Importance and Benefits of Accounting Ethics
In this article, we will be taking a dive into Accounting Ethics. What Accounting Ethics stands for, it’s importance to accounting professionals. We will then be looking at qualities that make up of Professional Accounting ethics. The Consequences of poor Accounting Ethics and the benefit of good Accounting Ethics to the Profession and the Public.
What is Ethics ?
Ethics can be defined as established codes of conduct, modes of behavior, pattern, practice, standard and principles generally accepted or strictly adhered in a given profession or situation.
Is used to refer to generally accepted codes of conduct, standard, practices and principles of accounting to be strictly adhered to by accountants/professionals in accounting profession.
Accounting ethics encompasses both rigorous adherence to norms and a detailed examination of unusual situations requiring professional judgment. Understanding the ethical foundations for independence, integrity, secrecy, and professional competence will help you make better decisions and protect your field’s reputation.
Qualities and Accounting Ethics
- Honesty: Honesty means to be truthful. Not only to being truthful but candid and forthright, absence of lie and deception..
- Transparency: Transparency means to be open-minded, being straight-forward in dealing with clients without hypocrisy and pretends.
- Integrity: An accountant should behave with integrity in all professional, business and financial relationships. Integrity implies not mere honesty but fair dealing and truthfulness. Integrity is an important fundamental element of the accounting profession. Integrity requires accountants to be honest, candid and forthright with a client and financial information.
- Accountability: Accountants should acknowledge and accept personal accountability for the ethical quality of their decisions and omissions to themselves, clients, and their companies. Accountability simply means being responsible for any cause of action. Ability to be depended or relied upon.
- Fairness: Fairness means just in all dealings. Not to exercise power arbitrarily or use overreaching or indecent means to gain, maintain any advantage nor take undue advantage of another’s ignorance or difficulties. Fairness also means to be open-minded
- Objectivity: Objectivity is the state of mind which has regard to all considerations relevant to the task in hand but no other; Objectivity is essential for any professional person exercising professional judgement. It means accountants should not allow bias, conflicts of interest or undue influence of others to override professional or business judgement. It is sometimes described as ‘independence of mind’
- Trustworthy: Trustworthy is the state of relying and depending on someone’s ability, professional competency. It simply means to believe somebody sincerely. Accountants should be competent enough to be trusted by the client in all professional standard and business.
Professional Competence: A professional accountant must keep up with changes in technology, regulation, and best practices. To make sound decisions, an accountant must stay current on events that could influence the outcome of a choice.
Due care entails acknowledging your competence level and not implying that you are an expert in a field in which you are not. Consulting with other experts is a common occurrence that helps to bind a group of people and build respect.
Accounting professionals who manage others should follow similar rules. These accountants must guarantee that their employees are properly trained and guided in the performance of their duties.
Why is Ethics Important In Accounting
- You are dealing with sensitive Information
- Your Mistakes are on You
- You are seen as a Professional
- Your business is Counting on you
Consequences of poor ethics in accounting
- Lose customers
- Have trouble retaining employees
- Struggle to stay afloat
- Lose other business relationships (e.g., investors)
- Have serious legal repercussions
Benefits of Accounting Ethics to Accounting Profession and the Public (Society)
- Ensures standard in Accounting profession
- Ensures accountant’s integrity, transparency and objectivity in accounting Practice.
- To protect the public from unscrupulous Accountants and corporations
- It prevents hiding or mis-representation of information to the society