ACC320: The Impact of Ethics on Enterprise Performance in Accounting

This report provides a comprehensive overview of contemporary issues in accounting, specifically focusing on the significance of ethics in the accounting profession. It begins with an introduction that highlights the importance of ethics for accountants and the impact of accounting scandals. The report then delves into practical and theoretical motivations, exploring why ethical accounting is crucial for both accountants and organizations. A literature review examines ethical principles, causes of ethical issues, and the impact of ethics on enterprise performance. The study draws on agency theory and deontology theory to support its arguments. The report concludes by summarizing the key findings and presents a null and alternative hypothesis regarding the influence of ethical accounting practices on business productivity and performance. The appendix includes an annotated bibliography of the sources used.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s Note

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................2
Practical Motivation.........................................................................................................................2
Theoretical Motivation....................................................................................................................4
Literature Review............................................................................................................................5
Ethical principles of accounting......................................................................................................5
Causes of ethics in accounting.........................................................................................................6
Significance of ethics in accounting................................................................................................6
Effect of ethical accounting on enterprise performance..................................................................7
Hypothesis.......................................................................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
Appendix..........................................................................................................................................9

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
The research study provides an overview on the ethics in accounting profession. Ethics is
the substratum of the accountants profession. Ethics is important for all accountants as they are
responsible over the financial statement users and gives information to the users having
conflicting interests. Ethics in accounting is crucial for accountants to gain professional skills
and knowledge in their job so that they are able to present effectual services to customers.
Despite presence of ethical standards, numerous accounting scandals have occurred within the
enterprises operating in competitive business environment (Bampton and Cowton 2013). This led
to failure in reporting process and management oversight of these enterprises. The corporations
now-a-days are re-assessing ethics in accounting with interest in providing training to employees
for underpinning ethical principles. Since accountants are liable to organizations financial
integrity, ethical knowledge facilitates them to overcome ethical dilemmas that they face during
their work. This study explores about how the ethical accounting practices influence the
performance of an enterprise. This research study also aids to assess how the ethics in accounting
practices improve the enterprises reputation in relation to investors and stakeholders. This paper
focuses on practical and theoretical motivation relating to research topic. This study also reviews
on the literature and designs hypothesis relating to ethics in accounting profession.
Practical Motivation
This research paper will help in practical motivation of the accountants to perform their
job in effective way. This study will help the accountants to understand the essentiality of
education relating to accounting ethics. Besides this, this paper will motivate the organizations to
implement proper work culture as ethical accounting depends largely on the enterprise culture

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
where it is generally practiced. It will also aid the business enterprise to recognize few dilemmas
relating to ethical accounting, which they experiences in the competitive business environment.
Several evidences reflect that most of the organizations in certain circumstances perform
unethical accounting practices in order to maximize profitability and accordingly violate the
stakeholder’s self- interest. This in turn has adversely influenced the stakeholders or investors to
continue their business operations or make investment in the organizations. Moreover, the
entities might lose its reputation or lower their share in the market. However, this research paper
will encourage the organizations to adopt proper strategies in ethical accounting. These strategies
will further positively influence the enterprise to sustain in the competitive business
environment. Apart from this, this research paper will motivate the accountants to maintain
ethics in their work practice and avoid unethical accounting practices.
The research outcome will further facilitate the business owners to integrate appropriate
legal actions as well as strict rules and regulations for controlling unethical accounting activities
that occurs in regular business operations. This study will motivate the employers of the
enterprise to understand the significance of encouraging management accountants for
considering implications of the business decisions for other individual. It will also motivate the
organizations to develop personal values within the accountants, which would restrict them to do
unethical practices and thus promote ethical behavior within the workplace. Furthermore, some
of the professional corporations will get an idea from this study about the need to implement
ethical standards within the accounting profession (Bampton and Cowton 2013). This will also
provide huge opportunities to these professional organizations to provide leadership in
accountant’s ethical motivation by creating enterprise values.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Theoretical Motivation
This study will explore on few theoretical theories in relation to this research topic. The
theories that will be explored in this research study are- agency theory, deontology theory. As
ethical behavior is crucial to proper business functioning, several changes have occurred in the
present accounting practices. Christ and Burritt (2013) opines that ethical behavior primarily
comes through individual’s principles and internalized values. The acceptability of different
forms of ethical behavior seems to differ among the accountants. This study is mainly reinforced
by “Agency theory” which describes that each individual have propensity to be honest to some
extent but most of the individuals might choose to be dishonest mainly for financial payoff. This
theory involves few basic assumptions such as- individuals acting in their self- interest are work-
averse and thereby requires to be monitored and controlled. The basic idea that surrounds this
agency theory depends upon honesty as well as ethics and also denial of any kind of social
responsibility. The current accounting scandals in business world might be attributed to lack of
corporate as well as personal ethical system. Moreover, the implications of individuals
responsibility has been evident in the names of individuals and corrupted enterprises. Despite
enterprise failures, the entities addresses ethical issues that previously affected them to lose trust
of stakeholders. According to Duska, Duska and Kury (2014), deontological theory explains that
an individual must obey to the obligations as well as duties while assessing ethical dilemma.
From the perspective of accounting, this deontology theory is the viable approach that supports
ethical decision- making. In addition to this, the deontology theory requires all the accountants to
follow professional codes without even taking into account consequences of the actions taken by
them. Thus, these theories relating to ethical accounting will help the accountants and enterprise
to better understand the importance of ethics in the accounting profession. It will also enhance

