ETHICAL STANDARDS

Ethics and Accountability of Accounting Professionals

Ethics and Accountability of Accounting Professionals

Introduction

Ethics related to business operation is currently treated as burning question due to thrilling scandals that have caused economical turmoil's in several countries. These astounding business scandals raise many questions about the integrity and morality of accountants and businessman. It is critical argued by many economists that accountants are the main reason behind the deterioration of the ethical standards of a business. Following the collapse of WorldCom and Enron in year 2002, International Federation of Accountant (IFAC) published a report with title “Rebuilding public confidence in financial reporting - an international perspective”. Findings of the report concluded that financial disorders of corporations were the upshots of problems related to improper management of ethical standards. The report identified that to increase confidence of public in financial reporting one should enhance ethical standards, the adequacy of corporate finance, reporting methods, quality of audit and corporate governance.

The professional accountancy bodies and accounting professionals have some responsibilities in the establishment of ethical standards, but their inefficiencies have lead to collapse of corporations and exposed our business environment to corporate scandals. Ethical conduct of accounting professionals is becoming a newsworthy subject. This essay will focus on the following aspect: development of ethical codes by professional accountancy bodies in order to protect the public interest, ensuring public trust and upholding the reputation of the accountancy profession (ICAEW 2013).

Discussion

What is Ethics?

Clarity of the concept of ethics is formed by professional, cultural and personal values. There are two perspectives regarding the nature of ethics, some believe it is a subject of individual interest while other believe it's based on society's interest. Debate on ethics and ethical standards has been dominated by these two perspectives for a longer period of time, and this debate will remain continuous in future (Allen 1990, p.2).

The term Ethics is derived from the combination of two words ethos (Character) and moras (Customs). Jointly these two words explain how individuals interact with each other. Therefore, ethics is about making the selection between right and wrong based on the values an individual carries from inheritance and from accumulated knowledge.

Ethics & professional practice

It is essential for accounting professionals to follow establish ethics in their working practices because of the sensitivity of their working environment. The nature, duty and responsibility of accountants work put them in closer and special position of faith in relation to their employees, employers, clients and the general public. These all stakeholders are directly relying and dependent on the reporting of accountants for making investment and related decisions. Thus, it is important to keep and maintain the confidence of public and clients by following ethical standards design by a professional accountancy body (IFA 2013, p.10).

Ensuring the uppermost ethical standards is the responsibility of a business accountant (someone who is performing accountancy tasks in an organization on salary) and a public accountant (Someone who deliver taxation and assurance services to the general public for ...