ACCOUNTING ETHICS: WHAT TO DO IN THE WORKPLACE?

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ACCOUNTING ETHICS: WHAT TO DO IN THE WORKPLACE?

SCHOLARLY INQUIRY

ACCOUNTING ETHICS: WHAT TO DO IN THE WORKPLACE?

CUARESMA, DANIEL BRYAN A.

2019162011@FEU.EDU.PH

BACHELOR OF SCIENCE IN ACCOUNTANCY

SECOND SEMESTER

MARCH 21, 2020

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TOPIC

The topic is about accounting ethics on what to do in the workplace. Accounting ethics

are important in the workplace since being an accountant, you manage the financial documents

of the company. As an accountant, it is important to practice accounting ethics to be able to

provide an honest and transparent financial report to your principal. When an accountant is

unethical, a lot of anomalies will occur in the company that may result in legal charges. To avoid

these types of problems, an accountant must consider these accounting ethics since he/she

handles the finances of the company.

RATIONALE

As an aspiring accountant, I have chosen this topic since I am aware of anomalies within

a company such as tax evasion and fraud. Knowing the accounting ethics will help future

accountants such as I to avoid further corruption within a company and even in the government

because I have been taught that being an accountant is being transparent and honest to what you

are doing. In researching this topic, I believe that it will help me and other people to be aware of

what to do and to avoid in the workplace as if we are already accountants, it's good to start early

since we aim to be top-caliber accountants.

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INTRODUCTION

"There has been a considerable effort at improving the ethical behavior of professional

accountants. This has led to the incorporation of ethics into almost all business and professional

accountancy programs, as well as detailed code of ethics guiding practicing behavior"

(Armstrong, 1993; Nathan, 2015; Cameron and O'Leary, 2015) "However, there still exist

considerable scandals both in public and private corporations mostly orchestrated by

accountants" (Bazerman et al., 2002; Steinshoff et al., 2015) Ethics in terms of accounting is of

high value since being an accountant is a job of faithful representation: being complete, neutral,

and free from error. Some accountants still do not follow the standard ethics of being an

accountant making false documents making people believe in certain facts that are not even

there. Being an accountant is a big responsibility, especially if you are the chief executive

accountant of a company because you can easily manipulate numbers to be able to make the

appearance of your report pleasing to the eyes of the public or even the government. The honesty

of an accountant is on a different level since corrupt officials will bribe them as high as they can

to be able to evade taxes. They will play a major role in resolving cases regarding corruption

which are also dilapidated by heinous accountants. Accountants can be the key to solve or

worsen anomalies regarding business and financial transactions which will be further discussed

in the body of this paper.

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DISCUSSION

What is the importance of ethics in accounting?

"We have mentioned that ethics is a responsibility how should be treated. Ethical

behavior, however, is not only legal responsibility. An act that is not a matter of legality may be

a non-issue of ethics. An ethical issue may not be included in the legislation. For this reason,

ethics should be addressed within the framework of a concept and understanding" (Gözener,

2008). Being associated with financial matters is a big responsibility for an accountant. An

accountant needs to know what the proper treatment for every situation is, that may occur in the

workplace. One example of corruption occurring in the workplace is the Satyam Scandal in India

where it occurred in Indian IT services and back-office accounting firms. The main player of this

scandal is the Founder who is Ramalinga Raju. He falsified the revenues, margins, and cash

balances of the company which resulted in a 50 billion rupees kickback for him. Raju has only

been caught because he admitted his crime through his letter to the board of directors. As we can

see, handling the company's financial statements will be a great way for you to earn some money

by falsifying documents, but will also lead you to prison depending on the weight of your

charges. Being an accountant does not simply end by getting the title of a Certified Public

Accountant, it simply starts at that moment where all your responsibilities get serious, and

accounting ethics takes its place.

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What does an accountant need to showcase in the workplace?

The responsibilities of an accountant dates back even in the BC periods up until now. The

accounting ethics are being revised accordingly depending on new implementations needed to

improve the security and responsibility of accountants. "Code of Ethics for Professional

Accountants" is a code established by the International Federation of Accountants. The following

rules of ethics shall be implemented in the workplace to establish an ethical accountant.

