This website uses cookies to ensure you have the best experience. Learn more

Importance Of Ethics In Accounting Essay

1086 words - 5 pages

Running head: IMPORTANCE OF ETHICS IN ACCOUNTING

Importance of Ethics in Accounting
Everest University

Importance of Ethics in Accounting
Accounting fraud is common but is not as trivial as the common cold; a typical organization loses annual revenues of nearly 5 percent to fraud. In addition, almost one-quarter of reported fraud is exceeding $1 million dollars. The accounting industry is constantly growing and changing. Consequently, difficult decisions have to be made every day. While accountants follow a simple code of conduct; nevertheless, due to the infamous scandal of Enron, the Sarbanes-Oxley Act of 2002 was constructed to reestablish confidence in the public ...view middle of the document...

While working with an accountant, one should be able to count on, and trust they are receiving the correct information and not have to question the accountant’s abilities.
Just as, depicted in the 1987 movie, ”Greed is good!” the movie implies that greed is a motivator and that some business professionals will do anything to make money, which includes the practice of unethical behavior (Smith, & Smith, 2003). An example of this theory is the infamous scandal of Enron, who are synonymous with greed by inflating profits by whatever means feasible. The investigation revealed that the firm Arthur Andersen was negligent in the conspiracy with Enron executives in “cooking the books” by creating false earning reports, thereby concealing massive amounts of debt and falsely inflating stock prices. The investigation established that Andersen instructed or personally destroyed financial documents that revealed the actual magnitude of Enron’s financial difficulties. Also proven was that Enron’s executives and many others led to the implosion of Enron due to fraud, false reporting of revenue, questionable accounting practices and an overall disregard for nearly every principle of accounting ethics. Ultimately, the conspiracy led to overall scrutiny of American’s faith in the accounting profession itself.
Although, accountants already had established laws and regulatory rules to follow, because of Enron and several other large companies involved in serious financial illusions of financial records, and as a result of their actions there was a push to increase regulations and supervision in financial reporting, the Sarbanes-Oxley Act of 2002 (Sox) was put into law. These regulations are mandatory and set the rules that all accounting firms must follow. The Sox Act of 2002 modified the existing laws set by the Securities Exchange Act of 1934, and its purpose was to prevent widespread scandals in accounting from reoccurring. The amended alterations under ”Title VIII of the act (Corporate and Criminal Fraud Accountability) increased penalties to $5,000,000 in fines and/or up to 20 years imprisonment for altering, destroying, mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct, impede or influence a legal investigation” (Addison-Hewitt, & B2B, 2003a). Also within this area it “imposes penalties of fines and/or imprisonment up to 10 years on any accountant who knowingly and willfully violates the requirements of...

Other Papers Like Importance of Ethics in Accounting

Accounting Code of Ethics Essay

1255 words - 6 pages aCCOUNTING cODE of eTHICS LaToya Wallace AC504 APril 10, 2012 Accounting Code of Ethics Introduction The accounting system is ever changing and constantly evolving. Therefore, it is extremely that accountants adhere to very high ethical standards. The code of ethics for accountants “guides those in the profession to behave in a respectful, controlled and moral way. Clients need to have confidence in the business practices of

Review of Accounting Ethics

1445 words - 6 pages Review of Accounting Ethics Dr. ACC 557: Financial Accounting May 22, 2013 Table of Contents 1.0 Corporate ethical breaches in recent times. 3 2.0 Accounting ethical breaches and their impacts 3 2.1 The Scandal of Enron 3 3.0 Organizational ethical issues and the management failure 5 4.0 Breach of the accounting practices and its impacts 5 5.0 Recommendations by the CFO 6 6.0 References 8 1.0 Corporate ethical breaches in recent

Review Of Accounting Ethics

1666 words - 7 pages | Assignment 1: Review of Accounting Ethics | | | | Assignment 1: Review of Accounting Ethics | | | Doing the right thing matters. Every day, workers make decisions that are vital to a company’s success. How those decisions are made is just as important as the decisions themselves. In every company there are shareholders, consumers, business partners, and employees who have placed their trust in workers to act

Importance Of Ethics

830 words - 4 pages The Importance of Ethics in Entrepreneurship This essay emphasizes the importance of ethics as a basis for successful entrepreneurship in any environment and under all circumstances. Let us first look at the meanings of entrepreneurship and ethics, respectively. Hisrich, Peters, and Shepherd (2010) defines entrepreneurship as “the process of creating something new with value by devoting the necessary time and effort; assuming the accompanying

Importance Of Ethics And Social Responsibility In The Business World

1388 words - 6 pages IntroductionStrategic ethics and social responsibility are two of the most important, yet perhaps most misunderstood concerns in the world of business today. By their very nature, these fields are controversial, and there is no universally accepted approach for solving their questions. On the other hand, government is encouraging organizational accountability for ethical conduct, and organisations are being asked to prevent and control

What Is The Importance Of Cost Accounting?

