Essay about Accounting Is A Function Of Economics And Ethics

1032 Words 5 Pages
Managing Earnings Financial reporting relies on ethical, accurate, and structured information to relay the economic present and future economic position of an organization. Accounting is a function of economics, measurement error, and bias (Baginski, Bradshaw, & Wahlen, 2015). There is a gray area regarding management and ethics. Often managers have different opinions of what is ethical and unethical, particularly with manager earnings. For example, a manager thinks shipping early to reach an earnings goal is ethical. The ethical boundaries are important and should be standardized, because when management manipulation is used to drive up profit reporting, there are long-term consequences.
Managing Short-Term Earnings
Accounting provides a representation of a company’s earning, value, position, and strength. Ironically, managers view manipulating short-term accounting earnings by accounting methods as less acceptable than manipulating operating decisions or procedures (CSU Global, 2015). Managers can impact production, sales, and core processes within an organization. A disturbing element of the ethical rationalization by managers is they often feel bending the rules is o.k. when as long as they are legally doing so. In my opinion, companies that allow manipulation are infusing immoral seeds within the organization. If a manager feels it is justifiable to manipulate the short-term earnings to look good on this month’s accounting reports, others within the…

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