Importance of Ethics in Accounting and Auditing - Applied Business Research

This research paper explores the significance of ethics in accounting and auditing, ethical rules and regulations, ethical threats, and ethical auditing. It also examines the impact of auditors' commitment to audit quality and ethical regulation of their profession.

Running head: APPLIED BUSINESS RESEARCH
APPLIED BUSINESS RESEARCH
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1APPLIED BUSINESS RESEARCH
Table of Contents
1 .Research Title: Accounting and Auditing ethics.........................................................................2
2 Partner organization (if applicable): NA......................................................................................2
3. Background of research...............................................................................................................2
4. Research problem........................................................................................................................3
5. Research Objectives.....................................................................................................................3
6. Research Questions.....................................................................................................................4
7. Literature (source and keywords)................................................................................................4
8.. Data collection plan....................................................................................................................5
8. Ethical Consideration...................................................................................................................5
References........................................................................................................................................6

2APPLIED BUSINESS RESEARCH
1 .Research Title: Accounting and Auditing ethics
2 Partner organization (if applicable): NA
3. Background of research
The purpose of the research is to examine the role of ethics in accounting and auditing as
well as develop ethical analysis in order to emphasize the importance of ethical decision- making
during the process of auditing. Audit in financial accounting has been categorized by self-
governing valuation of justice to which financial statements of the organization are made and
presented by supervisors (Kung and Li Huang 2013). One of the crucial activities of the
accountants in an organization is auditing. They design audits in order to assure accountability
and reliability in few areas, which includes- legal compliance, accounting systems. In this
respect, one of the vital things for the auditor is ethics as they are responsible for inspecting
accounting practices in the company. There are several ethical threats that are connected with
this auditing profession, which involves- self- review threats, self- interest threats, familiarity
threats, advocacy threats, management threats and so on. As a result of such ethical threats,
numerous ethical dilemmas occurs within the organization. Recent evidences reflect that
numerous ethical issues occur for most of the multinational enterprises owing to their technical
regulations and varied value systems (Brown-Liburd, Cohen and Trompeter 2013). For instance,
Eron is one of the multinational enterprises that went bankruptcy owing to financial fraud,
registration of false claims in the financial statements, false accounts and sell of projects at loss
to the bureaucratic enterprises. Ethical auditing however enables these companies to establish
proper guidelines relating to limits of behavior (Stefaniak, Houston and Cornell 2012). It also
helps to determine both external and internal consistency of value systems of the companies.
Moreover, most of the organizations implements various approaches to carry out ethical auditing

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such as- reviewing and monitoring work ethics. The underlying research problem is that the
information regarding factors causing ethical issues such as financial frauds within the enterprise
cannot be easily obtained. The issues relating to various approaches integrated by the companies
has been another problem for this research (Greaney et al. 2012).
4. Research problem
The main research problem in this paper is to explore auditor’s ethical reasoning level in
various decision- making situation. Another research issue is that the auditors of most of the
enterprises were not keen to give information about the causes of ethical issues that occur during
the auditing process (Louwers et al. 2015). In fact, the information regarding ethical programs
adopted by these companies could not be attained accurately. Additionally, breaches of such
ethical programs within the companies has not been investigated effectively in this study.
5. Research Objectives
The main objective of this research study is to analyze importance of ethics in auditing
process. The other objectives include-
 To examine ethical rules of auditing and quality of auditing
 To assess impact of the auditors commitment to the audit quality and ethical regulation of
their profession.
 To recognize different aspects of ethical auditing with respect to auditing standards and
laws governing auditing job
 To recommend regarding audit procedure development and implementation of effective
solutions to such ethical issues in order to improve auditing ethics.

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6. Research Questions
The research questions are given below-
 What is the significance of ethics in auditing procedure?
 What are the different methods of implementing ethical auditing?
 How the ethical issues in auditing hampers the business?
 Whether there are any ethical rules and regulation of auditing profession?
 How ethical auditing aid the companies to improve their financial performance?
7. Literature (source and keywords)
The different sources from where the literature of this specific research topic has been
reviewed are given below-
 Zadek, S., Evans, R. and Pruzan, P., 2013. Building corporate accountability: Emerging
practice in social and ethical accounting and auditing. Routledge.
 Cibtech.org. (2018). [online] Available at:
http://www.cibtech.org/sp.ed/jls/2014/01/00(25).pdf [Accessed 10 Aug. 2018].
 Greaney, A.M., Sheehy, A., Heffernan, C., Murphy, J., Mhaolrúnaigh, S.N., Heffernan,
E. and Brown, G., 2012. Research ethics application: A guide for the novice researcher.
British Journal of Nursing, 21(1), pp.38-43.
The keywords that are utilized in the literature review section of this study includes- auditing
ethics, ethical rules, ethical threats, internal and external auditing, ethical culture, ethics
programs, ethical code and so on.

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8.. Data collection plan
Data for the research study is usually collected by using two methods such as- primary
and secondary. The primary data is gathered from surveys, interviews, observations while the
secondary data is collected from academic journals, books, company’s websites and other related
sources. Furthermore, the data obtained for conducting this research is further analyzed by using
qualitative and quantitative method. The qualitative method of data analysis involves interview
procedure while quantitative data analysis method involves surveys, observations.
For this research study, qualitative method will be used through interview procedure. The
interviews have been conducted for the employees, auditors and stakeholders of few
organizations. The information collected for this research helps to assess about auditors behavior,
financial frauds that have been already occurred within the enterprise and other scandals arising
within auditing procedure. In fact, this method also helped to obtain accurate results of the
research study.
8. Ethical Consideration
The researcher should consider ethical problems while conducting the research study.
They must always abide by rules and regulation of research project for avoiding any kind of
confusion (Feizizadeh 2012). They must also consider ethical issues while analyzing and
formulating the research plan. In this study, the confidentiality of data has been properly
maintained such that the auditors or employees names are not disclosed in this study. In fact, the
emotions of these people are also taken into account while framing the questions (Thomas 2012).
Furthermore, the voluntary participation of employees are considered for avoiding any conflict
during the interview procedure.

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References
Brown-Liburd, H.L., Cohen, J. and Trompeter, G., 2013. Effects of earnings forecasts and
heightened professional skepticism on the outcomes of client–auditor negotiation. Journal of
Business Ethics, 116(2), pp.311-325.
Feizizadeh, A., 2012. Strengthening internal audit effectiveness. Indian Journal of Science and
Technology, 5(5), pp.2777-2778.
Greaney, A.M., Sheehy, A., Heffernan, C., Murphy, J., Mhaolrúnaigh, S.N., Heffernan, E. and
Brown, G., 2012. Research ethics application: A guide for the novice researcher. British Journal
of Nursing, 21(1), pp.38-43.
Kung, F.H. and Li Huang, C., 2013. Auditors' moral philosophies and ethical beliefs.
Management Decision, 51(3), pp.479-500.
Louwers, T.J., Ramsay, R.J., Sinason, D.H., Strawser, J.R. and Thibodeau, J.C., 2015. Auditing
& assurance services. McGraw-Hill Education.
Stefaniak, C.M., Houston, R.W. and Cornell, R.M., 2012. The effects of employer and client
identification on internal and external auditors' evaluations of internal control deficiencies.
Auditing: A Journal of Practice & Theory, 31(1), pp.39-56.

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Thomas, S., 2012. Ethics and accounting education. Issues in Accounting Education, 27(2),
pp.399-418.