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Alfredo Gonzalez

Wendy Gunn

Accounting 2010

February 22, 2017

Personal Ethics and Financial Reporting

On one occasion, when I was a boy of about six or seven years of age, my father
had me accompany him to the small office building where he worked as a civil engineer.
It was late in the evening and all the other employees had gone home for the night
leaving a desolate building for my former self to run and play in while my father finished
his work. At some point I became tired of my toys and had the idea to go office-to-office,
cubicle-to-cubicle filling the cardboard shoebox I had brought my toys in with souvenirs
from my father’s workplace. A few pens, some SoBe stickers, boxes of paper clips and
erasers, a tiny model airplane, a gel wrist rest, and an assortment of other items; my
shoebox was full of stolen souvenirs. I got caught as soon as we got home and was
gravely scolded by both my parents and my grandmother who was visiting us from
Mexico at the time. To make matters even more embarrassing, the following workday my
father took me back with the box full of ‘hot’ items and had me go office to office, much
in the same manner in which I had taken the items, and apologize to everyone
individually and let them retrieve their belongings from the box. I learned a valuable
lesson that day, a lesson I wouldn’t soon forget, and it marked the beginning of my ethical
development.

If morality is defined as the distinction between what is good and what is bad,
what is right or what is wrong, and ethics defined as said polarities in practice and at play,
then the correlation between the two principles becomes clear and you cannot talk about
one without addressing the other. I don’t believe people to be intrinsically good or bad,
they just are. For me, the biggest determinants of my ethical development were nurture,
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example, faith, and environment. The type of household I grew up in was one of
righteousness, order, love, and integrity. My loving parents were kind, hard-working,
honest people whose strong faith as Christians aligned perfectly with their virtuous
nature; and so every day through positive example, a loving environment, and church
teachings I began to develop my own set of moral codes.

As a teenager and young adult, I began getting into trouble; I began doing things
that were in direct conflict with the moral and ethical codes I had grown up with. I began
challenging authority, questioning the foundation of my beliefs and lost all fear of
punishment be that legal, at home, or divine; but even in the midst of this rebellion I
realized there were things I knew to be right and wrong no matter how hard I tried to
reject them. Once that phase had passed and life had kicked me in the rear a few times I
embarked on a journey of self-improvement and development. My actions were no longer
guided by fear of punishment or by blind acceptance but rather because after long
deliberation I decided what type of person I wanted to become. I realized that the same
core values I had grown up with were the ones I knew at heart to be true and universal;
and although I still hold the same ethical standards that all my siblings and I were raised
with, our lifestyles, faith, and character could not be more different.

I have been studying college-level business and finance for almost two years now
and plan to continue to do so into postgraduate school. My studies have included courses
in varied pecuniary fields such as finical markets, economics, and accounting. One
observation is that the modern level of criminality found within these money sectors is
not only unprecedented but on the rise. The dot-com bubble and the housing market crash
are large-scale proof of this, and stories are published daily with scandals of corruption,
money laundering, fraud, embezzlement, and all sorts of white-collar crime. If these
crimes happen regularly and at such large scale that they can collapse entire economies is
the industry as a whole unethical? I say no, it’s the individuals that become corrupted and
unethical.

At a microeconomic scale, what are the connections between personal ethics and
financial reporting? In the fraud triangle and with regards to financial reporting there is
an abundance of two out of the three elements, which are rationalization or attitude and
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financial pressure. The problem with financial reporting is that there is a lot of
opportunity for deceit and misdirection and even good people can become corrupted by
opportunity. In my opinion, the solution is strong internal controls (as taught in class), a
highly selective hiring process, severe legal action against offenders, and to eradicate all
opportunities for dishonest behavior while maintaining a respectful and dignified
workplace. White-collar crime isn’t a victimless offense; often it is committed at the
expense of other employees, consumers, equity holders, local economies, individuals, and
communities.