PHL212: Ethical Issues in the Accounting Field 2
PHL212: Ethical Issues in the Accounting Field
Southern New Hampshire University
Ethical Issues in the Accounting Industry
Many people such as owners, managers, legislative bodies, lenders, and employees rely on accountants and auditors to portray the financial statements of companies as accurate as possible. There is a high level of ethics required in accountants and auditors work. “A good accounting firm should present as clear a picture as possible of an organization’s financial condition, and/or attest to the fairness of that picture. Any practice that violates that purpose contradicts the firm’s very essence.” (Duska, Duska, & Ragatz, 2011) ) It is each accounting firm’s goal to increase their own personal wealth but integrity should never be sacrificed for personal greed or wealth. Ethical business practices must be established and followed in order to keep trust that is needed for companies to prosper. I have worked in the accounting field for over fifteen years and have seen and experienced the effects of unethical accounting practices.
There are many large scandal cases in the accounting world. One of the most well-known is the Enron scandal which resulted in one of the largest Chapter 11 bankruptcy in history. Enron covered up their fraud of on their financial reporting by using a variety of deceptive and fraudulent accounting practices. Enron’s auditor signed off on the validity of the audits even with the inaccuracies on the financial statements. Shareholders of Enron lost twenty-five billion dollars as a result of the bankruptcy and eighty-five thousand employees lost their jobs. A much smaller case is the Halifax Corporation. One colleague had access to print checks and also access to the signature stamp. She embezzled over fifteen million dollars over a few years of time. Halifax Corp is still facing financial turmoil almost fifteen years later.
Enron is a perfect example of how not to use ethics in the workplace. Enron required that employees sign a 65-page code of conduct before joining the company but then the company entered into unethical activities. The code of conducts covered values such as respect, integrity, communications, and excellence. Enron’s former CEO and other managers were charged with criminal activity due to their unethical actions.
The effects of cases such as the Enron scandal tarnish the accounting profession. Unethical procedures need to be eliminated and they need to follow the established codes. Conflicts of interest in the accounting industry need to be eliminated. It is extremely important for accountants to follow the guidelines that have been established by the accounting associations and uphold strict ethical standards. An accountant does not have a business without a client so it’s important to gain and keep their trust. Robert H. Montgomery, one of the founders of the world’s largest accounting firm and former...