Accounting Ethics: An Overview of Principles, Issues, and Importance

This presentation offers a comprehensive overview of accounting ethics, beginning with an introduction to the field and its importance in ensuring ethical conduct in business operations. It delves into the analysis of ethical problems, emphasizing the necessity of adhering to a code of ethics for fair accounting practices. The presentation outlines the five fundamental principles of accounting ethics: integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. Furthermore, it explores various ethical issues such as fraudulent financial reporting, misappropriation of assets, disclosure problems, and penalties. The conclusion underscores the significance of ethical principles in accounting, highlighting their role in maintaining a company's fair and accurate financial position, and the positive impact of ethical guidelines on a company's image. The presentation is supported by references to relevant research papers and sources.

ACCOUNTING ETHICS
An Overview

 Accounting ethics is regarded as the field of
applied ethics along with the study of moral
values which are basically applied in accounting.
 It can be critically evaluated that it is necessarily
required to follow ethics so that each and every
operation of business can be carried out in an
appropriate manner and will be ethical too.
 Government of every nation has started to
encourage business accountability for ethical
along with the legal conduct.
INTRODUCTION

 The main issue linked with the present article is to
identify the role of professional ethics in accounting
profession. As per the views of Basu and Saha (2013),
complying with appropriate code of ethics is
necessary for business and through this, accounting
practices becomes fair (Basu and Saha, 2013).
 However, according to Ketz (2006), the key role of
accounting ethics is to ensure the system of
information that assists rational behavior. Overall,
necessity of maintaining trust in the integrity of
accounting profession has assisted in moral judgment
abilities (Ketz, 2006).
PROBLEM ANALYSIS

 On the other hand, it has been critically assessed
that Bonaci (2012) said ethics look at human behavior
and make an overall attempt to distinguish good
from bad. Code of ethics assist in addressing the
particularities of high risk tasks and are developed
on collective conscience of a profession (Bonaci, 2012).
 Similarly, according to Ketz (2006), IFAC code of ethics
has established standards for accounting
professional behavior and highlighted the key
principles that must be followed in order to fulfill
the common objectives (Ketz, 2006).
CONTD.

 Accounting ethics relies on five basic principles
which are as follows:
 Integrity: According to Russell and Cohn (2012),
it is the first major principle where professional
accountant of company must be straightforward
and honest in all the operations which are being
carried out (Russell and Cohn, 2012).
 Objectivity: Accountant of business must not
allow conflicts of interest or undue influence of
others with motive to override professionals.
CODE OF ETHICS PRINCIPLES

 Professional competence and due care: According to
Stanwick and Stanwick (2015), It is required for the
professional accountant to maintain adequate
knowledge along with the skills at professional level.
Further, it has to be ensured that company is complying
with the legal laws and regulations as per the
accounting practices (Stanwick and Stanwick, 2015).
 Confidentiality: As per the views of Rezaee (2009), it is
one of the key principles where accounting information
of business must be kept confidential and must not be
shared with the third party for undue benefit (Rezaee,
2009).
CONTD.

 Professional behavior: According to
Porter and Norton (2007), it is the first
and foremost duty of professional
accountant to comply with all the laws
and regulations and should not adopt
any unethical activity which can have
an adverse impact on the organization
(Porter and Norton, 2007).
CONTD.

 Fraudulent financial reporting: It is
considered as one of the main issues
which is the misstatement of financial
statements by the management of
business. However, according to Duska
(2007), fraudulent financial reporting is
undertaken with the motive to mislead
the investors and to maintain the share
price of organization.
ETHICAL ISSUES IN ACCOUNTING

 Misappropriation of assets: It is another issue
which is linked with the use of company’s asset
for other interests rather than for business.
 Disclosure: It can be critically evaluated that
according to Russell and Cohn (2012), it is linked
with the aspect of recording accounting
transactions in a manner which is not as per the
principles of accounting (Russell and Cohn,
2012). So, this is also regarded as a fraudulent
activity which company has to consider
necessarily.
CONTD.

 Penalty: It is the last major ethical issue
where legislation allows for harsh
penalties for manipulating the
accounting records.
 Thus, it can be assessed that these are
some of the ethical issues in
accounting which every business has to
consider so that every activity along
with the operations would be ethical
and as per the accounting practices.
CONTD.

 The entire study has supported in
understanding about the role of ethics in
accounting where it plays a significant role.
Further, to highlight fair and accurate position
of company is must for accountants.
 Thus, it can be critically assessed that for
every business, it is must to undertake ethical
accounting principles and overall guidelines
introduced must be followed strictly.
CONCLUSION

 In the last few decades, public interest
for business ethics has enhanced
significantly and comply with ethical
guidelines has a positive impact on the
image of company.
 Thus, it can be said that ethics help in
ensuring whether business is
complying with proper accounting
practices or not and accounts are
prepared as per guidelines.
CONTD.

 Bonaci, C., 2012. Accounting Ethics: Some Research Note. [PDF]. Available through
http://www.wseas.us/e-library/conferences/2012/Vouliagmeni/MMAS/MMAS-21.pdf. [Accessed on 17th February 2016].
 Code of ethics - the five fundamental principles. 2016. [Online]. Available through: http://www.icaew.com/en/qualifications-and-
programmes/aca-evolved/applying-for-membership/code-of-ethics. [Accessed on 17th February 2016].
 Chan, S. Y. and Leung, P., 2006. The effects of accounting students' ethical reasoning and personal factors on their ethical sensitivity.
Managerial Auditing Journal. 21(4) .pp.436 – 457.
 Taylor , A., 2013. Ethics training for accountants: does it add up? Meditari Accountancy Research. 21(2) .pp.161 – 177.
 Ghazali, M. and Ismail, S., 2013. The influence of personal attributes and organizational ethics position on accountants' judgments:
Malaysian scenario. Social Responsibility Journal. 9(2) .pp.281 – 297.
 Ketz, E. J., 2006. Accounting Ethics: Theories of accounting ethics and their dissemination, Volume 2. Taylor & Francis.
 Blake, J. and Gowthorpe, C., 2005. Ethical Issues in Accounting. Routledge.
 Basu, K. A. and Saha, M., 2013. Studies in Accounting and Finance: Contemporary Issues and Debates. Pearson Education India
 Russell, J. and Cohn, R., 2012. Accounting Ethics. Book on Demand.
 Stanwick, A. P. and Stanwick, D. S., 2015. Understanding Business Ethics. 3rd ed. SAGE Publications.
 Rezaee, Z., 2009. Corporate Governance and Ethics. John Wiley & Sons.
 Porter, A. G. and Norton, L. C., 2007. Financial Accounting: The Impact on Decision Makers. Cengage Learning.
 Duska, F. R., 2007. Contemporary Reflections on Business Ethics. Springer Science & Business Media.
REFERENCES

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