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Ethical issues in Accounting

The increase in accounting scandals in the recent past requires the introduction of strict measures to regulate the accounting profession. The diversity in accounting services has increased the probability of occurrence for unethical behavior among the accountants since it has become hard to capture all the accounting activities being operated. Ethical issues affecting the accounting profession are overstatement of revenues to portray a good financial condition of a business contrary to the real situation. Corruption has also been cited as unethical issue affecting the profession. Several companies have been reported to collapse due to conduct unethical practices in the accounting profession. The management and the accountants have been reported to liaise in scandals where a lot of funds are embezzled (Love, 2008).EthicsEthics refer to a code of conduct which is required of people working in a particular community, organization, or profession. Professional ethics are developed to govern people in a particular career path and to ensure they adhere to the established rules and regulations. Professional ethics in the accounting profession are based on a particular country or region. There are international standards in accounting which provide a general guideline for all professionals in accounting in the entire world (Love, 2008).Professional ethics in accountingProfessional ethics in accounting have been developed for a long period in time to regulate the profession. The institute of Certified Public Accountants (CPAs) was established in 1916 to address ethical issues in accounting. Several rules were established to ensure all accountants adhere to ethics in their profession. Professional ethics in accounting were first introduced by Luca Pacioli. These ethics were later expanded by professional organizations, legal entities, and individual companies (Love, 2008). There are many stakeholders who rely entirely on the information provided by accountants, for example, shareholders, government agencies, employees, managers, competitors and other interested individuals and organizations. Improving the ethical standards in accounting will help accountants provide accurate information and reduce the number of scandals being reported by many organizations (Duska, 2003). Several accounting scandals have been reported in the past which relate to unethical issues in accounting. Controlling accounting ethics has been a challenging task to many organizations and this has led to occurrence of many scandals which relate to the weaknesses of the accounting profession. Several standards have been created to protect professionalism in accounting; but this has always been accompanied by an increase in crimes relating to unethical accounting behavior. In order to impress the shareholders, managers liaise with the accountants and auditors to conceal some transactions and provide financial statements which ado not reflect the true and fair value of the organization. The collaboration between the three parties has led to great losses by companies with some companies becoming bankrupt while others accumulating a lot of debts which take long to repay. Some of the global companies which have encountered fraudulence due to unethical accounting practices are Enron, AIG, WorldCom, and Nugan Hand Bank. Shareholders have incurred great losses when frauds in accounting occur. For example, shareholders at Enron incurred $25 billion loss when the auditor, Arthur Anderson conducted fraudulent operations in the early 2000s (The New York Times, 2003). The unethical behavior by accountants can result in loss to many stakeholders. The shareholders lose the benefits from their investments while employees lose their jobs when a company is declared bankrupt. The government is concerned about ethical issues in accounting since big organizations contribute a lot to the gross domestic product. International organizations regulate the ethical behavior of their professionals to ensure they continue expanding their operations in the global markets. The international community has established the international law to govern the activities conducted across the globe. Such laws govern all professions and organizations should adhere to the rules and regulations provided for their survival in the global markets. With the increase in globalization of many organizations the use of ethics has been a key agenda in the global environment (Stuart, 2004). Necessary steps to be taken to avoid unethical practicesIndividual organizations should educate their accountants the ethical standards in accounting. Since every organization has its own procedures it should establish a set of ethics which align with its operations. The general ethics in accounting cannot address all the accounting problems the firms encounter in their day-to-day operations and the ethics should be designed to fit the specific needs of the firms. Through this process the accountants will not be able to use the loopholes in the International Accounting Standards. Many accountants conduct unethical practices and escape without punishment since they are able to use the weaknesses in the ethical standards provided by law (Stuart, 2004). Independent organizations should be established to regulate the accounting profession. These bodies should be provided with powers to regulate the accounting profession. The organizations should be separated from the activities of the government since many public institutions are not operated efficiently. International bodies should be created to enhance ethics in the accounting profession. These bodies will protect the interest of multinational companies which operate in many countries. Multinational companies require a good system of accounting in the countries they are based and they require a good accounting system to ensure all their activities are properly regulated (Stuart, 2004). The accountants working in any organization should join professional bodies to ensure they are properly monitored. Many accountants carry out unethical activities when they are not governed by an external body. The organizations should ensure they employ individuals who are registered members of these accounting bodies to avoid scandals which may not be legally supported by an external body. All the professional ethics in accounting should be provided to all accountants in all organizations to enlighten them about the requirements they are supposed to adhere to (Stuart, 2004). The education institutions should provide appropriate accounting courses to their students to provide skills to the accounting professionals. These education institutions should be properly regulated to ensure they provide the required academic knowledge about accounting. Many academic institutions have emerged since the introduction of education systems in accounting. Some of the institutions are not fully equipped in provided the required knowledge in accounting and they need to be monitored. The government ministries concerned in education should ensure the institutions adhere to the standards required for teaching accounting courses (Loeb, 2007). There are several goals of providing accounting ethics in the education systems as provided by Loeb (2007). The students should be capable of relating accounting education with ethics and morality; they should have the capacity to identify accounting issues that relate to ethics; the education systems should provide a sense of responsibility upon the accountants; development of the ability to deal with conflicts about ethical behavior in accounting; the accounting professionals acquire knowledge about dealing with uncertainties in the profession; the accounting education enables the students change their unethical behavior; and appreciation of the components of accounting aspects in ethics (Loeb, 2007). The accountants should have a personal responsibility to conduct ethical activities in his/her daily operations. A personal commitment to perform ethics in their career should be enhanced since people cannot adhere to ethics until they are committed to comply with them. To solve the dilemmas in accounting, the accountants must realize the ethical issues affecting the organization they are working for, identify the parties interested in the outcomes of ethical/unethical conduct, establish the alternatives of dealing with each dilemma and adopt the best alternative of dealing with the issues. Since there top management individuals who are concerned with the ethical behavior, the accountants should liaise with them to help solve the ethical problems they may encounter in their daily activities (Stuart, 2004). All organizations should take responsibility to protect the accounting profession by ensuring they collaborate with the legal organizations and other bodies established to regulate accounting ethics. As technologies continue to be created, the profession of accounting is becoming more exposed to unethical practices. Many people misuse the ethics established by the use of new technologies. New technologies may not be covered by the existing legal systems and criminals may use these technologies to conduct unethical practices. The corporate culture should be designed towards achieving the desired ethical conditions to ensure accountants have appropriate behavior and attitude towards ethical practices. The change of behavior is essential in promoting ethical standards (Appelbaum, Kyle and Mathieu 2005). Leadership strategies should be introduced in the organizations to enable the management influence their employees adhere to the required ethical behavior. Since leaders have the ability to influence their followers adhere to the established set of conduct, the managers should adopt leadership as a strategy to enable the accountants and other professions follow the ethics required.ConclusionEthics provide a guideline to be followed by people in a particular setting. Professional ethics in accounting were introduced after the realization that accountants were involved in dubious activities which could lead to embezzlement of funds. Several organizations have failed to lack of adherence to ethical issues in the accounting profession. The legal systems of any country should amend the professional ethics relating to accounting to reduce the number of financial scandals reported by many companies. Strict rules should be implemented to regulate the accounting profession and to avoid the mischievous conduct by accountants. To enable the accounting professions practice ethics in their work, the education systems should provide adequate knowledge about accounting ethics and standards, the laws concerning accounting should be amended to accommodate the changing technologies and other establishment of appropriate control measures by the government. The international communities should collaborate to eliminate unethical accounting practices.

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