Accounting Ethics: The Importance Of Ethics In Accounting

Superior Essays
Various accounting bodies establish their own ethics board that is in charge of creation and implementation of ethical standards. In America, these guidelines are established by the ethics committee of the American Institute of Certified Public at domestic level, with contribution of state level establishments. Execution of these ethical guidelines is performed by these bodies and by other legal bodies including SEC. Many accountants and firms have been punished by these bodies for their unethical practices. Some of the time, in accounting sphere, organizations issue their own set of ethical standards.
Ethical Issues in Accounting
Accounting ethics is concerned with making ethical decision while preparing and presenting the financial statements
…show more content…
There is severe punishment for tampering or distorting the accounting data or misreporting and other unethical behaviour.
The Importance of Ethics in Accounting
A professional’s key attribute is compliance to a thorough set of ethical rules. When a person deviates too far from ethical guidelines, his dependability and judgment become questionable. As much significant the understanding and upholding ethics is in other professional disciplines, it is equally important in accounting discipline.
Organizations are heavily dependent on accounting ethics. Investors, creditors and managers cannot trust the financial data’s accuracy unless they are confident that the financial accounting practices of the accountants responsible are straightforward, honest, reliable in harmony with the industry standards. If accounting ethics and is not maintained, investors and creditors might be susceptible to
…show more content…
Professional Competence and Due Care: An accountant l has an obligation to have proficient skills and information to provide competent services to clients. He should be committed and dedicated and must act as per the standards applicable when providing his services. Due care requires accountants to observe all accounting standards and to have competence, consistency and a comprehensive understanding of financial information.
4. Confidentiality: An accountant should not disclose confidential information of his clients to third parties without a professional or legal reason to take such step.
5. Professional Behaviour: An accountant should not involve himself in any act that dishonours his profession and ought to obey the rules and regulations established.
Why Accountants act Unethically?
There can be numerous reasons as to why accountants act unethically. The most common reason being the personal financial issues. Many of the accounting scandals that have occurred in the past showed how an individual, by exercising unethical practices gained a good amount of money. Moreover, in a pressure to deliver good results, some organizations implement these unethical practices. Some organizations also do this so that they do not have to pay large amount of

Related Documents

  • Great Essays

    Ir 230 Summary

    • 1807 Words
    • 8 Pages

    As tax professionals, it is essential to maintain and follow the rules and standards which govern our industry. It is expected for tax professionals to follow the ethical standards that contain information which governs the standards and provides guidance to become a professional taxpreparer. IRS Code 6694(a) focuses and addresses tax return preparers concerns including the conflicts involved from tax preparers who decide their claims may surpass an unreasonable position within sections or throughout the tax return. In furtherance of reducing tax liability for clients, tax return preparers may claim deductions or credits their clients are not qualified for. 6694(b) includes penalties for the tax return preparers who willingly or recklessly…

    • 1807 Words
    • 8 Pages
    Great Essays
  • Improved Essays

    Every organization has their own set of rules, guidelines, values, and procedure on how they want to manage their business. However, organizations question the importance of ethical coding. Are they beneficial to the corporation? Can they help raise and bring in profits? Or does it have the potential to cause risk to the corporation?…

    • 1533 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    This has been questioned because of the scandals and fraud that have been occurring throughout the Accounting field. I believe the Accounting field has still maintained its professionalism but its reputation has suffered. It has suffered because Accountants have been held socially responsible for the fraud that has happened. Accountants serve the public interest and their job is to ensure that the financial statements are reported according to Generally Accepted Accounting Principles…

    • 830 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    The ACCT 6120 course helps us learn how the company is governed. The lecture and tutorial introduce and recap a series of accounting, corporate law and auditing theories and practice with a specific case in each class to analyze how the theories apply, which could better help us understand the theories as well as thinking more critically. Before studying this subject, we all think as an accountant, the corporate governance is a little bit far away from us. However, through the content of each week, from the principle conflict to sub-committees and finally CSR, the core of the issue is the accounting information. The accounting information is the incentive to drive the management of company to take some actions, for example, earning management…

    • 939 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    White collar crime which is committed by the business managers, director or executive is due to lack of integrity in order to achieve high performance. In a global capitalism, the problem of lack of integrity is a candid situation. In order to achieve high performance the role of integrity is usually left by certain directors and it later then cause white collar crime such as corporate corruption. Codes of ethics tend to be reasonably general in their tenor, encouraging employees to display particular characteristics such as loyalty, honesty, objectivity, probity and integrity. Director’s code of ethics plays an important role in corporate governance in order to make sure that an organization achieves high performance.…

    • 156 Words
    • 1 Pages
    Decent Essays
  • Improved Essays

    Williford (2013) contends “at its core, an effective program protects an organization by detecting and preventing improper conduct and promoting adherence to the organization 's legal and ethical obligations” (para. 1). Internal accounting practices are typically headed by an ethics officer. An ethics officer creates ethics polices and enforces rules and regulations. The ethics officer enforces an organization’s code of conduct and code of ethics. A code of conduct and code of ethics define acceptable behavior and includes a statement of values (Ferrell et al., 2015).…

