Discuss the importance of ethics in accounting
Discussion topic:
1. Discuss the importance of ethics in accounting. Why is it important for accountants to maintain high ethical standards? What are the potential penalties to the accountant and the accountant’s employer for behaving in an unethical manner?
Student Post
2. Ethical issues affect almost every aspect of accounting, forensic accounting, and adherence to valuation. The American Institute of Certified Public Accountants (AICPA) plays a critical role in defining the guidelines for which all CPAs must comply. In doing so, AICPA undertakes to serve the public interest through a stringent professional ethics code. To interpret and implement the AICPA Code of Professional Conduct, the Professional Ethics Executive Committee (PEEC) was created. In particular, all accountants should behave in the public interest. In this regard, accountants should avoid meeting solely the interests of a specific client or a single customer, but rather follow ethical standards to ensure that the public interest is upheld. The basic principles include honesty, objectivity, professional competence, due care, privacy, and professional behavior. Such principles are essential to preserving the accounting industry as a whole high ethical standards. To sum up, the importance of ethics in accounting cannot be adequately emphasized because ethical standards lay the foundation on which the entire industry must be held accountable and prosper.
When company management is dishonest for financial fraud, the company may be liable to civil and criminal penalties. The Sarbanes-Oxley Act prescribes fines and incarceration for intentionally falsifying financial information of publicly traded companies. Therefore, the company’s creditors could successfully sue the company and its owners for civil damages to cover their losses. Small business owners should be careful, as not knowing accounting practices and principles are no defense against fraudulent reporting. If a reasonable person believes a manager should have known about business fraud, it may be enough to cause the jury to side with the plaintiff.
Ellrich, Neal, Smith & Stohlman, P.A. Certified Public Accountants (2017). The Importance of Ethics in Accounting. Retrieved from
https://ensscpa.com/the-importance-of-ethics-in-accounting/
3. The importance of ethics is very critical when it comes to accounting. It is important for the accountants to maintain great ethics with their company that they are working for to give the company confidence that they can trust them to hold themselves to the highest standards possible. Being trustworthy and complete when they are completing financial statements and all the processes that accountants do. If they behave in an unethical manner and the employer finds out, it could mean several things. It could mean loss of employment, it could mean prosecution depending on what behavior is done.
It could possible mean not being someone that other company’s would want to hire and have difficulty finding a new job.
When you hold an accounting position, you have to make sure to record everything and record it in the correct manner in which it should be. That means correctly inserting information in the correct journals and itemizing correctly. Also making sure they correctly input the numbers, because could cause major problems for management and audit results.
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