Accounting ethics is a vast term and have a lot of minor details in it. Looking at just the basics, it can be defined as providing right financial details to the company and to its stake holders. Numbers are something which can be manipulated very easily for one’s own interest and that is where the rules and regulations are made to make sure that the accounting ethics are not breached at any level. Businesses make sure that each and every account is made and maintained in the right manner (Cohn, 2013). Accountants work in many different areas and fields. They are not focused on one particular subject but have to handle a lot of work at a single time. The accounting areas majorly include performing audits, making tax statements, making budgets and planning for the future, manage the ongoing accounts, consultancy and of course, preparing general accounts. Having so many things to handle, there is an opportunity for them to make frauds at each level or subjects they are working on. The greed of making huge amount of money in no time makes them get onto the wrong track and that’s where the ethical issues start coming into action (Mele Carne, 2005). Although having all the right code of conduct, there are still some loopholes in the system which the accountants and the senior officials of the company identify and then use it for their own good. One of the biggest examples we can find in the history which was charged of the allegation of breach of accounting ethics is the Lehmon Brothers Inc. Lehmon Brothers was one of the giant companies and had a big name when it comes to the investment market of the United States of America and due to its unethical accounting methods it got bankrupt. The business of Lehmon Brothers can be described as borrowing money from the general public and then investing that money into different assets. They earned interest from their investment into the assets and then share the interest earned with the people they borrowed loan from (Jeffers, 2011). Lehmon Brothers were considered a good company to invest in as they showed people their artificially made financial statements to the people. After they filed bankruptcy in 2008, the position of Lehmon Brothers came in front of the eyes of the people. We will now discuss about how they betrayed people by showing artificially made good financial statements. A report was made by Jeffers, Agatha E. in which all the details regarding Lehmon Brothers bankruptcy and how they did breach the accounting ethics was presented. Lehmon Brothers used a Repo 105 accounting policy to misguide their investors. Repo 105 policy suggests that when an asset is given out and cash is received, it should be recorded as sale of asset. Although in accounting methods, an asset is not considered and written as sale until it is completely transferred to the second party and is fully non-operational by the company. Lehmon Brothers accustomed to give assets as a guarantee to purchase loans from the institutions abroad. They recorded this transaction as sale of assets and showed people that they have got rid of non worthy assets and have earned good money from that. In this way their balance sheet looked less leveraged as they have less unproductive assets and more cash. Secondly they used to pay off some liabilities with the
Review of Accounting Ethics Name University Business ethics are the code of conduct and the values which run the business and make them take the right decisions. In short it is to know what things to do and what things to refrain from. Business ethics are not only related to the insiders of the organization that is their human resource, but also is related to shareholders, customers and every single person who is related to the business directly or indirectly…
It finally makes recommendations on how accountants can be made more responsive to ethical standards and methods. Keywords: Accounting, Ethics, Sarbanes-Oxley, Stakeholders Table of Content Executive Summary………………………………………..4 Introduction……………………………………………….
Managers have been continually unable to effectively use management accounting information concerning existing dynamics. Therefore, the paper will reveal the existing managerial accounting dynamics that have hindered effective communication and decision making by managers.
Central administration economic strategy regarding information economy and 2020 visualization has as well opened the marketplace up for the contest and undoubtedly augmented technological development. These alterations have impacted terribly much on the global business setting, predominantly on developed industry, which has been depicted as the most dynamic and imperative contributor to the Global economy.
The information related to the Barclay’s Bank in LIBOR rate fixing scandal has led to the drawing attention to the ethical issues resulting in the breach of the ethical issues related to the financial institution over the last five years. Thus the corporate ethical breach has increased in the recent times due to the increase in the loopholes of the company’s ethics (International Risk, Crisis & Business Continuity management, 2011, p.1).
The world is being rocked with many cases of accountants breaching business ethics. What these organizations fail to consider is the environment that employees work in. Accountants may be responsible people who change with the dynamics of the organization.
The example of corporate accounting scandals that occurred over the years have been analyzed to find the impacts of unethical accounting practices in such cases. This helped to explain the importance of ethical accounting practices in the companies. The accountability of the accountants and auditors in providing true financial disclosures for protection of the investors has been emphasized in this research.
In the preamble that has been recently published by OECD, they have stated that corporate governance signifies a set of association that lies between the management of the company, its shareholders and its board, which also involves the other stakeholders of the company.
Stewarts article is of particular importance in understanding the organizational arrangements to ensure ethical accounting and financial practices. This article provides a debate on the objectivity and success of standards applied to organziations and ends up weighing between