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Ethics issues in accountancy profession
Ethics in the accounting profession
Importance of accounting ethics
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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 …show more content…
This essay will talk about the ethical standards and code of conduct in the accounting profession, in particular for CPA Australia, the importance of ethical education for accounting students, the importance for ethical financial reporting and also addresses ways to deal with conflicts that arise from ethical issues in the …show more content…
It is highly essential for accountants and business professionals to maintain a standard of ethical conduct in the workplace as the nature of their work places them in position of trust. (Senarante, 2011). Accountants have the responsibility to ensure that their duties are performed in accordance with the five fundamental principles set out in the Code of Professional Ethics such as integrity, objectivity, professional competence and due care, confidentially and professional behaviour (Cunningham et al. 2014). Accountants are expected to be reliable and trustworthy. Thus they are required to act ethically in relation to their clients, employers and the general public in order to provide quality services in the best interest of the society (Eginiwin & Dike, 2014). The International Federation of Accountants (IFAC) have established a code of ethics for accountants, allowing each specific country to add their own national ethical standards to the code to reflect cultural differences. The code provides emphasis on the five fundamental principles as well as resolution of ethical conflicts. In Australia, professional accounting bodies such as CPA Australia, Institute of Chartered Accountants in Australia (ICCA) and the Institute of Public Accountants (IPA) adopt the Australian Professional and Ethical
This organization has been setting ethical standards and publishing the Code of Professional Conduct for the profession since the early 1900s. A Code of Professional Conduct is necessary for any profession to help maintain strict ethical standards. This organization is the basis of ethical reasoning in the accounting profession because of what the Code of Professional Conduct covers. The code is comprised of a preamble and six articles. The preamble and the six articles serve as a foundation to provide guidance and guidelines for accountants to overcome any emerging ethical issues with ease on a daily basis. The six articles’ purpose is to protect the public, investors, and creditors. The AICPA Code of Professional Conduct consists of: Responsibility, Public Interest, Integrity, Objectivity and Independence, Due Care, and Scope and Nature of
Ethic is defined as a set of moral principles or values, a theory of system of moral values, the principles of conduct governing an individual or a group. In all its form, ethics deals with what is good and bad, and with moral duty and obligation. Hence, ethics is either a set of principles held by an individual or group, or the discipline that studies the set of principles (Duska, Duska, & Ragatz, 2011). Ethical theories provide principles that can be useful when solving dilemmas whereas business ethics refers to the ethical values that determine the interaction between a company and its stakeholders. The three major approaches in normative ethics identified are virtue ethics, deontological and utilitarianism (Kraut, 2012), but in this paper the focus is on the two major one proposed for the accounting profession – deontology and utilitarianism.
Brooks, L., Dunn, P. (2012) Business & Professional Ethics for Directors, Executives & Accountants. 6th Edition. Thompson South-West.
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.
Proverbs 10:9 states: “People with integrity walk safely, but those who follow crooked paths will slip and fall” (New Living Translation).” This Scripture suggests that individuals who do not walk in integrity follow “crooked paths.” They walk in ways that are not morally sound, pure, and honest—but in ways that are corrupt. Clients want accountants with integrity. Thus, integrity is critical to the public trust. As a matter of fact, one of the general definitions of integrity provided by the AICPA Code is that it is a quality from which the public trust derives. Also, it is an element of character fundamental to professional recognition, and it requires members to be (among other things) honest and candid within the constraints of confidentiality (Duska, Duska & Ragatz, 2011). Integrity in the accounting profession involves adhering to the rules and principles of the profession. This includes remaining free of conflicts of interest and maintaining client relationships in which the accountant can remain objective in discharging his or her responsibilities. This requires independence in fact and in appearance as mandated under section 1.200.001.01, Independence Rule the AICPA Code. In other words, no one should be able to view the accountant as being biased with respect to a client’s financial reporting due to an improper client relationship. Lack of integrity in accounting practices has been, and continues to be, a key element in the downfall of many institutions which has hurt the public trust in the accounting
[1] Ethics is defined as “the code of moral principles and values that governs the behaviour of a person or a group with respect to what is right or wrong” (Samson and Daft, 2005, p.158)
Ethics are norm of conduct that distinguish between what is acceptable and unacceptable behavior within a person’s personal and professional rim. Morals are protected values that people uses as a guidance in their everyday lives. Each of these principles are ideal characteristics that helps develops one’s personal code of ethics. Code of ethics is a standardized method, procedure, and guideline in which many companies, organizations, institutions, groups, and individuals, govern themselves by, to bring a unified perspective on how individuals / members should act, analyzes problems, and seek clarity of situations and issues as they serve their community. Within any “different disciplines, institutions, professions, and persons each have their own standards for behavior that suit their particular aims and goals.
ethical issues. The purpose of this assignment is to offer reasons ethics and integrity will be
Business ethics are best described as moral principles within the business environment of what is right or wrong, and guides the way a business is run. The ethical decisions made by businesses can affect their company in a positive way while unethical decisions made can affect them in a negative way, although these unethical decisions are not necessarily illegal. The same rules or principles that regulate a person’s actions also applies to the business environment. Running a business in an ethical way involves differentiating between right or wrong, and then making the right choice. Ethics can be extremely important in business decision making.
As an individual and ambitious accounting student with plans to pursue a career in public accounting, I recognize the importance of understanding my core personal values and behaviors that guide the ethical principles of my everyday actions. I recognize that I have a responsibility to myself, family, future colleagues, future clients, and the general public to follow certain guidelines and conduct myself in an ethical manner. Furthermore, I acknowledge the idea that ethical dilemmas will occur, but I am committed to my “Personal Code of Ethical Values” (as seen above) that represent my desire to live ethically in every facet of my life.
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.
Malden, MA: Wiley-Blackwell, 2003. Elias, Rafik. A. The "Determinants of Earnings Management Ethics Among Accountants.
Ethics has become a more central issue in the field of accounting in the past decade, due to the Enron scandal and other similar ethics breaches at large corporations. One of the results of this newfound focus on ethics is the recent rewriting of the Code of Ethics of the American Institute of Certified Public Accountants (AICPA, which is the American national association for certified public accountants), in order to better educate practicing accountants on acceptable practice. Another is a greater interest in how ethics are incorporated into the education of prospective accountants, raising questions such as whether addressing ethics within and across a variety of accounting courses is adequate, or if a separate course devoted entirely to
Ethics is simply doing the right thing. In the business situation ethics are the moral concept of a firm getting through it organizational duties ethically.
Ethics are moral principles or values that govern the conduct of an individual or a group.It is not a burden to bear, but a prudent and effective guide which furthers life and success. Ethics are important not only in business but in academics and society as well because it is an essential part of the foundation on which a civilized society is built.