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
the knowledge of accountants relating to ethical accounting and also motivates them to
implement ethics in their profession.
Literature Review
The section of this study intends to explore the significance of ethics in accounting
profession. The ethical principles of accounting profession is elucidated in this study. This
segment also focuses on the consequences of ethical accounting on the performance as well as
productivity of the enterprise. This section mainly reviews on existing, theoretical and empirical
literature is reviewed in this segment.
Ethical principles of accounting
The ethical principles relating to this profession that has been identified by IFAC
(International Federation of Accountants) include-
 Integrity-It is necessary for an accountant to be straightforward and honest in their job or
professional relationship.
 Confidentiality-An accountant generally abides by confidentiality of information that
they acquires during the research. They are not permitted in disclosing any kind of
information to third parties without any legal right.
 Professional competence-Accountants performs their duty of maintaining professional
knowledge at required level in order to ensure that an employer gains competent service
based on developments in practice and legislation.
 Objectivity- An accountant should not have any kind of biasness or conflict of interest
that affect people to override judgements (Chafi 2013).

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
 Professional behavior- Accountants are needed to comply with proper laws and principles
for avoiding certain kind of actions that discrete this accountancy profession.
Ethics in accounting are usually meant to enhance accountants to the highest standard of
conduct. The accountants should consider ethical code of conduct that an organization sets to
encourage ethical behavior in certain business situation. Principles of ethics also aids accountants
to assess their feelings during specific situations. Ethical principles makes honest reply to clients
whose interest must endeavor protecting of their ability.
Causes of ethics in accounting
As per Thomas (2012) ethics in accounting has been difficult to regulate as the
accountants might take into account public interest while assessing that they stays employed in
an company. Ethics has become crucial for the accountants due to occurrence of several
accounting scandals. The problems within this accountants and their conflict of interest have led
to various professionalism standards while stressing ethics in the work environment. Few reasons
of ethics in accounting profession involves- false transactions, registration of transactions with
positive documents, misusing of assets and false accounting procedure application (Clikeman
2013).
Significance of ethics in accounting
Ethics in accounting emphasizes on moral values, judgments and business ethics in their
decision making. The ethical drivers of the accounting are better professionalism standard and
appropriate practice (Zadek, Evans and Pruzan 2013). Some of the organizations around the
world have instituted ethical issues in the accounting process, which results in increase of
potentiality for the conflict of interest. Kwok (2017) opines that development of ethical codes

