The Importance of Accounting Ethics: a Critical Role in Success

Is a specialized department of accounting that using standardized guidelines to keep track of a company's financial transactions that are verified, summarized, and obtainable in a financial report or financial statement such as balance sheet. In other words, financial accounting refers to collecting, summarizing and presentation of the financial data resulting from business transactions. It records the operating profit and the value of the business to the shareholders. However we will consider the topic of the importance of accounting ethics in this essay. Why this theme? Due to the fact that most financial crisis that we have practiced could have simply been avoided if investment accountants, financial planners, and other finance professionals were ethical in their transactions. 

Ethics is identical with morality, honesty and integrity. Ethics implies the basic concepts and main rules of right human conduct, which involves differentiating between good and bad, right and wrong, so that an accounting professional follows what is principally right for him to do.

The Importance of Accounting Ethics and Morals

Following accounting ethics we can create a 'win-win' situation for all sides. Shareholders of a business enjoy when suitable ethical standard is followed in keeping the books of accounts of an entity. Though some shareholders like management would rather prefer to commit accounting fraud so as to get more bonus and advantages that are linked to performance, however, the existence of an accountant with high ethical standard will deter managers from committing this fraud. Following the code of ethics of the professional body that you affiliate with make your life a lot easier when those conflicting moments come knocking at the door.

Moreover, we can increase confidence in accounting profession. The community will simply place more confidence on accountants and the accounting information system as a whole if they are convinced that people with ethical values acts as the preparers, assessors, and auditors of accounting system. Having a functional inner control in place is the best way to avoid fraud. Good accounting ethics upholds inner control and  governance.

On the other side, being compliant and moral in your practice as an accountant saves you time, energy, and money. You need not invest more time trying to cover your track hoping that someone would not dig it out some day if you do what is morally right and ethical. Morales are important enough in accounting to have earned a dedicated set of rules:

• Independence and objectivity

In order to supply fair and accurate information, accountants must approach their work free from bias or agenda. Having preconceptions can affect the accuracy of financial data. Having a stake in the outcome can likewise interfere with letting the numbers tell their own story as clearly and honestly as possible.

• Integrity

Accountants are morally and legally obligated to do their work with conscience that is, to exercise honesty and a willingness to handle information thoroughly and carefully. It is their responsibility to engage in fair and accurate reporting with regard to the veracity of the data they provide as well as its completeness.

• Confidentiality

Accountants handle sensitive information, and they are morally obligated to make sure this information isn't shared with anyone who doesn't have the right to see it. This ethical obligation is especially important for public accountants who handle the books for multiple companies but must not divulge one client's information to another.

• Competence

It may seem strange to include as an ethical guideline for accountants the obligation to perform work competently. However, the act of performing a professional service includes both moral and a professional commitment to do it right. Sleazy accounting puts a client at risk of legal trouble and poor decisions.

• Professional behavior

Accountants are also responsible for performing work in accordance with the standards set by their profession. These include legal parameters as well as guidelines set by trade organizations that protect the integrity of the industry as a whole.

In conclusion, we briefly analyzed the ethical dilemma in accounting. In this essay, we stated that the purpose of financial accounting ethics is to ensure that certified public accountants perform their duties objectively and honestly. Financial accounting ethics form the basis for legal and regulatory requirements and include issues related to maintaining public trust. Professional organizations have codes of ethical conduct to which their members must adhere.