Ethics is a requirement in any form of business practice, especially in accounting and auditing. However, business ethics has been viewed as an oxymoron because of the paradox it presents. Businesses are about maximizing gains while ethics may contract this perception. Nevertheless, ethics are a critical aspect of businesses and professionalisms (Jeffrey 2018, p.88). Part of the reason is the increasing demand from the societies, which are major stakeholders in all businesses. People in the societies are holding businesses and their professionals accountable for their actions and practices. They no longer are ignored because the success of these businesses relies on the support of these societies.
The theories of ethics in accounting or any other business practice are founded on specific considerations. These considerations also define moral behavior and how much impact it will have on the profession. Among these considerations are religion, conscience, respect, selfishness, utilitarianism, rights, virtue, and justice (Schmit 2018, p41). The belief among many people is moral principles shape ethical behavior. Despite this finding, history has uncovered a lot of debate and controversy about this topic. Questions of who decides what is wrong and right are not yet fully answered, especially in the various contexts.
Due to the complexity and troubling matters of ethics, policy makers in organizations utilize sets of simple theories and principles. They adopt these theories from former philosophers and apply them per the organization’s goals and objectives (Arens 2013,p.58). That is the same approach that the accounting and auditing professions have done. The associations have coded their ethical practices as per the aims of this profession. This method creates a clear and comprehensive guide to every accounting intending to work in this field. The code applies to both certified and those who are yet to qualify.
All the four journal articles are about ethics in the accounting and auditing profession. They all state that accountants and auditors have a duty of responsibly acting when delivering their services. These professionals should always aim at exercising sound judgment in their activities. One way of doing so is presenting their clients with truthful information and accurate statements. Accounting is founded on values such as integrity. It is a fundamental element that demands honesty from accountants and auditors.
Professionals should refrain from personal gains, primarily by taking advantage of information within their work (Mintz, & Morris 2011, p.21). Laws and difference in opinion may cause some differences, but the bottom line is avoiding opportunism and manipulation. The mandatory code of ethics can address the gaps in opinion in every public or private accounting firm. Those who breach the norms and set codes are liable for reprimanding or punishment.
Yaramadi (2015, p.2164) mentions that values such as honesty are the basis of accounting. Furthermore, ethical leadership determines the future of this profession. Due to the sensitive nature of this fact, practitioners should be trained and qualified for this job. Training involves learning about ethics and how to practice them. An extensive part of the unprofessionalism in accounting and auditing is a consequence of no vocational qualifications in some practitioners.
Accountants and auditors handle confidential information on financial statements. This information could be a client’s personal information or an organization’s reports. Professionals are forbidden to divulge such information without authorization (Baldarelli, Del & Nesheva-Kiosseva 2017, p.79). There should be privacy privileges between accountants and their clients. Also, that information should not be used in any other way that does not benefit the client. For instance, an accountant cannot use this information for personal profit.
Authors acknowledge the theory that moral beliefs determine ethics. Alteer, Yahya & Haron (2013, p.871), suggests that ethics entails personal values through sensitivity in ethics. Also, the level of ethical climate is a determinant. Professionals are more sensitive to ethics in an environment with a high level of ethical climate. Personal values and sensitivity in ethics will influence a professional’s judgment. This means that businesses and organizations can increase ethical practices by cultivating a culture of ethics and values in the organizations. The ethical climate will mould accountants and auditors into the ideal professional the company requires.
Masoud (2016, p.89) and Odar et al. (2017, p.1801) agree that accounting organizations and their professionals have different perceptions of adopting ethics. Masoud’s article evaluates the difference in perception between internal and external accountants explicitly. Internal are accountants are those qualified and bound by the profession code while external ones practice outside the profession’s regulations. The findings revealed that internal professionals are sensitive to an ethical scenario and they would pay more attention to it. On the other hand, accountants and auditors offering external services are more focused on the contract work. They would prioritize the requirements of their clients.
Also, accountants from small firms tend to be easy-going with sensitive ethical scenarios. This turn out could be because small firms believe the society does not direct much attention to them. Therefore, malpractice or any other ethical issue would not get much attention from the public. On the other hand, large firms are sensitive to ethical scenarios to protect their image. Despite the size of the company or business, leniency in handling ethical matters will have a direct effect on the organization.
This outcome concurs with Yaramadi (2015, p. 2163) on the need for vocational qualifications. A nation such as Slovenia and other countries allow people to practice accounting and auditing without board certification. It brings a challenge and deviation when it comes to practising norms and ethics of accountancy. Qualified professionals will approach and handle matters of ethics harshly and professionally.
