Ethical Issues in Accounting Profession

This research proposal identifies the ethical issues being faced by accounting professionals in managing the financial statements. It provides a background of auditing and accounting in the context of professional ethics.

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Ethical Issues in Accounting Profession

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Table of Contents
Introduction................................................................................................................................3
Research Problem.......................................................................................................................3
Research Objectives...................................................................................................................3
Literature review........................................................................................................................4
Recent ethical hazards in Accountancy..................................................................................5
Ethics in Accounting..............................................................................................................5
Managerial implications.........................................................................................................6
Limitations.............................................................................................................................7
Common Issues......................................................................................................................8
Pressure of manipulating figures........................................................................................8
Omission Sins.....................................................................................................................8
Issues of confidentiality.....................................................................................................8
Conflict of interests............................................................................................................9
Whistleblowing..................................................................................................................9
Research Design & Methodology............................................................................................10
Type of Research..................................................................................................................10
Research approach...............................................................................................................10
Type of data to be used in the research................................................................................10
Sample..................................................................................................................................11
Reference List..........................................................................................................................12

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Executive Summary
The main purpose of this research proposal is to identify the various ethical issues in the
profession of accounting and also understand the importance of practicing ethical working
standards in any organization. The research provides a background of auditing and
accounting in the context of professional ethics. An accounting professional or an auditor
needs to analyze the financials of a business, while dealing with pressure from different
parties who have interest in these financials. As such, they might be forced for manipulating
the figures or even might make mistakes due to the expectations of the stakeholders. This
creates an ethical liability or dilemma for the accountants and this assessment focuses on the
different ethical issues faced by them. The assessment identifies a research problem and
objectives of conducting the research along with relevant literature from various scholarly
sources. The research design and methodology states the type of research to be conducted and
the sources being used.

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Introduction
Accountants are responsible for handling a wide range of sensitive and privileged data in
their work. Accountants act as watchdogs of the business world ensuring a clarity in the
business reports and prepared according to the recognized standards (Alzola, 2017). It is also
common to face a range of ethical dilemmas since they work with numbers and finances of
the company. Therefore, it is important for accountants to maintain a professional conduct as
it plays a crucial role in building public trust in business practice and financial reporting.
Code of Ethics and ethical standards ensures integrity and reliability of the financial
statements. Integrity means being honest and trustworthy with the work and business. It is
advisable for accountants to uphold integrity and not to associate with any misleading
activities. Identifying any potential legal issues and rectifying those can be a concrete step for
an accountant to demonstrate their professional skills and concern towards company finances
(Ferrell, 2016). Since not every accounting professional is trustworthy in their field of work,
the following research proposal identifies the ethical issues being faced by accounting
professionals in managing the financial statements. The research will derive a research
problem, appropriate literature to support the topic, the methodologies of conducting it
following with a set of recommendations.
Research Problem
The research will help in identifying the underlying ethical issues affecting the profession of
accounting. Currently, the problem exists in identifying that if an organizational culture
influences unethical practices or the individual outlook of accounting professionals on ethics.
Furthermore, it is important to note that code of ethics must be embedded in the
organizational culture along with the individual attitude of accounting professionals. The
research will also address what can be done to reduce the ethical issues in the accounting
profession and provide with relevant recommendations for accounting professionals to work
accordingly.
Research Objectives
The research will identify the importance of ethics in accounting and how ethical values has
changed the working activities of an accountant. The research will also identify the recent
ethical hazards in the profession of accounting. It will also identify the influence of individual

