Importance Ethics in Accounting

Public outrage over the financial crisis that put our economy in recession demanded some type of reform to prevent this from happening again. The general notion, however, was that this was not foreseeable and couldn’t have been prevented with rules in place. So, the best thing in banker’s eyes or proponents of a self regulating economy was not to mess with what already works and do nothing. Because of the widespread economic instability some type of action was needed. The government has come out with reforms that carry little substance and hide behind the façade of actual change. The creation of specifications of these reforms and their enforcement are ultimately left to regulatory agencies “known for their ‘sound’ – that is to say ‘bank-friendly’ – cultures”(Prasch). No wonder it’s taken so long for the Dodd-Frank to be implemented. The regulatory agencies have continuously water-down the reform and delayed the process all to the benefit of the businesses it should be regulating.

“Fraud has never been legal, so why has it not been prosecuted?” (Prasch)

Renewed interest of ethical issues in the accounting profession is due to scandals involving accounting fraud, i.e. Enron, WorldCom, and Tyco. “Client pressure to present a favorable financial picture of a corporation’s health may lead to ethical breaches” (Adkins & Radke) “New calls for regulations…are specifically concerned with violations of ethical standards.” (Adkins & Radke) Studies have found the inclusion of ethical teaching in the collegiate level translates into improved moral reasoning in the profession. While studies have shown a link between the two, “accountants in general have not progressed to the same level of moral development as other college graduates” (Adkins & Radke)
Expectations gap between “the public, accountants in practice and academia, and accounting students”
First gap between the public and accounting professional is due to recent accounting scandals that have diminished