    • 845 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    AICPA Code Of Ethics Essay

    • 1178 Words
    • 5 Pages

    Assignment # 5 1. Visit the IMA website www.imanet.org . List, describe, and evaluate the requirements to become a Certified Management Accountant. What topics are covered on the exam for certification? Would you be interested in a career as a management accountant?…

    • 1178 Words
    • 5 Pages
    Decent Essays
  • Improved Essays

    The American Institute of Certified Public Accountants (AICPA) is the world’s largest representation of certified public accountants (CPAs). Established in 1887, the AIPCA serves as an advocate for CPAs, CGMAs, and has a mission of powering the success of global business, CPAs, and CGMAs through the use of education, resources, and advocacy (AICPA, 2016). The AICPA supports FASB by providing technical support, standard setting, and guidelines to CPAs nationwide. Because accounting is complex in nature this governing body works in collaboration with other institutes to ensure that organizations are adhering to the accounting standards established under the General Accepted Accounting Principles (GAAP). This paper will focus primarily on the AICPAs relationship in advising the FASB, their function in setting the auditing standards for public accounting firms and their relationship with authoritative rule making boards such as The International Accounting Standards Board (IASB), The Government Accounting Standards Board, and the HFMA Principles and Practice Board.…

    • 924 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    Equifax Breaches

    • 311 Words
    • 2 Pages

    Ethics are important in all aspects of life because they govern interactions that are considered socially acceptable. Ethics are important particularly in business, because when violated, can have serious ramifications for the success of a company and the welfare of its customers. Unfortunately, breaches do occur, most recently in the case of a credit card data company from Georgia. Equifax committed a serious breach of ethics after not preventing, detecting, and reporting an information systems breach.…

    • 311 Words
    • 2 Pages
    Decent Essays
  • Decent Essays

    The preamble and the six principles should help serve as a foundation and assist accountants to overcome any emerging ethical issues with ease. Accountants encounter ethical issues on a daily basis regardless of the industry he or she is…

    • 116 Words
    • 1 Pages
    Decent Essays
  • Improved Essays

    Ethic Violations

    • 830 Words
    • 4 Pages

    What are key components in managing company ethics, and can one’s business reputation be changed once an ethic violation has occurred if so why; or why not. While maintaining ethics where laws, reputation, and standards come to play can be difficult however, knowing the four concepts of managing these ethics are vital in helping to improve those inappropriate business practices from ever surfacing within one’s organization if applied properly; and consistently. “First there must be a reason to be ethical, and a definition of ethics must be devised, then there must be communication and training, third, there are ongoing activities that should be undertaken, and fourth, there must be follow-up” (Drafke, 2009, pg. 148). The first step to managing…

    • 830 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    There is no deny that ethical practices have many advantages, but it is more significant when the desire is for ethics itself, not its effects. Businesses should always encourage and offer ethical guidance for managers and employees, simply because it is the right thing to do. Overtime when this becomes a habit for businesses, maybe the market place will not be as corrupted. In the end, doing good because it is good is essential for any human beings, regardless of their jobs, characters, or where they are from. Two authors Scott Rae and Kenman Wong also quoted from their interviewees in their text “Beyond Integrity” on their opinions about what if honesty does not pay, and one answer reflects the importance of ethics over profits : “Is that important?…

    • 1291 Words
    • 5 Pages
    Superior Essays
  • Improved Essays

    Significance of ethics in managerial accounting is obvious: if managerial accountants don’t follow four ethical principles which include Honesty, Fairness, Objectivity, and Responsibility, the data provided by them to business owners and decision makes won’t be factual and objective. Disclosed information by an accountant might lead a business to serious problems and legal implications. Everyone within an organization is required to follow the four IMA’s overarching ethical principles and adhere to them. In the described situation that happened in Hi-Power Mower Company, the following stakeholders are affected by Marcus’s actions: Marcus Lum (the cost accountant for Hi-Power Mower Company), Marcus’s friend Ray Pon (the production manager for…

    • 767 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    External Ethical Issues

    • 940 Words
    • 4 Pages

    In this case, I will perform an audit of the payment process to establish if the delays are being deliberately caused by the accounting employees’. I will also seek to establish whether the payment system is up-to-date and meets the required international standards. The utilitarian approach to ethics will be employed together with the virtue approach to ethics. This is to establish which actions will produce the greatest efficiency at the lowest cost. This action also has to be in line with ideals and values of the company.…

    • 940 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Case 11.1: Accounting/Finance Ethics Scenarios Main Ethical Issue(s) Financial professionals are often confronted with fiduciary issues which challenge their integrity, honesty, and ability to be transparent with stockholders and customers. They may be pressured to make decisions or participate in accounting practices that are clearly against company policy, financial or accounting rules, regulations, and code of ethics. In all three scenarios, employees are asked to make such decisions. Concepts and Theories Relevant to Case Economics and the bottom line are often the driving force behind decisions that are made within the organization.…

    • 1208 Words
    • 5 Pages
    Improved Essays