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
might secure business transactions and financial process. As a result, this affects the performance
of accountants and credibility of the organizations. Moreover, adherence to ethics in accounting
also aids to ensure business operations compliance with standards. However, the accountants
mainy identifies and perform their job that contributes to formation of policies as well as fraud
identification within an organization. Thus, ethical standards is important for accountants who
basically renders taxation in service.
Effect of ethical accounting on enterprise performance
Several facts highlights that ethical accounting practices within an enterprises enhances
its productivity, reputation and credibility. But the ethical issues relating to accounting practices
have led to decline in profitability level of the companies. Moreover, ethical activities done by
experts affect trustworthiness and reputation of the companies. Thus, ethical practices makes it
easier for accountants to conduct their work practice within the business (Chun et al. 2013).
Hypothesis
Null Hypothesis: Ethics in accounting practices influence productivity and performance of the
business.
Alternative hypothesis: Ethics in accounting practices do not influence productivity and
performance of business
Conclusion
From the above discussion, it can be concluded that the organizations adopting ethical
accounting enhances profitability through their business operations. Ethical accounting also
benefits the accountants to avoid the risk of financial fraud within the company. Ethical practices

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
highly affects the accountants to follow legal activities and thus this also positively impacts on
other stakeholders of an enterprise.
References
Bampton, R. and Cowton, C.J., 2013. Taking stock of accounting ethics scholarship: A review of
the journal literature. Journal of business ethics, 114(3), pp.549-563.
Bampton, R. and Cowton, C.J., 2013. Taking stock of accounting ethics scholarship: A review of
the journal literature. Journal of business ethics, 114(3), pp.549-563.
Bosse, D.A. and Phillips, R.A., 2016. Agency theory and bounded self-interest. Academy of
Management Review, 41(2), pp.276-297.
Chafi, R.M., 2013. The Effect of Accounting Education on Occupational Ethics.
Christ, K.L. and Burritt, R.L., 2013. Environmental management accounting: the significance of
contingent variables for adoption. Journal of Cleaner Production, 41, pp.163-173.
Chun, J.S., Shin, Y., Choi, J.N. and Kim, M.S., 2013. How does corporate ethics contribute to
firm financial performance? The mediating role of collective organizational commitment and
organizational citizenship behavior. Journal of Management, 39(4), pp.853-877.
Clikeman, P.M., 2013. Called to Account: Financial frauds that shaped the accounting
profession. Routledge.
Duska, R.F., Duska, B.S. and Kury, K.W., 2018. Accounting ethics. Wiley-Blackwell.
Kermis, G.F. and Kermis, M.D., 2014. Financial reporting regulations, ethics and accounting
education. Journal of Academic and Business Ethics, 8, p.1.
Kwok, B.K., 2017. Accounting irregularities in financial statements: A definitive guide for
litigators, auditors and fraud investigators. Routledge.
Thomas, S., 2012. Ethics and accounting education. Issues in Accounting Education, 27(2),
pp.399-418.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Zadek, S., Evans, R. and Pruzan, P., 2013. Building corporate accountability: Emerging practice
in social and ethical accounting and auditing. Routledge.
Appendix
Author/
s
Date Title Journal Type of
Paper
(Theore
tical or
Empiric
al)
If empirical,
dependent
&
independent
variables
Summary of contribution
to the research question
(100 words)
Kermis,
G.F.
and
Kermis
2014 Financial
reporting
regulations,
ethics and
accounting
education.
Journal
of
Acade
mic
and
Busines
s
Ethics
Empiric
al
Independent
variable –
accounting
edication
Dependent
variable-
financial
reporting
and
regulations
Proper accounting
education help the
accountants to conduct
ethical practice in their
job. It enhances
knowledge of
accountants and
improves the financial
performance of business

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Bosse,
D.A.
and
Phillips
2016 Agency theory
and bounded
self-interest
Acade
my of
Manage
ment
Review
Theoreti
cal
----------- This study reflects on
“Agency theory” that
describes each individual
have propensity to be
honest to certain extent
but many individuals
might choose in being
dishonest for financial
payoff. This theory
includes basic
assumptions involving-
individuals acting in their
self- interest are work-
averse and thus requires
to be monitored. The
main idea surrounding
this agency theory
mainly depends on
honesty and denial of any
type of social
responsibility

Running head: CONTEMPORARY ISSUES IN ACCOUNTING