Why Is Ethics Important?

“ In order to prevent fraudulent financial reports and statements, the American Institute of Certified Public Accountants(AICPA) has created ethical standards” (Ethical standards in a financial statement, 2011). These standards aim to make financial professionals accountable for their accounting practices. This includes the integrity of financial reporting and ensuring financial reporting is done fairly and factually. Financial accountants and professionals should maintain professional integrity, objectivity, and independence to reduce the risk of resulting legal action, loss of profits, and a poor reputation if improper financial reporting is done (Ethical standards in a financial statement, 2011).

Accountants are held to a higher ethical standards and they must performed their duties in compliance with standards or ethical values of honesty, integrity, objectivity, due care, confidentiality, which must be fully committed to. They must put clients or public interest first before their own. They must have and ethical values and maintain those values way beyond what the society or the company’s code of ethic. It is important that accountants’ behavior or ethical values is in conformity with the

Accountants owe the duty to act in a professional and ethical manner concerning clients, as well an obligation to respect the laws that are involved with the profession. This is where a crossroads of ethics and legalities are formed and potentially the defining point of crucial decision-making. Stephen Richards and his actions under employment with Computer Associates (CA) are then examined in light of this concept.

Accountants and auditors are often faced with having to make decisions that bring ethics into question. The American Institute of Certified Public Accountants (AICPA) sets the standards for professional conduct that dictates what accountants are allowed to do and what they are not allowed to do. However, issues do arise that have not been addressed by the AICPA and when this occurs it is up to management to use their best judgment to make a determination about the ethical implications of their actions (Allen, 2011).

Ethics can be defined as a set of values used to judge whether an action is morally right or wrong based on the duty and obligation of an individual (Hess, 2007). Hence, in view of a given task that has to be performed, we are able to judge the performance as being good or wrong based on some moral principles. Hutchings (2010) notes that ethics can be held by an individuals or a groups of people. This paper will be predicated on the thesis that both the utilitarianism and deontological viewpoints have potential to impact the accounting profession and have to be adopted with care.

Ethics in any industry is important, but for Accounting professionals and those in need of their services, it is a particularly stressed element. Information provided by accountants is used to make major decisions, including investing, downsizing, expanding, etc, so accountants are expected to be competent, reliable, and have a high degree of professional integrity. Because of these high expectations, the professional accountancy industry, like many other professions, has adopted professional codes of ethics (Woelfel, 1986). These ethical codes go above and beyond the requirements for state or federal laws and regulations. There are several professional organizations within the

This study aims to understand what effect has an ethical framework in accounting. In particular, we examine the influence of ethics on earnings management, financial reporting, and external accounting. Today, the commercial environment reveals the unethical behavior of management and accountants through the manipulation of accounting records to boost the company’s stock price, falsified financial statements to mislead investors, failure of auditors to correct errors and omissions due to client’s pressure and personal material interests.

In conclusion, this highlights the importance of ethics in accounting. A high level of trust placed on accountants to produce accurate reports and data and many critical decisions are based on their reporting and their unethical behaviour can result in major consequences. Additional importance is laid on the application of ethical accounting behaviour by the fact that vast majority of people are affected every day by the decisions of accountants they will never meet. These people contribute to pensions funds, work for companies, actively invest, or are in some other way a stakeholder in various companies. In broad terms,

Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche

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

The importance of information and work in the realm of accounting requires all accountants to remain consistent in standards and ethics. However, perception of an entire culture can shift as seen in the Arthur Anderson debacle in 2002 and the establishment of Sarbanes-Oxley Act (SOX). Also, there is the ongoing concern of global companies attempting to adhere to the same standards and ethics, when social standards differ around the world. Studies show that, “people from different cultures can be expected to hold different implicit theories, which lead to divergent cognitive processes and behavior” (Wong-On-Wing and Lui, 2013, p. 17). Therefore, having an understanding of each ethical system has never been more crucial in organizational culture in the accounting profession. “Accounting ethics incorporate social standards of behavior as well as behavioral standards that relate specifically to the profession”

Accounting is the planning, recording, analyzing, and interpreting of financial information. It is a professional designation, which places the utmost emphasis on integrity and strong ethical standards. The decisions accountants make effect the decisions of others.

Introduction. The authors study the financial scandals and the recent financial crisis to demonstrate the gap between market processes and accounting standards. The IFRS and U.S. GAAP differ in contrary nature of accounting standards. GAAP is considered as rule-based standards, while IFRS viewed as a principle-based. Therefore, the professional judgment on financial improprieties is highly important (p. 479). The main objective of the research is to specify the impact of ethical setting on judgment and decisions of accountants. The code of ethics and systematic ethics trainings can diminish the inconsistencies from accounting policies. The study is important due its analysis of mechanisms and alternatives of decision-making, and the influence of code of ethics on chief officers’ strategic choices (pp. 484-485). The authors focuses on the problem: how accounting standards contribute to the professional judgment, company financial performance, and earning management. The authors discuss issues that arise because of the unethical financial reporting.

Explain the role of ethics and social responsibility in developing a strategic plan, considering stakeholder needs.

Accounting is commonly depicted as the most boring, yet reliable profession possibly offered in the business school. But what if accountants managed to scam millions? How about billions? Accounting is a seemingly innocuous career, but corporations can manipulate their current financial state and become more appealing to investors with some clever help from their accountants. Accountants could embellish financial statements or secure higher balances for wage expenditures. A typical corporate mistake is improperly segregating duties of employees. If someone has more than one task, such as recording inflow of cash and controlling where it goes, then a chance of embezzlement can occur. Embezzlement is when an employee, usually under good faith, takes a small sum of money to pay personal finances under the guise of paying it back, but does it so often that they eventually get caught by an increased amount of missing cash. The SEC, Securities and Exchange Commission, carefully monitors these conniving, dishonest businesses. To enhance the duties of this agency, President Bush in 2002 signed the Sarbanes-Oxley Act, which dictated that publicly traded companies must maintain adequate internal control systems. Despite the strong reinforcements of regulating agencies such as SEC commissioners and auditors, corporations still manage to circumvent the proper accounting techniques that prevent fraudulent behaviors. Because of the consequences observed from the Enron and WorldCom