Accuracy and Impartiality

Being able to comply with the laws and regulations of accounting does not imply that it

conforms with the morals of an accountant. These rules and regulations do not signify that an

ethical work is done. It could be ethical in the eyes of the laws but could be unethical when it is

done for the sake of mischievous acts. "Doing the job right is not the same thing with doing it in

conformity with the principles of morality." (Elitas and Yurt, 2013)

Resolution of Moral Conflicts

Moral conflicts can greatly affect an accountant's work. Financial and family problems

can easily divert an accountant's ethics into doing unethical things such as fraud where they can

see an easy way out from the problems they encounter. "An accountant who faces with such

cases should implement the ethical policy of the institution on which he/she is dependent if that

institution has one." (Elitas and Yurt, 2013)

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Professional Competency

An accountant is taught ethics in the workplace during their stay in their respective

universities, some professional seminars are being conducted which can be conducive with the

ethics of an accountant, whereby some of them are being sent abroad just to attend seminars

regarding accounting ethics, of what to do in the workplace. "Having an academic career and

knowledge of mastery is insufficient even it is a necessity. Ongoing economic changes and

related national and international arrangements should be followed and updated." (Elitas and

Yurt, 2013)

Privacy

Everything that an accountant handles is confidential; therefore he/she must not disclose

anything to other people for their benefit. "However, privacy is not an absolute one. On

condition of judiciary case or mandatory situation to reveal it, it is proper not to keep it, but to

reveal is ethical." (Elitas and Yurt, 2013)

Tax Application

With regards to tax application, an accountant must ensure that every income and

expense is properly stated with valid evidence to be able to recognize it as an increase or

decrease in the company’s financial treasure. In this way, auditing of the government will easily

be passed because all documents are supported with valid evidence therefore making the

financial statement valid and taxable.

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The Results of Poor Ethics in Accounting

"Accounting rules and regulations exist to ensure that financial statements are useful to

their end-users in their financial decision-making. For financial statements to be useful, the

information presented therein must be accurate, faithful to the financial circumstances and be

produced in time to help the decision-making process. Poor ethics in accounting result not only

in increased incidences of criminal activities but also hurt the business through harming its

reputation and rendering their financial statements untrustworthy and thus useless." (Li, 2008)

Having poor ethics in Accounting might result in several disadvantages: criminal

activities, personal consequences, shattered business reputation, and the usefulness of financial

statements might be disregarded. Criminal activities will easily be conducted if a person has poor

ethics in accounting. Accountants will be more willing to break free since they can easily cover

up their bad behaviors. Personal consequences can also occur such as loss of motivation of the

caught accountant, and even bullying in the workplace where the other employees will make ill

of the said employee. Business reputation will greatly be shattered especially if it is a financing

company, because how can a business company be trusted if it has fraudulent operations. Lastly,

the independence of the financial statements will be accused as untrue and false, making it prone

to fraud and anomalies.

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Conclusion

Accountants, being the major player in the business sector, shall practice proper work

ethics to avoid doubtful situations wherein the business can suffer. A big responsibility is given

for accountants since they handle the business's finances, they can easily build up or destroy the

organization just by doing their work ethically or unethically. Being an ethical accountant is not

easy since fraud is always on your side and temptations are increasing as you do your job

ethically. If an accountant sticks to the ethical code, there would be no hindrance to being one

true faithful and transparent accountant.

Accounting ethics will be established through Accuracy and Impartiality, Resolution of

Moral Conflicts, Professional Competency, Privacy, and Tax Implementation. If an accountant

knows how to properly execute and deal with these ideas, there would be no problem in terms of

auditing of government officials. Failing to do so might incur criminal activities, personal

consequences, shattered business reputation and disregarded financial statements. Being an

accountant does not end in the title of being a Certified Public Accountant, instead, it is just the

start of a much bigger world where bigger consequences will be upheld if one mistake is proven

to be fraudulent.
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References:

Li, Alan. "The Effects of Poor Ethics in Accounting." Small Business - Chron.com,

http://smallbusiness.chron.com/effects-poor-ethics-accounting-37750.html. Accessed 08 March

2020.

Yurt, Çetin & Elitaş, Cemal. (2013). Morality and Ethics of Accounting.

Ahinful, G. S., Addo, S., Boateng, F. O., & Danquah, J. B. (2017). Accounting Ethics and the

Professional Accountant: The Case of Ghana. SSRN Electronic Journal. DOI:

10.2139/ssrn.3009253

Accounting Ethics - Understanding Ethics in Accounting and Auditing. (n.d.). Retrieved March

8, 2020, from https://corporatefinanceinstitute.com/resources/knowledge/accounting/accounting-

ethics/

Writers, S. (2019, July 1). The 10 Worst Corporate Accounting Scandals of All Time - The

Accounting Degree Review. Retrieved March 8, 2020, from https://www.accounting-

degree.org/scandals/
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