Effects Of Unethical Behavior Essay

605 words - 3 pages

Effects of Unethical Behavior

Effects of Unethical Behavior
Accounting is used as a kind of language to communicate and report information about the financial position of an organization in a way that is understood by its intended users. The information reported is vital to investors and creditors of that organization as it gives them an insight of the business. This information is used as a determining factor in the decisions they will make regarding investing or extending credit in a particular organization. As a result of this, it is not uncommon to encounter individuals and organizations that utilize unethical behaviors and practices to make the books look more appealing to outsiders.
Corporate scandals can be very public affairs that cost companies not only money but their reputation in the public eye. The pubic often question the reason why some individuals are willing to run their companies honestly and others turn to ...view middle of the document...

WorldCom had so much fraud in their accounting records that it led them to total bankruptcy.
As a result of these to publicized scandals the United States government had to get involved which usher the creation of the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley act was created to bring ethical practices back by implementing strict auditing rules. One of the biggest regulations added by the Act was the requirement to have the CFO or CEO of the organization sign the financial statements certifying the validity and accuracy of the information being presented.
The best way to turn unethical practices around and promote and atmosphere of honesty and ethics in the workplace is the implementation of strong training programs. Training programs can communicate the value of ethics in an organization. Trust, honesty, respect, and transparency in the workplace make employees feel connected and like they are part of the company. Making employees feel like their actions have a significant impact in the wellbeing of the company can deter the pressure to compromise their ethical standards. Training should be completed as soon as new employees are hired into the company to create a first impression of the importance of ethics within the organization. (Bannon, Ford, Meltzer).
The problem of unethical practices in the business sector is one hard to eradicate. Every company should take the initiative to stop it and promote ethical practices. Training their employees and creating a community of trust, respect and honesty within the company is one of the best ways to fight unethical conduct. Also by following the rules implemented by the government, like the Sarbenes-Oxley Act, will instill a sense of order and discipline when reporting accounting records. Organizations need to step forward and set examples of how they operate strong, positive and ethical cultures while still giving their stockholders consistent financial results.

Bannon, S., Ford, K., & Meltzer, L. (2010). How to instill a strong ethical culture. The CPA Journal, 80(7), 56-58. Retrieved from http://search.proquest.com/docview/637267174?accountid=35812

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