The Ethical Challenges of Professional Practice
In recent months, a sense of chaos has prevailed in Ireland. Scandals, which emerged in banking sector, have done horrendous damage to credibility of accountancy profession and reputation of Irish financial system. In these difficult times, it is very important to understand what the ethical challenges of accountancy profession are.
As professionals, accountants are required to act with integrity and professionalism. They need to understand that ethics and compliance are very important in their professional life. Corporate collapse of Enron, WorldCom, and recent banking scandals have shown that unethical accounting practices and ill-judged decisions can have devastating consequences for a firm, individuals, investors and, in the case of audit work, the capital markets. Unfortunately, we are likely to see more corporate scandals. This report discusses the ethical challenges of professional practice. First section examines the role of accountancy profession in serving society and the importance of ethical values such as integrity, objectivity and independence. Second section briefly discusses unethical practices in Anglo Irish Bank, whistleblowing, and the need for strong ethical culture.
Accountancy profession and public interest
Professional accountants are individuals who have the knowledge and expertise recognized and valued by society. They play a key role in ensuring public trust in financial reporting and business practices. Because of the complexity of accountants’ role, clients and the public at large must rely on their professional judgement and expertise. Professional expertise must be applied with honesty, integrity, professional scepticism, and avoidance of misinterpretation.
Accountancy profession is self-regulated which means that quality of service is judged by peers rather than by government officials. If a profession loses good reputation and credibility, the consequences can be serious, not only for the offending professional but for the entire profession. Trust between accountants and those who rely on their services is fundamental to the profession. Therefore, professional ethics matter and it should be an everyday feature of professional life. One of the distinguish characteristics of any profession is the existence of a code of professional ethics. Professional ethics include standards of behavior for members of given profession. According to Cosserat (2004): Professional ethics for accountants refer to the objectives of the accountancy profession to work to the highest standards of professionalism, to attain the highest levels of performance and, generally, to meet the public interest requirements (Cosserat, 2004 p.71). Professional accountants regularly face ethical issues. “An ethical issue is simply a situation, a problem, or even opportunity that requires thought, discussion, or investigation to make decision”(Ferrell, Fraedrich, Ferrell, 2008 p.63). Ethical issues can arise at any time perhaps as a result of conflicts of interest, undue pressure, influence or relationships. Sometimes ethical issues arise out of pressure to do wrong and sometimes they arise from having to choose from one or more right answers. When facing ethical issue, professional accountants should prioritise their loyalty on the public interest. According to Brooks (2006): The primary fiduciary responsibility of professional accountants should be to the public or to the public interest. Otherwise, the expectations of stakeholders in society will not be met, and the credibility of corporations will erode, as will the credibility and reputation of the accounting profession (Brooks, 2006 p.12). The public’s requirements for trustworthy financial reports cannot be met unless professional accountants focus their loyalty on the public...
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