Accounting Ethics is Important for Company

Document Type:Research Paper

Subject Area:Accounting

Document 1

Code of Ethics for Professional Accountants says to the world that professional accountants are competent to do what they say they will do, and that they will behave professionally, and with due care, integrity, and objectivity, ("Ethical Behavior in Accounting: What is Ethics?," 2011). Accounting ethics is primarily a field of applied ethics and is part of business ethics and human ethics, the study of moral values and judgments as they apply to accountancy. The sad truth is that almost every company has individuals that partake in unethical behaviour for their personal benefit or supported by the company. Unethical behaviour might be as simple as using company property and time for personal benefit to inside trading and financial fraud. Poor accounting ethics can lead companies into bankruptcy from improperly reported financial information.

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Ethics concern an individual’s moral judgment about right and wrong. The leadership who make decisions in a company are influenced by values and vision, ("Afterword: Current Debates on Accounting Issues," 2011). In an organization, a code of ethics is a set of principles that guide the organization on its programs, policies and decisions for the business. It can affect the reputation, productivity and bottom line of the business. The ethics that leaders in an organization use to manage employees may have an effect on the morale and loyalty of workers, ("Ethical Behavior in Accounting: What is Ethics" 2011). When that code is breeched, many issues arise. A positive and healthy corporate culture improves the morale among workers in the organization, which may increase productivity and employee retention.

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(Blumenstein and Pulliam, 2003) Accounting ethics builds trust within a community and among investors and customers. Ethics are important to any business, creating trust and customer confidence. When businesspeople make unethical decisions, benefiting themselves only, it can lead to the kind of scandal and outrage that destroy careers and even companies. Therefore, trust is very important for a company to develop and build a trusted relationship among investors and customers, ("Afterword: Current Debates on Accounting Issues," 2011). Accounting ethics provides accurate and reliable information to a company. Ethics is the practice of behavior that does not allow for intentionally inaccurate or false accounting practices, (Stanwick & Stanwick, 2014). This pertains not only to following the law, but also to interpreting financial data as clearly and honestly as possible in all situations.

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In business, people use the information collected by accountants to make very important decisions, including decisions on how to structure the organization's profit system and whether to invest in a particular business or not, ("Afterword: Current Debates on Accounting Issues," 2011). (Lacoma, n. d) In conclusion, Accounting is an integral part of our business and finance world. However, there are some accounting ethics to be kept in mind for all financial transactions made. Wherever there are investors and creditors involved, ethical codes in accounting can never be ignored, ("Ethics Applied to the Accounting Firm," 2011). Accounting ethics can be defined as a set of distinct guidelines for a business to maintain clean balance sheets, accounting for their profits, losses and expenses incurred, and prevent it from mishandling financial reports and statements, ("Afterword: Current Debates on Accounting Issues," 2011).

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