Accounting and Ethics
- Hits: 5028
Accounting and Ethics
Are you a resident of New York, Chicago or London? if yes the following article requires your attention.
The following is a discussion about accounting ethics, which have to be catered for in an attempt to have the place of moral responsibility in the field of accounting. The field of accounting is one of the businesses major because it has the lens that scrutinizes the business and its operations. However, accountants themselves have at times abdicated and even assumed the trust in which the business owners as well as the public have on them. This trust is built on honesty and the belief that the accountant will present honest reports about the profitability of the business or its failings.
However, cases of fall of companies such as Enron are one of the major causes of concern. It is a caution against the company pursuing business goals at the expense of integrity. This company failed because the management and the accountants colluded to resent doctored financial statements thus deceiving the shareholders. This awareness that accountant are prone to unethical activities has led many companies to come up with internal controls to curb such activities (Riahi 63).
One of the internal controls adopted by various companies is that of establishing systems within the organization through which the employees without fear of intimidation or victimization bring reports on fraud. Reports on such cases of fraud should be investigated properly to ensure that the facts are established and if one is found guilty proper actions are taken against that person.
Another internal control ethic mechanism adopted by various organizations, is having codes of ethic that relate to accounting and auditing of the company's book of account. It is very important for any organization that is hoping to have integrity in its accounting methods to spell out clearly in writing their expectations to their employees and measures taken against them for not adhering to these expectations. The code of ethics should also include the government code of ethic in accounting. This is where most of the management looses their track on fraud because; they expect their employees to adhere to their code of ethics yet they do not present proper profit and loss accounts because they look for ways in which to minimize tax. This makes them to loose credibility and vulnerable to blackmail from their accountants.
The other ethical internal control, which is effective in curbing accounting fraud, has to do with the rotational tasks where employees do not hold on to one responsibility for long. They rotate the tasks periodically and randomly meaning that one has to keep his records straight knowing that someone will see any malpractice. The code of ethics should have clearly spelt responsibilities or key tasks or accounts for each accountant working in the company to enhance responsibility.
The field of accounting requires high level of moral responsibility because; it is critical to the performance of any business or organization. The organization that does not take the accounting ethics seriously in the pursuit of business goals will fail Enron Company shows. This is because; the accounting work is the eye of the organization, which views the performance of other parts of the organization (Hoffman, Kamm and Robert 13). This is because; it calls to account on how funds are spent, it shows where the resources are misused. Therefore, failure of the accountants to hold their moral responsibility in their work will certainly lead to the failure of that organization.
Hoffman, Michael, Kamm Judith, and Robert, Frederick. The Ethics of Accounting and Finance: Trust, Responsibility, and Control. West Port: Quorum Books, 2000. Print.
Riahi, Ahmed. Morality in Accounting. London: Quorum Books, 1992. Print