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Discussion on: Why are ethics crucial in the profession of Accounting and Finance? Provide some examples

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Angel Paudel

The study of judgments along with moral values that are to be followed in the context of accounting is called accounting ethics (Engström, 1994). An example of professional ethics, they are crucial to the profession of accounting and finance as explained in the passage to follow.

Being ethical increases the confidence in record keeping. With no fraudulent entry or leftovers, it gives a better idea for the planning of the next fiscal year or any such planning, in general, the future. Without it, it would have caused overestimation hammering the business growth with a false estimate based on the record. Only with proper planning, a business can prosper and following ethical practice enables an organization to create an effective growth model.

Being transparent with taxes is a good way to boost the confidence of the investors. This can only be done if proper ethical practices are followed otherwise the income is often shown as a loss by showing a heavy loss and paying no tax for long-term like seen the United States with Trump Foundation. A research found out that the organization that is transparent would face less severe problems if any compared to organizations which try to avoid taxes and aren’t clear (Petrin, 2018). Following proper business standard and completing proper duties of paying taxes shows the business health as well in a way which all helps to give a good picture of the overall brand to the stakeholder and general people.

As an accountant, confidentiality must be held because much of private information are withheld by the accountant such as the customer income, taxes, physical address of the person, phone number, etc (Brasel & Daugherty, 2017). It is important for such information to not leak out to the public and if it does, not only to the accountant but the entire business will suffer the uproar causing damage to the organizational brand and overall business.

Following proper ethical practices, while paying taxes on time, filing the balance sheet and all the other documents and making them available easily to the general public shows that the company cares about the business and is transparent. Thus, helping change the perception towards the business in the eyes of the people which can often go a long way to contribute towards business growth.

Further, ethics is also important to be able to appropriately and efficiently advise clients and to not handover misinformation to them. Like in a restaurant while you’re to pay a bill of thousand rupees, if you receive the bill for two thousand, you won’t be happy. Similarly, people don’t like being played around and being miss-informed. That calls for following professional competence and due care while practicing the profession of accounting and finance.

Looking into companies with high ethical values, I would consider 3M company to be one of them. The company encourages its employees to make ethical decisions that follow the organizational core values. It also bases its ethical system on promise keeping, fairness, honesty, integrity, showing empathy and personal accountability. While another example would be Starbucks, they base their ethical system on the same principles. They believe in empowering local communities so they ethically source the coffee while supporting local farmers. They also clearly demonstrate where the items have been bought by along with providing its staff with proper training on the best practices to best serve the customers.

References

Brasel, K., & Daugherty, B. (2017). Balancing Auditor Liability, Client Confidentiality, and the Public Interest. Issues In Accounting Education , 32 (1), 17-32.

Engström, T. (1994). Accounting for Ethics. Business And Professional Ethics Journal , 13 (1), 51-53.

Petrin, M. (2018). Corporate Tax Avoidance - The Problem of Aggressive Tax Planning. SSRN Electronic Journal , 43-47.