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perception and attitudes towards adhering to ethical practices and standards by accounting
professionals. Furthermore, the research will help in identifying the views and opinions of
accounting professionals directly engaged in any given accounting role and the impact of
ethics on their work.
Literature review
According to Shawver and Miller (2017) accountants are apprehended as one of the elite
classes of the society. They are entrusted with carrying out activities relating to the handling
of finances of people and delving into the financial policies of various aspects in order to
follow the proper guidelines and arrive into conclusive decisions accordingly. The schemes
relating to various kinds of investments must be analyzed in such a manner so that proper and
appropriate services are delivered accordingly to the person concerned by the respective
accountant. The laws and policies in force relating to taxation must also be taken into
account by the accountant concerned as far as the disbursement of various taxes is concerned.
As far as the ethical considerations are concerned, accountants must act in such a manner that
there is no scope for any dispute regarding their duties. As opined by Duff (2017), the
accountants should not indulge into activities with regard to embezzlement of funds and
money laundering as far as misleading the general public is concerned with regard to red-
herring. Accountants must maintain confidentiality as far as the ensuring of data privacy of
the clients is concerned. It would result in the laying huge emphasis over the sensitivity of
clients as far as their financial records are concerned. If accountants are indulged in illegal
activities, they might be encountered with dire consequences as far as the imposition of
penalties for various kinds of white-collar crimes are concerned. As a result, it is essential for
accountants to maintain ethics during discharge of their duties. Such ethics primarily imply
that misuse of money must be avoided by accountants to a large extent. According to Eresi
(2017), accountants must also furnish true information to their clients and customers in order
to ensure an amicable relationship between them. Any correspondence between the
accountant and client must be treated as a privileged communication as far as the laws of
evidence in force is concerned. Such a communication must be treated with utmost
confidentiality during the proceedings in a court of competent jurisdiction. The taxes must be
evaluated by the accountant in question in a proper and appropriate manner so that the
concerned client does not face any kind of difficulty with reference to the filing of taxes. As a

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result, a hassle-free service would be ensured to the people by the accountants concerned as
far as the modus operandi of the financial industry is concerned.
Recent ethical hazards in Accountancy
According to Beets, Lewis and Brower (2016) there have been a huge number of scandals
related to the misappropriation of funds at various parts of the world. As a result, questions
are being raised at huge levels from various quarters with reference to the ethics of the
accountants as far as the discharge of their duties is concerned. Such duties primarily imply
the delivery of consultancy services to people as far as the handling of their finances is
concerned. The common inference drawn upon by the authors implies that any financial data
of clients with reference to their investments made, taxes paid and assets purchased must be
treated with utmost confidentiality by the concerned accountants as far as the compliance
with basic ethics of the profession of accountancy is concerned. As opined by Flory and
Phillips Jr. (2013), the various kinds of businesses concerning clients which imply that the
information regarding the businesses may be quite sensitive. As a result, it is essential to
maintain confidentiality of data as far as the financial aspects of the clients are concerned.
The authors have also commonly emphasized over the fraudulent activities undertaken by
financial organizations thereby resulting in the various kinds of scandals which subsequently
highlights the malicious intentions of such organizations. The authors have also laid emphasis
to a huge level upon the misappropriation by various authorities with reference to the assets
as far as the employee of a company is concerned. As opined by Cameron and O'Leary
(2015) the confidentiality of client’s data plays an extremely vital role in the influencing of
the stability of the markets related to monetary functioning taking account of the future. The
authors also seem to conclude upon a common agreement with reference to the
misrepresentation of financial statements of clients by the organizations as far as deception of
the clients is concerned. The accountants are to ensure that fairness is maintained in the
delivery of services on their part taking account of the situation concerned and addressing of
the issues in a comprehensive manner. Cameron and O'Leary (2015), have commonly laid
importance over the secrecy to be maintained while conducting trade as far as the financial
aspects are concerned with reference to the management concerning the prevention of the
leakage of information. Financial control measures should be introduced in order to ensure
stringency regarding confidentiality as mar as financial management by the accountants in an
appropriate manner is concerned.

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Ethics in Accounting
As stated by Eresi (2017), despite the common aspects regarding the rationale behind the
ethical considerations for accountants, there are certain differences in the perspectives
concerning the ethics to be followed by accountants while delivering services related to
consultancy on financial matters. The differences also imply the disclosures about the
variations in annual reports published as far as the functioning of the organization is
concerned with reference to the modus operandi of their finances. If the investors are
furnished with the disclosure of information, they may refrain from making investments into
the organization. However, some authors are of the opinion that it is ethically correct for an
organization to make appropriate disclosures of information regarding financial aspects. It
has been stated by Flory and Phillips Jr. (2013) accountants are compelled to falsify
information in order to protect the organization form being encountered with ethical issues.
The contrary views of other authors imply that it is the role of the accountant to ensure
fairness on part of the organization as far as the handling of fiancés is concerned. Due to such
factors, there are dichotomies relating to the interests of people associated with the concerned
financial organization. As argued by Martinov-Bennie and Mladenovic (2015), the ignoring
and overlooking of vital information by the accountants have a massive impact over the
decisions which are to be concluded upon by the investors with regard to the making of
investment in the organization is concerned. As a result, the stock market may be affected by
the role of the accountants as they are involved in dealing with that kind of financial
information which is quite sensitive in nature. However, it is also viewed by some authors
that accountants would have a massive role to play as far as the blowing of the whistle is
concerned with regard to the disclosure of unethical activities on part of the organization as
far as the sensitive information of financial aspects is concerned. It is imperative that the
stability of the organization depends on the decisions made by accountants. According to
Massey (2017) it is also imperative that that the top level management takes decisions with
reference to the modus operandi of the organization. Such a contrasting approach implies the
different perspectives people have with regard to the ethical considerations of accountants
with regard to the handling of finances and providing appropriate and comprehensive services
to clients as far as the fostering of an amicable relationship between the accountant and the
client is concerned.

