The concept of professional ethics Essay Sample

The concept of professional ethics Pages
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What do you understand by the concept of “professional ethics” for those working in accounting and finance? Outline some of the key issues of professional ethics that graduates working in accounting and finance may face.

When looking at ethics we need to look at the moral judgement of it and how it deals within ethics. The perception of this may be what moral decisions or judgements may be faced in such things as preparing cash flow charts or auditing company’s accounts. It is at this point that the public may assume, due to the mathematical precision that accountants are engaged in with accounting procedures, that there is very little capacity to make any sort of ethical decisions. These are nonetheless stereotypes, which will look at now in more detail.

For anyone working is accounting and finance, when they are preparing figures, they should submit a ‘true and fair view’ of them in way that it is a description of reality, just like words. However, there is no agreed definition of what a ‘true and fair view’ is so there leaves some anomalies as to the level of ethics that we may encounter within accounting and finance.

Whilst accounting is just like anything else in that it is another way of describing something in the world, it can still be described in different way. Meaning, if you were to give the same set of accounts to two different accountants they could still present them in different ways. So, whilst this isn’t unethical, depending on how exactly they are shown, a degree of ethics may come into it.

This can be seen for the fact that nearly all accounting to some extent, is creative, the reason for this being that there is no clear answer within a set of accounts as to whether something is a cost, an expense or anything else for that matter. An example of this is a company who may have only have made modest profits during the year, yet by selling some of their capital they could then treat that as profits also, therefore making things look at lot better in the books and reassuring shareholders that the company is more stable than they possibly are, this obviously could not go on forever though as capital would eventually run out.

Although, whilst this may seem unethical to some it happens in one way or another with almost every account so who is to say that it is unethical if everyone does it. So it is this notion of everyone doing it which gives you the argument that a company should have the right to enjoy the best possible advantage within the law and therefore show their accounts in the best light possible. Considering also that business executives have a duty of keeping the best possible return for their shareholders investment, you can easily say they are obliged to ensure the firms accounts are presented in the best possible way as to give them maximum advantage in their market.

It is now then, that we should look to auditors in their ethical involvement. Where it is quite a logical assumption to consider they should play a part in resolving ethical issues seeing as they are already bound by professional codes of practice, namely the Institute of Chartered Accountants. In spite of this, as we mentioned before, there is no agreed definition of what a ‘true and fair view’ is in accountancy and this can certainly vary widely between different auditors in what it can mean.

One of the reasons for this being that whilst auditors are meant to be independent, they are still employed by the firm that they work for. Base that on the fact that the appointment of an auditor is often decided by asking the candidate their opinion on a possibly controversial accounting matter, this meaning that the prospect of getting or losing a job is obviously going to have a great factor in their decision on how to view particular pieces of creative accounting.

At present there is no external body in place to point out any accounting practices which may be deemed unacceptable or to have a level of uniformity in the way accounts are presented and held. Conversely, while the accountancy profession may not be completely satisfied with the way things currently are, you have to go back to the fact that a business should have the primary right of how to they will organize their own affairs. So whilst it should make firms books more accurate, they would lose that right so therefore it is very unlikely that strong ethical guidelines will be introduced. Although there have been some proposals for standardizing the presentation of accounting procedures at least in some areas which would then at least give some improvement from what it is like now.

Bibliography

* An introduction to business ethics

George D. Chryssides and John H. Kaler, Pgs 347-353. Chapman &

Hall

* Business ethics(5th Edition)

Richard T. De George, Pgs 450-452. Prentice Hall

* Ethics and the conduct of business

John R. Boatright, Pgs 172-174. Prentice Hall

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