Professional Ethics in Accounting
Ethics is a branch of philosophy and is about the way people judge rights and wrongs of their actions. It is a code of conduct that is followed by members of a community.
To explain ethics, people say that ethics begins where the law ends. A person or business may act legally according to laws of the particular country, but their actions are not necessarily ethical.
Profitability should not be the only consideration when formulating the policy of a business: social and moral aspects are also considered. By including such factors, a business is not only applying the laws of the country, but is also applying a moral or ethical approach.
Solely from an accounting point of view, an ethical approach covers things like honesty, trustworthiness, prevention of fraud and prevention of corruption. The increased use of information and communications technology in bookkeeping and accounting brings additional ethical problems such as computer-based fraud.
All the accounting organizations actively encourage their members to apply a minimum code of conduct. If such minimum standards are not upheld, an accountant is guilty of professional misconduct (which can result in loss of reputation, a monetary fine, and even imprisonment).
It is not enough for a business simply to formulate a code of ethics and expect it to be followed by its employees. The actions and attitudes of the employees need to be regularly monitored. The code may need to be reassessed at regular intervals and modified to meet changes within the business.
Why an accountant would consider it is professionally unethical to improve the financial results of a business by making the adjustments in the accounting records:
Ø Accountants work with generally accepted rules such as accounting standards
Ø Accountants are expected by profession and public to produce reliable financial information
Ø Professional standards are more important than individual organizations
Ø Preparing accounts for the temporary benefit of one individual or organisation, even an employer, is against these rules and training
Ø An accountant could be penalised legally or professionally for not following agreed practice
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