Positive Impact Of Ethical Practices

Discuss about the Ethics And Its Contribution In Developing Greater Trust Among The Public Regarding Accounting Profession.

 

 

Introduction

This essay studies the modern perspective of the people regarding the accounting profession. It identifies major incidences that impacted or formulated the opinion of the people regarding the accounting profession. Various statistical surveys are being demonstrate to illustrate the changing trends or opinions if the people. The importance of ethical standards in practising accounting has also been taken into consideration. The essay studies the positive impact of ethical practices in the accounting profession to develop the level of trust of people in the profession of accountant.

Ethical standards

According to oxford dictionary ethics is “a moral principle that governs a person’s behaviour or the branch of knowledge that deals with moral principles” (Dictionary, 2007). It is basically a branch of study which deals with the issue of right and wrong. There are various branches of philosophical thinkers and their opinions regarding the topic of right and wrong. The various theories regarding the concept are the deontological theory, consequentialism or teleological theory and virtue ethics.  

Emanuel Kant is the chief propagator of the deontological theory. The deontologists’ perception of ethics is that it is an act that is independent of all variable. According to them actions can be either good or bad, there cannot be a grey area. They also believe that what is ethical is the duty of every individual and that duty shall be performed by the individual regardless of the situation or expectation of reward, self good or appreciation. There are various criticisms to this theory. The criticisms involve the fact that there is no guidance or particular description of the actions that are intrinsically good (Alexander & Moore 2007). Some critics also state that there is a difference between good and right which has not been taken into consideration but the deontologists.

Consequentialism is another such theory that discusses ethics. The chief propagators of consequentialism are J S Mill, Harry Sidwick, GE Moore, and Jeremy Bentham. The consequentialists opine that the result of an action is the factor that decides the right and wrong of an action. According to them if an action causes pain as a result then it shall be considered as ethically wrong and if an action created pleasure then the action may be considered as an ethically right action. They also propagate the idea of utilitarianism that the action that creates pleasure to larger number of people shall be considered as a stronger ethical action in comparison to an action that pleases an individual or group. There are various subdivisions of consequentialism according various factors. Altruism propagates ethical actions as those that benefits others, rule consequentiality theory believes that the rules that are formed after judging the consequences of actions should be followed as ethical standards, motive consequentiality theory further state ethical actions as those that are the best among the given options, negative consequentialism also like the motive consequentiality theory also believes in choosing the least harmful action among the given actions and the teleological ethics suggests that the impact of an action is its sole judging standard (Adams, 2008).

The third house that opines about the nature of ethics is the virtue ethics. The virtue ethics is propagated by Anscombe. This female British philosopher takes her ideas from the great philosophers like the Socrates, Aristotle and Plato. Anscombe in this theory propagates the importance of character as the most important factor in following ethics (Arjoon, 2008). According to her ethics is developed within a person through development of moral character within that person. In her theory she states that the virtues of a person shall be considered as the main source of ethical behaviour. In this theory it is also suggested that the ethical standards shall be decided by the person with the noble virtues when a situation arises.

Ethical standards for accounting professionals

There are certain fundamental principles that are to be followed by the accounting professionals in Australia. These principles are to be followed by an accounting professional. These principles are considered as a distinguished feature of an accountant in Australia. The acceptance of responsibility is must for an accounting professional. The components of the accounting principles include integrity, objectivity, professional competence and due care and professional behaviour.

• Integrity: integrity is the first quality that has to be carried by an accounting professional in Australia. An accountant shall be honest and have a strong moral principle that is the meaning of integrity.
• Objectivity: the second quality of an accounting professional is to be able to remain unbiased or impartial. It has been observed that the lack of this quality has been responsible in creating various hindrances to fair practice and resulted in corruption. The Enron scandal is one such example of lack of objectivity.
• Professional competence and due care: the third most important quality that has to be possessed by an accounting professional is competence. An accounting professional will not be able to serve his client if there is lack of competence or knowledge of the accountant. An accountant is expected to act according to the standards set and provide service to the client.
• Professional behaviour: the last and in no means the least point is to maintain professional conduct with the client. The chances of biasness begin whenever there is a lack of professional conduct. Hence it is a mandatory aspect of being an accounting professional in Australia (Arens et al. 2007).

