Accounting Ethics
Ethics in Accounting is crucial to the development of any organization. As indicated in the code of ethics and professionalism principles of accounting practitioners, they should provide information to guide operations in an internal setting and to provide sufficient information to allow outside financiers to make valid judgments about the creditworthiness of a company. Thus, many people rely on the decisions made with the accounting data. As such, the accuracy of the information is vital. If a practitioner’s ethics are compromised, then the resulting information will be, as well.
In our current case, in which Craig, the financial controller, are doing some unethical spending of company’s fund. I, as a senior auditor should maintain professionalism and transparency in giving financial reports. Thus, I will still raise the matter with my auditor partner, even though they are in very good relationship. Actually, this decision is crucial to any accounting practitioners. Decision making process is a knowledge-intensive process which can be considered as an important part of professionalism. In addition, it is considered as a central factor for giving relevant information because it provides the company the assurance that each and every operations and activities made by the organisations adheres to a common goal which is set in the decision making plans.
My decision to raise the issue with my auditor partner, Richard is one of best decision that I should do. Actually, this decision is based on the American Accounting Association model, which is to:
Ø determine the facts- Dishonest practices of Craig i.e. spending of company funds for personal purposes.
Ø define the ethical issue – The ethical issue here reflects to dishonesty of Craig and the Integrity of accounting reports.
Ø identify the major principles, rules and values involved – One of the major principles involved in this case is Integrity. Accounting practitioners should be straight forward and honest in performing professional services. Aside from this, objectivity is also at stake. It is important for me as senior auditor to be fair and do not allow prejudice or bias, conflict of interest or influence of others to override objectivity. My professional competence and due care will be involved if I allow practices like this. As accounting practitioner, I should perform professional services with due care, competence and diligence. Recognize the continuing duty to maintain professional knowledge and skill at a level required to ensure that an employer or client receives the advantage of competent professional service based on up-to-date developments in practice, legislation and techniques. Act in a manner consistent with the good reputation of the profession and refrain from any conduct that might bring discredit to the profession.
Ø specify alternatives- The alternative in this case is not tell or ignore the dishonestly of Craig and maintain good relationship with your auditor partner. This act is actually based on Deontology ethics in which the consequence is not considered as compared to action.
Ø compare the values and alternatives – the alternative will actually maintain good relationship with your auditor partner and even to Craig but my professional competence, integrity and due care will be questioned.
Ø assess the consequences - If I allow dishonestly of Craig, this will cause negative impact to the business of my long-standing client. Aside from this, my professionalism as accounting practitioner will be at risk.
Ø make a decision- Reveal the dishonesty of Craig and give the right information in accordance to financial accounting reports. This is actually based Teleology ethics in which it considers actions or behavior according to the consequences of that behavior.
In any current business organisation, progress that the company is making is recorded as basis for, among a host of other essential things, decision-making and as a benchmark for measuring the firm’s performance for the period under scrutiny. Accounting ethics is to direct accountants to abide by a code of conduct that facilitates, if not encourages, public confidence in their job. Hence, accounting fraud (mispricing or mis-stating financial items in business balance sheets or other accounting books) is an example of what ‘accounting ethics’ try to avoid.
Credit:ivythesis.typepad.com
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