APES110 Essay: The Role of Ethical Codes in Building Public Trust

This essay explores the critical role of the APES 110 Code of Ethics in fostering public trust within the accounting profession. It emphasizes that ethical conduct, as outlined in APES 110, is vital for the long-term survival of businesses and the integrity of the accounting field. The essay discusses how adherence to the code helps prevent financial scandals, such as those involving Volkswagen and Enron, and highlights the importance of ethical behavior over mere compliance with legal requirements. It covers key aspects of the code, including professional competence, conflicts of interest, and the handling of confidential information. Furthermore, the essay argues that ethical practices, as promoted by APES 110, are essential for building and maintaining public confidence, especially in an era of increasing financial complexity and globalization, and concludes that following the code can enhance the reputation of accounting professionals and the financial sector as a whole. The essay references several academic sources to support its arguments.

APES110
Demonstrate
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Trust is a necessary requirement of every business as an organisation cannot survive for a long
period of time if people do not have faith in them. Accounting profession is considered as the main
reason that people are aware of various activities that are performed in and out of a company. This
system helps in checking the accounts of a firm which reveal details about fairness in a business (Brooks
and Dunn, 2011). This essay will discuss about the contribution of codes in developing trust among
public.
Accounting Professional & Ethical Standards Board issued APES 110 Code of ethics for
Professional accountants. All the members of this institution have to follow rules that are mentioned in
this code. Most of them belong to Australia but some are running their business in other nations. They
also have to comply with norms unless there are provisions against these regulations in the country
where a company is operating. These ethics do not detract responsibility of an accounting professional
which is stated in law. They have to work according to auditing standards made by AUASB. Various
norms and provisions present in this code are amended in regular interval of time because of the
changing business environment and complexity in businesses.
Sometimes, people follow rules by the words written in a rule book, this concept do not run in
APES110 Code of ethics. Accountants have to understand the spirit of ethics instead of focusing on
words which is written in code. Companies feel that these morals are extra burden on their business, it is
increasing their cost of operation and creating various kind of hindrances in achieving short and long
term targets. But they fail to understand that these norms are the prime reason that trust of public in
private sector is enhancing. These ethics cannot be imposed on every organisation as there is a certain
requirement for coming under the area of obligation but one can adopt these rules at an early stage of
business.
In this era, pubic want to buy products from an organisation who is known for their fair practice
and they develop their commodities without doing any harm to society. Volkswagen is an auto-mobile
company who did unethical work by installing a software in their car which showed less amount of
pollution compared to actual one. Senior accountants of organisation knew about this scam but they did
not do anything about it. This blunder can be considered as the prime reason that accounts department
is facing lot of trouble in bringing enterprise out of financial problems.
If this act is analysed from a different angles than it can be easily found that they did not commit
anything wrong. Section 140 of APES 110 Code of ethics clearly state that an employee can not reveal
any confidential information without taking permission of a specific authority. When they were
conducting this unethical practice, at that time they were not aware about its consequences because
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they had committed same mistake before 3 or 4 decade and they were charged with small amount of
fine (Duska, Duska and Ragatz, 2011). Enron Corporation was an American energy company, Jeffrey
Skilling was president of this firm who made a team which helped him in hiding billions of dollars by
using accounting loopholes and poor financial reporting. CFO and other key people of organisation
mislead board of directors as well as audit committee. They asked them to ignore small issues because
they do not make any huge impact on performance of company. This unethical act results in bankruptcy
of Enron corporation and most of their executives went to jail for this wrongdoing. If company is doing
something illegal and unethical than accounting professional has to depicts this in their report. APES 110
codes says that the spirit of rules is more important than words.
(Sources: Comparing the Codes of Ethics and Conduct, 2017)
Laws made by government generally talk about what is legal or illegal. They do not cover
important elements like ethics which is getting popular in today's world. Organisation hire company
secretary and a team of lawyers who have better understand of the regulation which is present in
business environment. But they do not have much knowledge about moral values which is also
important in terms of fair trading. In present time, number of financial scandals are increasing which is
breaking the trust against accounting professionals (Klimek and Wenell, 2011). They were supposed to
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Illustration 1: Codes of Ethics and Conduct