1107 words - 5 pages What is the Importance of Cost Accounting? ACC310: Cost Accounting I (BBJ1220A) Instructor: Ashley Harper Melissa Little June 18, 2012 This paper seeks to explain the practices and principles of cost accounting and their overall effectiveness in assisting a company in minimizing costs where possible and optimizing the return on the costs that are necessary. Every year, no matter the overall state of the economy

Assignment 1: Review of Accounting Ethics

1711 words - 7 pages ethical environment. 4. Analyze the accounts impacted and/or accounting guidelines violated and the resulting impact to the business operation. 5. As a CFO, recommend which measures could have been taken to prevent this ethical breach and how each measure should be implemented in future. Assignment  1:  Review  of  Accounting  Ethics                            3     Before

Assignment 1: Review of Accounting Ethics

1098 words - 5 pages Introduction Accounting ethics is necessary people financial consultants, accountants or accounting executives are privy to confidential, private and sensitive information about people, companies and their clients. One trusts an accountant with information regarding their finances or business. That’s why it is so important for ethics in accounting and in financial reporting. It is important for ANY type of business to practice ethics and not

Ethics and Why They Are Important in Using Accounting Software

565 words - 3 pages Ethics and why they are important in using Accounting Software By Kevin Alexander Computerized Accounting acc231-f2014-ol-u-91502.001 Introduction Accounting is an honorable profession. Accountants must adhere to a set of standards that many other professionals do not have to be subject to. The ethical aspect for an accountant working in the public or private sector comes down to them being vigilant in making sure there are no outside

Importance of Education in Healthcare

1714 words - 7 pages health care professionals like pharmacists and physiotherapists after all they have to deal with life and a unprofessional work place just can’t do the job. TRAINING AND EDUCATION IN HEALTH CARE -Concentrating on health care industry as mentioned earlier the industry deals with life so the importance of training and education in health care cannot be underestimated The Medical Council of India (MCI) is a statutory body with the

Importance of Speech in Personality

716 words - 3 pages Importance of Speech in Personality Development Author: Exforsys Inc.     Published on: 5th Feb 2010 In every aspect of our life, a good personality holds a very important value. Whether you are a budding professional, an established career person, or perhaps a home-maker, it is something that will help you develop and maintain solid relationships with others. One of the key facets of personality development is speech. This is the ability of

Related Essays

The Importance Of Accounting In Business

1218 words - 5 pages Renee’ Johnson “The Importance of Accounting in Business” It important to take accounting in business because starting a business often requires entrepreneurs to understand and complete a variety of business functions. An important business function when starting a small business is accounting. In business there are endless stacks of financial documents, and accounting will provide a clearer picture for success in business. Whether you

Accounting Ethics In Healthcare Essay

953 words - 4 pages Accounting Ethics in Healthcare HCS/405 Dr. LaTrina Frazier   Accounting Ethics in Healthcare The four goals of good healthcare are to relieve symptoms, cure disease, prolong life and improve quality of life. Access to healthcare has been a perpetual challenge to healthcare providers who must take into account important factors such as equity, efficiency and effectiveness (Maharaj & Paul, Jul 2011, 98) Your

Ethics In Management Accounting Essay

2330 words - 10 pages ASSIGNMENT ON ASSURANCE OF LEARNING – ETHICS IN MANAGEMENT ACCOUNTING (CMA) Awoluyi Adekunle, Matric Number: 201403007 JUNE 29, 2015 MEMBA 3 LBS, Lagos AWOLUYI ADEKUNLE Matric Number: 201403007 Introduction The source of cost management ethical problems in any organization can be one or more of the following; 1. 2. 3. 4. Organisation’s management expectation Vs. professional ethics Personal desire for recognition

Ethics In Accounting Essay

410 words - 2 pages Acct 202-01 ETHICS: BUSINESS AND MANAGERIAL 1. List the relevant facts. -Janice is a highly paid top executive in charge of research and development. -John is her underpaid assistant that always has more than adequate evaluations, but is still underpaid -John designed a software package that addresses major concerns in the company and shares it With Janice in hopes of receiving a