Ethics in accounting
Ethics in Accounting
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Systematic body of theory and knowledge
Extensive education process for its members
Ideal of service to the community
High degree of autonomy and independence
Code of ethics for its members
Distinctive ethos/culture
Application of professional judgment
Existence of a governing body
Attributes of a profession
• Service ideal
• Market control view
The service ideal vs. the market control view Accountants work in:
• private companies and government organizations as accountants, internal auditors, budget offers, financial controller • consulting organizations as advisors to the public
• public accounting firms as auditors
Accountants work in different capacities Accountants’ work affects people both within and outside the organization • Employees of the entity
• Shareholders
• Bondholders
• Government
• Public in general
• Financial institutions
• The profession
• The environment
Stakeholders
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Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour
Professional codes of ethics
a) Many high profile companies failed in the US, Europe, and
Australia during the last decade.
• Enron
• Worldcom
• Parmalat
• HIH
b) More 60 finance companies failed in New Zealand since
2006.
• Bridgecorp Ltd
• Nathans Finance NZ Ltd
Accounting profession in crisis
• These collapses created a crisis of confidence in the accounting profession.
• The autonomy of the profession has been curtailed because of the perceived ethical lapses of professional accountants. • Professional autonomy is not guaranteed by the society.
• The society is the ultimate giver of professional autonomy. • The profession deserves the autonomy as long it lives up to the societal expectations.
Accounting profession in crisis
When faced with an ethical conflict, an employee should:
• The established policies of his/her
•
•
•
•
•
•
•
•
Systematic body of theory and knowledge
Extensive education process for its members
Ideal of service to the community
High degree of autonomy and independence
Code of ethics for its members
Distinctive ethos/culture
Application of professional judgment
Existence of a governing body
Attributes of a profession
• Service ideal
• Market control view
The service ideal vs. the market control view Accountants work in:
• private companies and government organizations as accountants, internal auditors, budget offers, financial controller • consulting organizations as advisors to the public
• public accounting firms as auditors
Accountants work in different capacities Accountants’ work affects people both within and outside the organization • Employees of the entity
• Shareholders
• Bondholders
• Government
• Public in general
• Financial institutions
• The profession
• The environment
Stakeholders
•
•
•
•
•
Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour
Professional codes of ethics
a) Many high profile companies failed in the US, Europe, and
Australia during the last decade.
• Enron
• Worldcom
• Parmalat
• HIH
b) More 60 finance companies failed in New Zealand since
2006.
• Bridgecorp Ltd
• Nathans Finance NZ Ltd
Accounting profession in crisis
• These collapses created a crisis of confidence in the accounting profession.
• The autonomy of the profession has been curtailed because of the perceived ethical lapses of professional accountants. • Professional autonomy is not guaranteed by the society.
• The society is the ultimate giver of professional autonomy. • The profession deserves the autonomy as long it lives up to the societal expectations.
Accounting profession in crisis
When faced with an ethical conflict, an employee should:
• The established policies of his/her