be on the side of public but auditor try to hide the mistakes done by an organisation which is an
unethical act.
Gifts are considered as the best way to conduct an unethical act, companies give gifts to
government employees in order to take some special permit for any activity. They cannot pay them
money against this favour so their managers give them gifts. This is not illegal according to the Section
260 of APES 110 code of ethics, it is unethical (Martinov-Bennie, Cohen and Simnett, 2011). An
accountant who have knowledge about these rules will never commit this blunder which will assist
organisation is promoting their positive image in the market. An organisation can think about getting a
second opinion if management believe that their current accounting professionals are failing to give
them needed advice.
APES 110 Codes states that sometime existing accountant do not get necessary information i.e.,
inadequate evidence so their reporting is different compared to other professional judgement.
Management have to give a copy of option given by external advisor to the auditor of the company so
he/she can analyse it according to the demand of society. This provision help in maintaining good
relation between board of directors and accounting professional which ultimately result in
implementing various ethical codes. Trust of public in accounting will only increase if companies are
clear about the rules which they have to follow.
This code of ethics contain various threats relating to self-interest, advocacy, intimidation etc. A
person who have knowledge about these moral standards will not choose wrong side and do something
unethical at the time of making or analysing any accounting records. Sometime when an accounting
professional is working with one clients, he/she has face problem relating to conflict of interest.
Providing facility to one customer can hurt business of other. In this case, APES 110 Code of ethics states
than member of this board has to notify old business firm and ask them for necessary consent.
Accounting professional must inform all the relating parties about the matter and take essential consent.
This ethical practice will promote good image of accountants and auditors which will play significant role
in earning the trust of public (Zadek, Evans and Pruzan, 2013).
Section 130 of this code discuss about professional competence. It states that a member must
maintain a required level of professional knowledge so he/she can provide competent service. Some
people may think that these small things do not have any impact on business ethics but they are wrong
as moral values assist in earning trust of public which is essential in present time because number of
financial scandals are increasing continuously. Era of globalisation brought complexity in business as well
as in accounting.
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Complexness gives a chance to accounting professional for conducting unethical practice which
is not illegal according to law (Kohlmeyer, Seese and Sincich, 2011). They understand that no one can
punish them because they are not breaking regulations made by government. But APES 110 Codes
discuss about various rules regarding unethical practice. They want members to develop a decent level
of integrity in their professional work because, at the end, they will be the one who will lose trust of
public which may also cost them their jobs. Resolve various kind of dilemma and showing right path in
essential part of this code which can assist its members in gaining faith and respect of public.
At the end, it can be concluded that APES110 code of ethics can enhance faith of public in
accounting professionals. They are held responsible for many financial scandals which can be considered
as the prime reason that trust of public in auditors and accountants is going down. By following APES
110 codes, reliance of people can be attained within short period of time.
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REFERENCES
Books and Journals
Brooks, L. J. & Dunn, P. (2011). Business & professional ethics. Cengage Learning.
Martinov-Bennie, N., Cohen, J. & Simnett, R. (2011). Impact of the CFO's affiliation on auditor
independence. Managerial Auditing Journal. 26(8). 656-671.
Kohlmeyer, J. M., Seese, L. P. & Sincich, T. (2011). Online versus traditional accounting degrees:
Perceptions of public accounting professionals. In Advances in accounting education: Teaching
and curriculum innovations (pp. 139-165). Emerald Group Publishing Limited.
Klimek, J. & Wenell, K. (2011). Ethics in accounting: an indispensable course?. Academy of Educational
Leadership Journal. 15(4). 107.
Duska, R., Duska, B. S. & Ragatz, J. A. (2011). Accounting ethics. John Wiley & Sons.
Zadek, S., Evans, R. & Pruzan, P. (2013). Building corporate accountability: Emerging practice in social
and ethical accounting and auditing. Routledge.
Online
Comparing the Codes of Ethics and Conduct. 2017. [Online]. Available Through:
<http://slideplayer.com/slide/8104342/>. [Accessed on 6th September 2017].
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