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Managerial implications
According to Picard (2016) that the codes relating to ethics to be followed by accountants
have been formulated in order to ensure transparency of the modus operandi of the
organization. However, challenges with regard to the following of ethics are still faced by
many accountants as far as the hiding of vital information related to finances is concerned.
Merchant and White (2017) deduced that various corporate giants dealing with financial
services have been embroiled in scandals and subsequently liquidated due to the poor and
inappropriate approaches undertaken by the accountants as far as the contravention of ethics
is concerned. As a result, the authorities and regulatory bodies concerned must play an
extremely vital role with reference to the implementation of such codes in a stringent manner
so that ethical considerations for accountants are ensured in an incredible manner. According
to Eresi (2017), as far as the managerial aspect is concerned, the Chief Executive Officers
and other related officials along with the top-level management can also have a vital role to
play with regard to the addressing of ethical issues on part of the accountants as far as the
transparency of the organization is concerned.
Limitations
Due to the constraints imposed by finances and time, the study could not be carried out to a
higher level as far as the ethical considerations of accountants are concerned. It seems that
still lot more needs to be done with regard to the improvements to be made in the drafting and
execution of ethics as far as an appropriate code of conduct to be followed by accountants is
concerned. It would subsequently set the tone for the formulation of codes of practice for
accountants at various spheres depending upon the kind of the organization. However, the so
called experts in the disciplines relating to finance simply play the blame game instead of
working on the improvements as far as the addressing of loopholes and grey areas is
concerned. Additionally, the accountants are not trained in a proper manner in order to tackle
the issues as far as the ethics are concerned. This study has provided a wider scope and
opportunity for future research analysts and enthusiasts to conduct and undertake research
and analyses in a deeper manner so as to derive the desired outcomes in an incredible manner
as far as the facilitating of the ease of research is concerned.
Thinking of the accounting professionals and staff as people equipped with specialized skills
and as glorified mechanics required for keeping the financial operations of a company
running significantly is easy. Despite of the above stated fact being true, the accountant
professionals play another role, which is of watchdogs in the corporate world. One of their

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responsibilities is to make sure that financial statement and reports are stated by them
accurately and in accordance with the acountancy standards (Thomas, 2012). As such,
accounting professionals often put themselves in certain situations which can be legally or
ethically dubious. There are various ethical issues which can be found in the accountancy
profession.
Common Issues
Pressure of manipulating figures
When things in a business firm do not go well or as expected, one can get into high amounts
of pressure. As such, the temptation of leaning on the accountant of the business for fudging
the numbers and figures of the financials can be tough to avoid. This is a big issue for
accountants whether they are a hired firm or employees of the same business. Accountant
professionals have a specified legal and ethical obligation of reporting the financial
statements correctly and accurately. Doing so can push them into being open to criminal or
civil liability, which could be potential hurdles in their careers. On the other hand, if the
accountants do not continue with the instructed operations, they might have the fear of losing
their profession, as they also need to make a living.
Omission Sins
An accounting professional can feel pressurized of simply leaving things out of financial
statements if they casted a shadow over the firm. This might be the other side of
misrepresentation or misstatement of figures, and psychologically, this might be easier. For
instance, a child might deny of some bad behaviour in front of his mother, or can simply hide
it and keep her unaware of the same. However, both are equally unjustified. If an investor
buys or invests in a business without being aware of the potential issues underlying within the
same, he might not be in a position for assessing or identifying the potential risks accurately
(Klimek and Wenell, 2011). Similarly, an accountant who states about a company exactly as
they expect might be leaving gaps in the information related to management, which is
necessary for running the firm effectively. Such gaps could come back in the form of issues
or threats to the firm if major business decisions are made based on incomplete information.
Issues of confidentiality
Just like lawyers and doctors, accounting professionals spend most of their time in dealing
with information and data that are highly confidential. If these professionals use such
information insignificantly, or fail in protecting the confidential data, then both can prove to

