Ethical Dilemmas in Accounting Profession

Running head: MANAGEMENT
MANAGEMENT
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Part A
Introduction
Individuals engaged in accounting profession comprises of a substantial accountability
towards general public. Accountants offer information regarding companies which facilitate the
public to make investment results for withdrawal, child’s education, retirement and significant
purchases related to home or land acquisitions. However, Dimitriu and Matei (2014) have noted
that for the public in order to rely on the data offered there must be an intensity of confidence in
the realm of awareness and behavioural patterns of accountants. According to De Villiers, Venter
and Hsiao (2017), because of varied range of accounting functions as well as recent corporate
malfunctioning, significant attention has been drawn to ethical standards implemented within the
internal control system. However, such malfunctions have critically resulted in the extensive
disrespect for the repute which accounting profession holds. Furthermore, in order to cover up
such criticisms and further protect from frauds in accounting, various rules and solutions have
efficiently developed by the accounting organizations as well as governments for development in
ethical norms amongst the accounting profession (Dimitriu and Matei 2014). The aim of the
following essay is to identify three ethical dilemmas accounting profession has been
encountering and safeguards which can eradicate or reduce the pressure to a satisfactory level.
Discussion
As per the information theory, accounting is defined as an information system which
primarily intends to identify, evaluate and report all relevant data and information for decision-
making purposes related to financial reality of an entity to interested users. It further produces
and share consistent as well as relevant financial information to its users, as the decision making

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process can be influenced by the quality of information. Horvat and Korošec (2015) have noted
there can be identified an existence of ethics since the fundamental assumption of accounting
information system of accounting information system. However, it is essential to ensure the
proper functioning of the systems required for their processing, storage, accessibility and
dissemination (Dai and Vasarhelyi 2017). As a result, it facilitates increase the value and
effectiveness of the information thus reducing the prospects of misinterpretations or factual
errors of the outputs.
Under-reporting income
Under-reporting income to avoid taxes is identified as an unethical practice. Islam (2017)
has noted when individuals under report their incomes, federal government loses tax revenues
which would impact social security, medicare along with other federal projects. Such an
unethical problem can be distinguished as an ethical dilemma as corporations are stringently
been scrutinized by auditors due to substantial tax bills at stake every year.
However, employees and organizations tend to experience penalties and in highly severe
cases can result to criminal charges if any forms of unethical practice against under reporting are
investigated. As per the view of Tsegba, Upaa and Tyoakosu (2015), under reporting income is
investigated as a case of negligence rather than an intentional disregard of tax code, the Internal
Revenue Service (IRS) might penalize the underreporting company or its employees but will fail
to initiate criminal proceedings. In addition to this, if any organization has been reporting news
regarding reduces stock, managers of the organizations tend to acquire some revenue from the
existing quarter and further push it into the next quarter. Through these strategies information
regarding diminished stock of an organization can be lessened. Furthermore, as per reports of

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Dai and Vasarhelyi (2017), organizations can report to develop an advantage disclosure in the
coming quarter through efficient increase of stock price. Such an ethical practice is highly
unlawful thus severely impact public organizations and pose challenges and pressure on
accountants creating balance sheets and financial statements. Furthermore, unethical accountants
tend to manipulate financial records and manoeuvre numbers of organizations in order to portray
false image of the organization (Tsegba, Upaa and Tyoakosu 2015). Under reporting of incomes
thus leads to temporary prosperity. However, altered financial records will in due course predict
the collapse of companies when the Securities and Exchange Commission investigates the fraud.
Whistle blowing issues
On the other hand, another ethical dilemma encountered by accountants relates to the
reporting of accountants infringements to Financial Accounting Board. As per reports of Grimm
(2014), it is imperative obligation of accountants primarily CFO to report unethical events of
violation of regulation, thus resulting to unethical practice while being reported. The ethical
dilemma in related to identify accurate timing to blow the whistle of the organizations or form
ethical division which has been unethically influencing its financial numbers. Reports of Odar et
al. (2017) have noted that if the accountant's information shows high unconstructiveness, it tends
to decline the reputation of the organization and lose substantial amount of its stock value.
Unethical issue of whistle blowing thus tends to impact organization’s investors and stakeholders
into financial jeopardy. Furthermore, stringent governmental evaluation occurs, if a CFO acts as
a whistleblower and makes public revelations regarding financial scandals. In addition to this,
executive and accountant managers show an implication to encounter criminal trials which in
severe cases leads to significant compensations and detentions. Dai and Vasarhelyi (2017) have
noted that in order to mitigate these unethical practices, CFOs and other accountant managers