Defining Financial Ethics Essay

1173 words - 5 pages

This report will cover the meaning of Financial Ethics, what kind of accounting practices are considered to be unethical and how a company can overcome problems. In addition this report talks about the use of EBITDA in accounting practices and how EBITDA can be manipulated to show a company’s performance as good when in fact they are suffering. The report will also show how EBITDA and financial ethics can be intertwined with each other.
Financial ethics is a form of business ethics but with more emphasis on the financial end of the business. To be a trustworthy person in this field it is a requirement that you refrain from bad accounting practices such as aggressive accounting. Aggressive accounting is where numbers are changed in order to make investors/shareholders feel comfortable with their investment. Aggressive account also inflates stock prices using false data to report income, not reporting all the expenses occurred within the company, concealing losses the company experienced, and overall not reporting an accurate financial statement to increase or stabilize the stock price and keep investors happy. This type of accounting practice is unethical and is an outright lie to investors and or stockholders. This type of accounting fraud involves one or more employees or an entire accounting division, modifying , getting rid of or marring accounts so the true information on these accounts are not revealed to stockholders. Why would a company do this type of illegal accounting? Companies do this in order to show they are doing well in order to obtain a higher credit limit with a bank, or financial institution making higher loan amounts available. Another reason is to pump up the share price of the stock, to keep losses from showing so it appears to investors they are a company on the rise and doing much better than they actually are. There are other reasons too such as to cover up any losses due to theft, and to get work related bonuses. If a company looks good on the outside they will attract more investors, have more credit available to them which is why companies are doing these unethical, and unlawful acts of accounting.
In today’s world in every corporation, small business, and healthcare organization ethics are more important than ever. Ethical standards are probably more important in healthcare than in other types of businesses. It is important to realize that many people, the patients, the family and friends of the patient rely on our healthcare system to be upfront and always ethical in their practices. To not withhold any available treatments to our loved ones and to only charge for those services provided. People expect and should receive the latest technological advancements available for their ailment.
Those employed by the hospital/care center or whatever entity they are working for are expected to have the commitment to ethics and reliability. These departments can include the...

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