Ethics in accounting

Topics: Accountant, Bioethics, Business ethics Pages: 11 (390 words) Published: October 29, 2014
Ethics in Accounting










Systematic body of theory and knowledge
Extensive education process for its members
Ideal of service to the community
High degree of autonomy and independence
Code of ethics for its members
Distinctive ethos/culture
Application of professional judgment
Existence of a governing body

Attributes of a profession

• Service ideal
• Market control view

The service ideal vs. the market control
view

Accountants work in:
• private companies and government organizations as
accountants, internal auditors, budget offers, financial
controller
• consulting organizations as advisors to the public
• public accounting firms as auditors

Accountants work in different
capacities

Accountants’ work affects people both within and outside the organization
• Employees of the entity
• Shareholders
• Bondholders
• Government
• Public in general
• Financial institutions
• The profession
• The environment

Stakeholders







Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour

Professional codes of ethics

a) Many high profile companies failed in the US, Europe, and Australia during the last decade.
• Enron
• Worldcom
• Parmalat
• HIH
b) More 60 finance companies failed in New Zealand since
2006.
• Bridgecorp Ltd
• Nathans Finance NZ Ltd

Accounting profession in crisis

• These collapses created a crisis of confidence in the
accounting profession.
• The autonomy of the profession has been curtailed
because of the perceived ethical lapses of professional
accountants.
• Professional autonomy is not guaranteed by the society.
• The society is the ultimate giver of professional
autonomy.
• The profession deserves the autonomy as long it lives up to the societal expectations.

Accounting profession in crisis

When faced with an ethical conflict, an employee should:
• The established policies of his/her employer to try to
resolve the conflict.
• If it is not resolved, consult the manager.
• If it is not resolved, consult senior managers.
• If it is not resolved, consult some independent bodies
within the organization (e.g., the audit committee, the
board of directors)
• If it is not still resolved, resign.

Ethics decision tree

1. What are the facts of the case?
2. What are the ethical issues in the case?
3. What are norms, principles and values related to the
case?
4. What are the alternative courses of actions?
5. What is the best course of action consistent with norms,
principles and valued identified in step 3?
6. What are the consequences of each course of action?
7. What is the decision?

AAA 7-step ethical decision model

THE END
GOOD LUCK WITH YOUR EXAMINATION

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