Importance Of Ethics On Accounting And Business At Large

When auditing a publicly held company, auditors need to observe principles. The ethical principles of the American Institute of Certified Public Accountants (AICPA) Code of

Financial reporting practices and ethics have manifested an ocean of literature. This has mainly come from organization theorists that address accounting practices. These theorists and professionals have given fresh accountability measures. Their ideals give this industry the tools needed to survive, grow and prosper. The way an organization prepares and reports its financial information and handles its daily operations is in essence financial practices, and in the way it accomplishes this reveals their ethical standards to which they adhere to. This paper will discuss the financial practices, ethical standards, and

“ In order to prevent fraudulent financial reports and statements, the American Institute of Certified Public Accountants(AICPA) has created ethical standards” (Ethical standards in a financial statement, 2011). These standards aim to make financial professionals accountable for their accounting practices. This includes the integrity of financial reporting and ensuring financial reporting is done fairly and factually. Financial accountants and professionals should maintain professional integrity, objectivity, and independence to reduce the risk of resulting legal action, loss of profits, and a poor reputation if improper financial reporting is done (Ethical standards in a financial statement, 2011).

Accountants are held to a higher ethical standards and they must performed their duties in compliance with standards or ethical values of honesty, integrity, objectivity, due care, confidentiality, which must be fully committed to. They must put clients or public interest first before their own. They must have and ethical values and maintain those values way beyond what the society or the company’s code of ethic. It is important that accountants’ behavior or ethical values is in conformity with the

     The accounting system is constantly changing. During these changes, it is important for accountants to adhere to the high ethical standards that they have always lived by. Adhering to the high ethical standards is an accountant's obligation to the public, the profession, and themselves. An accountant's ethical conduct usually lies within four different areas. This includes competence, confidentiality, integrity, and objectivity. NYSSCPA.ORG states, "Members also have a continuing responsibility to cooperate with each other to improve the art of accounting, maintain the public's confidence, and carry out the professions special responsibilities for self-governance," (Article 1).

The requisites in the Code of Ethics represented in the Sarbanes-Oxley Enactment have formed a foundation in the world of business because business administrators and stakeholders are now mandated to abide by the guidelines in the Act but they still need to be improved. When tackling the issue of social responsibility of a corporate it is of utmost significance that transparency be a key contributor, while ethics is considered by most in business as an oxymoron. People that lack moral standards will more often than not look for loo-holes in this relations due to their evil behaviors, however business principles and moral publication should be ensured so that such behaviors are dealt with in line with the law. “There has been a number of scandals reported in relation with accounting fraud and bad corporate governance as this are termed the biggest reasons why businesses are failing as high-profile organizations continue to subside. Investor confidence levels dropping in relation to financial capital markets due to investors incurring losses and correction mechanisms of the market that were in place were inadequate thus forced the enactment of the SOX Act by Congress (Jain,

As a response to several corporate failures resulting from corporate misconduct and fraud, Congress passed the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act is an accounting and business related law that was put into place to help boost confidence in financial accounting and financial markets (US Sarbanes Oxley Act). Some of its key provisions are that it requires the CEO and CFO to personally sign off on all financial statements, increases penalties for those who violate the act, and it protects whistleblowers (SOX 2002). Clearly, Sarbanes-Oxley can improve ethics in financial reporting and the purpose of this paper is to show how.

Ethics are a major issue which is a reason why the Sarbanes-Oxley Act was implemented. Before the Act, firms focused on growth but not as much on professional values. Revenue was the driving factor in auditing firms, and auditors were required to find new clients, keep existing clients, and cross selling. There were also penalties for not obtaining these requirements which could lead to termination (Jones III & Norman 2006). Since the Act many organizations have now implemented a code of conduct (ethics) which sets standards of how an auditor is supposed to act or a place to go to seek advice on handling different situations. The code of conduct or ethics can be viewed as a way an organization wants one to act or behave (Canary & Jennings 2007). Since implementation ethics is being taught more in college classes, and the reason for this is because of the huge scandals that have occurred. One study showed that the key leadership roles in a company often have a MBA, so teaching ethics will reach those leaders, and possibly prevent future ethical dilemmas (Sulivan, D. 2010).

When functioning in the corporate world, it is an essential to include moral ethics. Ethics is also particularly imperative when laboring with financial information. It is very hard to have faith in someone managing plenty of money. Corporations in the past have distorted their financial statements in regulation to look superior to stockholders, without thinking of the penalty that may be a consequence if they get caught. If a corporation does not encourage good quality ethical conduct within the business, it is

Ethics in any industry is important, but for Accounting professionals and those in need of their services, it is a particularly stressed element. Information provided by accountants is used to make major decisions, including investing, downsizing, expanding, etc, so accountants are expected to be competent, reliable, and have a high degree of professional integrity. Because of these high expectations, the professional accountancy industry, like many other professions, has adopted professional codes of ethics (Woelfel, 1986). These ethical codes go above and beyond the requirements for state or federal laws and regulations. There are several professional organizations within the

Businesses, investors, creditors rely on accounting ethics. The accounting profession requires honesty, consistency with industry standards, and compliance with laws and regulations. The ethics increase the responsibility and integrity of accounting professionals, and public trust. The ethical requirements influence the management behavior and decision-making. The financial scandal of Enron and Arthur Anderson demonstrates the failure of fundamental ethical framework, such as off-balance sheet transactions, misrepresentation of financial statements, inaccurate disclosure, manipulations with earnings, etc. The confronted accounting profession and concern for ethics in businesses forced regulators to revise the conceptual framework of accounting processes.

Imagine trusting your hard-earned money like your retirement savings to a financial adviser or Certified Public Accountants (CPA) only to lose it all in a fraudulent Ponzi scheme. In today’s world of business many organizations, financial planners and accountants are in the news due to the financial ethical breaches that have affected their customers, employees, and the general public. A CPA has to be responsible for their audits and take any punishments as a result of their mistakes, incompetence or illegal actions. CPAs are expected to have integrity in their work,

Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche

Ethical and legal obligations apply to all members of society. As one in society, the obligation to act in an ethical, law abiding manner on a daily basis is vital to the integrity of daily life. Many professions have their own code of ethics. Financial reporting is not exempt from such ethical and legal standards. One’s lively hood depends on decisions made in the business world. Business transactions are done daily and can impact one’s economic stability. Trust is placed in the hands of corporate America and an obligation of financial reporting to reveal a complete honest and legal picture of an entity’s accounting practices is important in attaining trust. This paper will discuss the obligations of

Ethics is the branch of philosophy that deals with the principles correlated to human behavior concerning the rightness and wrongness of specific conduct, and to the good and bad that influences and ends those actions (Ditonary.com, 2011). In other words, ethics is the choice people effect in regards to a decision they need to achieve. Without ethics directing the choice an individual makes, moral preferences of what should or should not be done becomes irrelevant. While ethical decisions are made every day there are two different regions in which these choices are made.