant is crucial to society. They serve as financial reporters to owe their primary constraint to public interest. The information provided is critical in aiding managers, investors and others in making crucial economic decisions. An accountant is responsible for any fraudulent financial reporting. Some examples of fraudulent reporting are:
Ostapski, S.A. & Pressley, D.G. (1992). Moral Audit for Diabco Corporation. Journal of Business Ethics, 11(1), 71-80.
Graduates of accounting degree should prepare themselves to become professional accountants. Thus, accounting classes should not only focus on accounting knowledge but also provide general knowledge, organizational knowledge, and business knowledge. They must develop communication skills, intellectual skills, and interpersonal skills. These skills can be acquired through out of classroom learning activities such as internships. Training in internships are useful in providing assessment and accountability. Practically, it is impossible for the university system of education to bring the replica model of the business into universities and provide the skill based training to the students. This can be attributed to the reasons like limited budgets in higher education, limitation from the industry to separate their business process that can be shared with universities, lack of sufficient resources from the aspirants for the process. Accounting profession basically a national affair of any count...
The Code of Ethics of the professional accounting bodies in Australia and its fundamental principles.
Most organizations with their management team, as well as their employees, are usually challenged with ethical decision making in their daily activities. This arises due to conflicting circumstances involving moral values, ethical practices as well as legal perspectives. For instance, employees may be stuck in making a morally acceptable decision due to conflicting ethical consideration to their professional practice. Even though ethical dilemma situations may be rampant in business organizations, it can be mitigated by maintaining moral integrity through following some set of code of ethics.
Accounting is a very important term to our modern society. It is the career for men and women who at the start have their eyes set on top positions in industry, management, government, and general business. Accounting is a basic need of every businessman, from the operator of a filling station to the government of the United States. It's so important to our society. None of the business organization can operate without is. They are there-somewhere-in every business. In small business, people use pen, ink and skill keep the records. In large business, modern accounting machines are used to operate. Men and women are directing these machines in the accounting process. Wise businessmen enter business must have some accounting knowledge.