Importance of Business Ethics in Managerial Accounting

Topics: Business ethics, Ethics, Business Pages: 2 (466 words) Published: November 1, 2013
Importance of Business Ethics in Managerial Accounting
When companies don't see the importance of business ethics in managerial accounting they usually end up down the same road as Enron: bankrupt. And while that isn't always true, the importance of business ethics in managerial accounting cannot be understated if you want your company to be a success.  

Why Ethics Is Important in Managerial Accounting
The Enron scandal is probably the most well-known example of improper accounting ethics on the part of a business' managers. But others companies have also played a role in increasing awareness about the importance of ethics in the business community: WorldCom, Rite Aid, and Global Crossing, to name a few.  

Financial reversals, jail terms, and business collapse have been the fruit reaped from unethically-sown business practices by these entities. But the financial reversals experienced by average investors and others who trusted the leadership involved in these company's accounting practices have also suffered, spurring regulatory changes to protect the average person in the future.  

Competence and Confidentiality
There are four ethical components of the IMA of the United States (Institute of Management Accountants): competence, confidentiality, integrity, and credibility. Integrity and Credibility

Third, it is important that managerial accountants refrain from any activity that could be construed as a conflict of interest. Managerial accountants that participate in activities that are a clear conflict of interest are breeding distrust. Even if they are not showing any favoritism to a production shift supervisor who happens to be a relative, other shift supervisors will assume that they are fudging numbers if that supervisor's production performance is better.  

Fourth, honoring ethical procedures in managerial accounting cannot be accomplished unless the managerial accountant discloses any and all relevant information available to the person...
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