Accounting Ethics and Sustainability

Accounting ethics and sustainability

Running Head: Essay
Introduction
This essay will include two parts. The first part will deal with the study of 3 ethical dilemmas
in accounting along with the study of relevant facts for each concern. The second part of this
essay will include the study related to the identification of sustainability challenges, which
impacts the accounting profession as well as threatens the existence of our planet.
Part 1: Ethics
Ethical Dilemma in Accounting
The ethical dilemma is a situation in which the accountant faces the problem while making
the decision that test the model system or Ethical code. The ethical dilemma comprises of two
terms, that is, the ethics which means what is wrong or right for a behaviour or conduct and
the dilemma which define the situation where the individual has to make a decision
considering various different options. It is a complex situation which stimulates the
intellectual conflict where taking an option is preferential. The ethical dilemma is a situation
which has been fundamentally out-looked as the situation which is quite uncomfortable. The
ethics in accounting is a field which is the parcel or part of human ethics and business ethics
with the study of moral judgement or values which are to be applied to accountancy. The
accountancy profession and the accountant is itself a public service and due to the distinct
accounting functions and latest corporate malfunctioning, the emphasis has been drawn to
adopt the ethical standards within the internal control system of the organisation. The
scandals or collapses have outcome in widespread disregard for the accounting profession
reputation and in order to safeguard from the fraud in accounting and cover up the criticism,
various remedies and regulations have been created by the government and accounting
organisations for the improvement in norms of ethics among the accounting profession.
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Running Head: Essay
The three ethical dilemmas which will be studied in this essay are the conflict of interest,
pressure from management, and fraudulent or illegal activities as per the case of Toshiba
Scandal, which exemplified a massive failure in governance, and corporate culture in the year
2015.
1. Conflict of Interest: The concerns which revolve around the conflict of interest are
requirement to secure the assignments and independence and the pressure from the
client in order to alter the financial statements or the pressure from management to
either affect the financial statements or the financial transactions in order to retain a
job or work or the fraud perpetrated by the friend or a relative.
2. Pressure of Management: The ethical concern for the accountants who are working
in a new pressure or stress to create the financial statement and balance sheet because
of the burden on public companies like Toshiba to complete at high level. The ethical
concern of search accountants becomes maintaining the reporting of profit, liabilities
and providing the true and fair view of the financial statements without considering
the pressure placed on them by the corporate officers or the management. Further, the
financial records may easily the altered by the accountants or auditors who are
unethical and may alter the company financial reports in order to justify the false
image of success of the company. When the Securities and Exchange Commission
identifies the fraud, the company may lead to down fall.
3. Fraudulent or illegal activities: This generally arises when the accountant or the
auditor look for the advantages from the fraudulent transactions or the activities and
when the auditor or accountant would get an advantage in terms of promotion or
awards if the organisation is seen to be done well. This may also arise when the
accountant lacks enough skills and knowledge in the field.
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Running Head: Essay
Importance of Ethics in Accounting: The behaviour and functions carried out by the
auditor and the accountant need a high ethics level. All the users or stakeholders of the
financial statement rely on the annual financial statement of the organisation and thus, they
manage to use this information while making the decision about the investment. They depend
on the accountant’s opinion who prepare the statement as well as on the auditors who are
accountable for verifying the prepared financial statement in order to present of fair and true
view of the organisation. The ethics knowledge can assist the auditor or an accountant to
overcome the concerns related to the ethical dilemma while permitting them for the making
the right choice that will provide the advantage to the public who rely on the reporting of
auditors or accountant, although it may not advantage the company.
Case - Relevant facts about Toshiba Scandal: Toshiba accounting scandal is an ethical
concern because the company failed to manage the corporate governance by overestimating
the profits by dollar 1.2 billion and steeping toll on the loss of trust and share prices while
firing lot of executives (Carpenter, 2015).
Why it is an ethical problem: It is an ethical concern because it led to the unethical culture,
dishonesty and disloyalty. Further, it is complex to control the accounting ethics mechanism
as accountants and auditors are provided with the full access to the public interest by making
sure that they remain employed by the organisation in which they are accountable as the
auditors. The auditors are required to know what is the best way to implement the accounting
standard even in the consequences of crisis that may lead to significant loss to the company
or even the discontinuation while looking at different accounting standard scandal within the
critics of accounting profession (Du, 2015).
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