Generally, each article approaches the topic of ethics in accounting differently. It indicates that there are numerous facets of ethics and various perspectives of viewing them. Due to the complexities of this topic, it explains why every profession approaches it differently. Despite the differences, the most vital thing is that all authors agree on the essence of ethics in the accountancy profession.
These four articles reveal specific managerial tips that accountants and businesses could adopt. Ethics are there to enforce independence and objectivity in the profession. Since the auditors or accountants understand their responsibilities, they should work independently. It means that one does not require supervision and work pressure to perform adequately. It also says that these professionals should avoid or issues causing a conflict of interest. Independence also facilitates objectivity because professionals will focus on the primary purpose and goals of their work.
The accounting profession has specific standards that auditors and accountants must observe. The management ought to ensure or review the generally accepted accounting principles (GAAP). These principles should be part of the company framework and policies (Pietra, McLeay & Ronen 2014, p.26). Observing GAAP facilitates due care that entails competence, comprehending financial information and diligence. Senior accountants are highly experienced, and hence, they are expected to guide the less experienced ones.
The four articles offer critical insight on how businesses and their professions could use ethics to make them successful. Particularly, ethics increase efficiency in accounting and auditing. When these professionals play their roles ethically, they are contributing to the functions of the organizations and overall achievements (Mintz, & Morris 2011, p.60). Practices such as integrity and care are elements of career growth.Accountants who are sensitive to ethics and observe them increase their opportunities in the corporate world. Companies or organizations prefer working with professionals who have a good track record of their work.
Besides offering services to the society, accountants can be influential to the people. Ethics include participating in corporate social responsibility (Arens 2013,p. 93). It entails giving back to the community as well as other social responsiblr practices. Involving the community is important because it is part of the businesses and professional practices. Incorporating the community is also part of making businesses successful.
All the four articles took different approaches and methodologies for conducting research. They are highly informative and uncovered new knowledge that is crucial to the accounting profession about ethics. Nonetheless, a few limitations exist in each article. Alteer, Yahya & Haron (2013, p.872), have restricted their study to secondary sources such as literature materials. This approach is also similar to Yaramadi (2015, p.2162). While their articles are enlightening, using primary sources of data collection would have added value to the information. Using case studies give researchers first-hand experience of how the issues under investigation are unfolding. These authors are at liberty to further their studies by including additional methodologies for better findings.
Odar et al. (2017. P.1800), state that part of the limitations of their article was time. The topic of ethics and perception is, and it was not possible to include all the variables needed. For instance, time forbade examining every individual’s moral philosophy. The study could not also predict management intention since attitudes in ethics do not directly reflect one’s behavior. Despite the limitations of time and other factors, all these authors have an opportunity of exploring more aspects of ethics and educating accountants and auditors. They could also use different designs and methodologies for conducting these studies and compare the findings.
Alteer, W.M., Yahya, S. B., & Haron, M.H. 2013 ‘Auditors’ personal values and ethical judgement at different levels of ethical climate: A conceptual link’. Journal of Asian Scientific Research vol 3 no.8 p. 862-875.
Arens, A. A. 2013. Auditing, assurance services and ethics in Australia: An integrated approach. Frenchs Forest, NSW : Pearson Australia.
Baldarelli, M. G., Del, B. M., & Nesheva-Kiosseva, N. 2017. Environmental Accounting and Reporting: Theory and Practice. Cham Springer.
Jeffrey, C. 2018. Research on professional responsibility and ethics in accounting. Bingley, UK : Emerald Publishing Limited.
Masoud, N. 2018 ‘Towards a strong ethics code for professional accounting and auditing.’ Journal of business marketing management. Vol. 8 no.11 p.89-96
Mintz, S. M., & Morris, R. E. 2011. Ethical obligations and decision making in accounting: Text and cases. New York, NY: McGraw-Hill/Irwin.
Odar, M., Jerman, M., Jamnik, A., & Kavcic, S. 2017 ‘Accountants’ ethics perceptions from several perspectives: evidence from Slovenia.’ Economic Research-Ekonomska Istraživanja. Vol.30 no.1 p.1785-1803
Pietra, D. R., McLeay, S., & Ronen, J. 2014. Accounting and Regulation: New Insights on Governance, Markets and Institutions. New York, NY : Springer
Schmitt, D. B. 2013. Advances in accounting behavioural research: Vol. 16. Bingley, U.K: Emerald.
Yarahmadi, H. 2015 ‘Ethics in accounting’ International jounal in accounting and financial reporting. vol. 5 no.1 p.2162-3082