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be issues of ethics for them. One of the most obvious issues pertaining within business firms
these days is insider trading which is related the usage of confidential information for taking
undue advantage of a future drop or growth of the firm’s value (Duska, Duska and Kury,
2018). The other concerning issues are carrying forward company knowledge and
information to its competitors, or making a possibility or loophole for outsiders to steal
valuable information. However, taking a principled stand of certain ethical issues could prove
to be a confidentiality breach. If sensitive moments or issues of a business are left abruptly by
an accounting team, and everyone seeks for reasons for the same, the outsiders might
anticipate of something suspicious.
Conflict of interests
Another issue that can be very difficult to be identified is conflicts of interest. For instance, if
the senior accounting team of a company is allotted with bonuses on the basis of the stock
prices, they might develop a conscious or unconscious motivation of making decisions which
would be favourable towards the stock prices that are higher. In the long run, such decisions
might not be beneficial for a firm or its stakeholders. Similarly, accounting professionals who
are responsible for doing the auditing of businesses might follow the principle of not asking
questions to which they do not necessarily require answers (Uysal, 2010). It is quite difficult
to think of the biases that are built within the culture of company. However, it can help in
keeping the issues from recurring over time.
Whistleblowing
Another ethical dilemma faced by professional accountants is the question of when to blow
the whistle on a division or a firm which might be misstating or manipulating its numbers and
figures unethically (Uysal, 2010). It is one of the concerning issues within a company. The
issue could become larger if criminal investigators or regulators are brought inside a business.
If the information provided by the accountant is too damaging, it might result in a business
losing huge values of its stock. As such, numerous investors and stakeholders would be put
into risk and financial jeopardy. There is a high risk of intimidation and backlash.
Dealing with ethical dilemmas and issues can be quite struggling for accounting
professionals. There are quite a certain number of ways of dealing with the ehtical dilemmas
of the accounting profession. Firstly, the potential legal issues should be identified by an
accountant who should also explore and find out if the issues are regulated by a policy or law.
It is always recommended for accountants to take the views and opinions of outsiders as it

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can help in understanding an issue in a broader sense. The parties such as the firms,
stakeholders or people that could potentially be affected by the issues or by the decisions of
an accountant. These parties should be identified properly. Finally, accounting porfessionals
should always seek for profesional advice. If they need to report any illegal or unethical
beaviour of their enployer or concerned company, they should seek legal counsel or access
the resources of whistleblowing of the company.
Research Design & Methodology
Type of Research
The study will adopt an exploratory research design. An exploratory design will help in
identifying and investigating the problem which is not clearly defined (Nardi, 2018). This
research will be conducted to gain specific knowledge on the existing problem faced by
accounting professionals due to unethical practices. For conducting this research, it will start
with a general idea and the research will become a medium for a further scope of research in
the field of ethical accounting practices. The use of both primary and secondary sources will
be used to gather the relevant data required to identify the ethical issues and the need of
ethical practices in an organization.
Research approach
The research will use qualitative research method that will focus on obtaining the relevant
data through a structured interview method having open-ended questions and conversational
communication with the respondents. The use of qualitative research methods will allow an
in-depth research on the specified topic and based on the responses, their perceptions and
attitudes will be understood (Taylor, Bogdan and DeVault, 2015). This will provide a way of
conducting a further research on the existing ethical practices, challenges and detecting the
ethical values in the profession of accounting.
Type of data to be used in the research
The research will be conducted with the use of both primary and secondary methods of data
collection. The primary sources used for conducting this research will be from an interview
process. The interview will contain open-ended questions which will record the responses
from a small sample of 50 different accounting professionals. The information will be
collected from the participants by a discussion protocol to assist the in-depth interview. The

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interview will not be more than 30-minutes but will contain all the relevant information and
data required for further research.
The secondary research will be conducted by using relevant articles, journals and reports
being published on the various websites. The secondary sources will help in gaining an in-
depth knowledge in the field of accounting and the ethical issues being faced by accounting
professionals.
Sample
The sample frame refers to a list of people or items from a population from where a sample is
taken. The research will be conducted by taking a sample of 50 people or accounting
professionals directly engaged in the profession. A random sampling method will be used to
gather the responses from the respondents. A simple random sampling will be taken to
continue with the research. This technique will make sure that every element of the
population will be given an equal chance to be a part of the selected sample. The sample size
will be a size of 50 accounting professionals to answer to the interview questions.

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