Importance Of Ethical Standards In Accounting

734 Words 3 Pages
Ethics are 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. 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 when making decisions based on what is morally right or wrong (Eginiwin & Dike, 2014). Business ethics in broader sense relates to the ethical codes of conduct that members …show more content…
These ethical codes of conduct, further acts as a framework for business professionals in the decision making process. It also informs the members of a particular association about the acceptable behaviour and how to go about the daily operations in their profession (ATT Ethics, 2013). This essay will talk about ethical standards and code of conduct in the accounting profession, in particular for CPA Australia, the importance of ethics for accounting, the importance of ethical financial reporting, the importance of ethical education for accounting students and also addresses ways to deal with conflicts that arise from ethical issues in the profession.

Similarly, ethics are important to the accounting profession because it informs and guides the professionals to perform their duties morally and ethically (Eginiwin & Dike, 2014). It is highly essential for accountants and business professionals to maintain a standard of ethical conduct in the workplace as the
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This is due to the series of corporate scandals that resulted from unethical financial reporting by accounting firms. Some examples of scandals include the downfall of the Lehman Brothers, which sparked the onset of the Global Financial Crisis (GFC) and the downfall of the Enron Creditors Recovery Corporation due to Arthur Andersen’s unethical financial reporting (ATT Ethics, 2013 & Cunningham et al. 2014). It is often disputed that accountants have been the main cause of the decline of ethical standards of a business, despite having an ethical code of conduct set out by the IFAC and APESB (Senarante, 2011). In the research report ‘Rebuilding Public Confidence in Financial Reporting – An International Perspective’ (2003), the IFAC established that the scandals were the result of further underlying issues. They also signified that the development of ethical standards and reporting mechanisms should be highlighted as a method to improve the public confidence in ethical financial reporting. Accountants, as business professionals are expected to behave ethically in conjunction with the ethical code of conduct. However, the involvement of accounting firms with corporate scandals reveals that they have not followed the ethical standards and principles set out in the codes. Thus, ethics in accounting have emerged into a key area of apprehension due to the various corporate

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