Trust level of public on accounting professionals

The study was conducted by Roy Morgan in the year 2015 in Australia to find out the opinion of the people regarding the level of trust that is in the mind of the general people regarding the accountants. The opinion was taken in regards to the level of ethics and honesty. A scale was formulated which had measures like very high, high, low etc. Only 45 per cent of the population rated the accountants as an ethical and honest person which is less than 50 per cent. That is more than 50 per cent of the people didn’t considered an accountant as a person with highly ethical or moral person (Jackling et al. 2007). The last survey in 2001 51 per

Cent of people considered accountants as ethical people but over the 15 years this level of trust was lost by 6 per cent of people. Accountants working as financial planner were even less trusted by people their rank stood a mere 24 per cent in the year 2015 (Taylor & Dixon 2007).

The main reasons that can be attributed to this view of the public can be thus discussed. The accounting professional does not comes in direct contact with the public. Only the businessman comes in contact with such a professional. The audit reports that are made by the accountants are often not comprehensible to the general stakeholders they just read the conclusion of the analysis whether the auditor has given the financial statement a tag of being ‘true and fair’. In such circumstances if a particular fraud comes out the public tend to blame the accounting professionals and there is no chance for honest professionals to gain an emotional support as their fair works are nothing to be appreciated in public as there is few or no understanding of their work. The Enron/Andersen scandal in the year 2002 has also played a vital role in creating mistrust among the public regarding the integrity of the accountants. A code of conduct for the accountants has been formulated as late as in the year 2006 yet this is quite an early profession (Carnegie & Napier 2010). In various other profession that is ranked as highly ethical by the public like that of a teacher or a doctor or a nurse comes in direct contact with the public and their good works benefit the public directly but this is not the case with the accounting professionals.

Creating respect for the accounting professionals

It is important to create respect in the eyes of the people regarding the accounting professionals. It will be dishonourable for those who follow ethical standards in their profession to be branded with low ethical and moral value for some dishonourable people and or incidences. The steps that can be taken to build trust are as follows:

• It is important to create an oath for the accounting professionals taking the ideas of honesty, objectivity, confidentiality, professionalism. The oath of the accounting professional should be considered with respect.
• A uniform accounting standard shall be formed which should be termed in such language that the common people can have a certain amount of understanding of the report.
• The good works of an accountant should also be rewarded to create awareness among the people regarding the good sides of the profession

Conclusion

In conclusion it can be said that there are certain moral and ethical standards believed by most of the people. After various bad experiences an ethical standard is set for the accounting professionals as well. There is a general disregard in the mind of the people regarding the ethical standards of the accounting professionals due to various reasons like communication gaps and bad experiences. It is important to bridge the gap by creating an understanding among the general people regarding the moral side of the accounting practices. There can be various practices that can contribute to this outcome.

References

Adams, R. M. (2008). A theory of virtue: Excellence in being for the good. Clarendon Press.

Alexander, L., & Moore, M. (2007). Deontological ethics.

Arens, A. A., Best, P., Shailer, G., Fiedler, B., Elder, R. J., & Beasley, M. (2007). Auditing and assurance services in Australia: an integrated approach. Pearson Education Australia.

Arjoon, S. (2008). Reconciling situational social psychology with virtue ethics. International Journal of Management Reviews, 10(3), 221-243.

Carnegie, G. D., & Napier, C. J. (2010). Traditional accountants and business professionals: Portraying the accounting profession after Enron. Accounting, Organizations and Society, 35(3), 360-376.

Dictionary, O. E. (2007). Oxford English dictionary online.

Jackling, B., Cooper, B. J., Leung, P., & Dellaportas, S. (2007). Professional accounting bodies' perceptions of ethical issues, causes of ethical failure and ethics education. Managerial auditing journal, 22(9), 928-944.

Taylor, D. B., & Dixon, B. R. (2007). Accountants and accounting: a student perspective. Accounting & Finance, 19(2), 51-62.