Ethical Code of Conduct - Case Study Example

Ethical Case Study Introduction At least in every profession there is an ethical of conduct. In the accounting profession, for instance, every accounting officer has to abide by the rules and ethical principles of accounting. Whenever an accountant prepares a company’s financial records, he must maintain his or her loyalty to the ethical provisions. However, in many instances accountants are always faced with ethical dilemmas as they may be made due to duress or undue influence from the managers or top officers, to give false records. Unless such accountants abide by the guiding ethical principles, they may falsify financial records and status of a firm and this may lead to criminal and ethical breaches. With the previously stated in mind, every accountant has to ensure that no one influences him to do something that would be unethical no matter the circumstances. The reason for this is that the result may be as stated earlier, criminal and ethical violations and also may be detrimental to many others who have interests in the company (Belski et al. 2008 p. 17). In the case of Northstar Company, the accountant is faced with an ethical issue. He has to increase expenses arbitrarily for no justifiable reasons that would also affect everyone in the company. As a result of increasing expenses despite having had low-income investors capital may be at risk considering there is no guarantee that increasing expenses would justifiably increase income. In fact, the President seems to be having no good motive for the company other than getting his incentive. Fooling the company that it made profits yet it did not does not mean well for the company’s future. The company may continue making loses a matter that would lead to loss of employment for other members of staff. Additionally, they could lose essential factors for the investors such as markets through improper financial investments. Under these circumstances, the best thing to do is find out why there was low income during the current year and find better ways to seal the gaps that contributed to the low income. In that context, I would advise the accountant to stick to the ethical rules and principles. In case the President threatens him of any repercussions then he should make it known to the relevant authorities within the company. The authorities will ensure that the President follows the right ways to achieve the company goals instead of following improper means. In most instances, managers employ short-cuts to find a way out of a problem facing their firms without considering their role as guardians of professional and company ethics. In the second scenario of a company that has been making losses, the managing director of Mubark Company seems to be one of those managers who are always prepared to do everything regardless of its ethical implications. By asking the Chief Financial Officer to give wrong information, implies that he has been doing that to create his so-called expertise of turning around loss-making companies. Changing a liability to appear as profit is a false statement of the real facts on the ground. Because of that request and coercion by the new Managing Director, the Chief Financial Officer faces an ethical issue that needs to be addressed diligently. The financial officer has to keep accounting ethics so that there is no false information on the financial status of the company. It would even be gross to lie that a liability was a profit, and that should not even be an option for the financial officer. Those that would be affected are the investors that may be fooled into investing into the by the false financial status of the company. Investors may be duped into believing that the company is profitable which would be wrong as it is possible that the company would be operating on a deficit of the falsified amount (Belski et al. 2008, p. 19). There are causes of action that Maryam Mohammed as a Chief Financial Officer could consider in this case. One of them is that she could tell off the new manager’s demands and ask him to use proper ways of reestablishing the falling company to a profitable company. Still, she could tell those concerned that the manager demands her to falsify accounts and that that may be detrimental to the company’s future. Because of the preceding, I would advise Maryam to follow what is ethical in providing correct and accurate financial information. This would not only help her save the unsuspecting investors, but would also save her from criminal prosecution and any other action for breaching ethical principles. Ethics in the accounting profession is of invaluable worth to any company. Not only does it ensure that there are integrity and sanctity of financial reports but observing ethics also help advise the firm properly to avoid future financial disasters. Furthermore, observing ethics makes it easy to predict the future of a company that is not only important to the owners but also the society at large. In essence, every accountant has to observe some allowed accounting standards. Every accountant has to disclose the true financial status of a firm to the right persons. Further, an accountant should not have his or her interests to conflict with his profession (Belski et al. 2008, p. 23). Lastly, integrity must be observed by all accountants as this is the basis for ethical accounting. In conclusion, accountants play a crucial role in financial reporting. Other than employing their skills to the benefit of the business and society at large, they have a crucial role in ensuring that the integrity of financial reporting is observed. As such, they need to abide by the professional code of conduct in their work as financial analysts for both the company and general society whose growth depends on proper and accurate information. Reference Belski, W. H., Beams, J. D. & Brozovsky J. A. (2008). Ethical Judgments in Accounting: An Examination on the Ethics of Managed Earnings. Journal of Global Business Issues 2 (2), Summer 2008. Read More