Contemporary Readings in Law and Social Justice 8(2)

2016, pp. 263269, ISSN 1948-9137, eISSN 2162-2752

MECHANISMS FOR ENHANCING ETHICAL BEHAVIOR

IN THE ACCOUNTING PROFESSION
LUMINIA IONESCU
lionescu.mfc@spiruharet.ro
Spiru Haret University
ABSTRACT. The purpose of this article is to gain a deeper understanding of ethical
tendencies in the accounting profession, accountants ethical duties, the use of ethical
principles to accounting regulation, and the driving force of public accountants to
make ethical decisions. My analysis complements the growing literature on the
ethical features of the human undertaking of accounting, the ethical criteria that
establish how accounting operates within society, the ethical responsibilities that
accountants confront, and the moral interpretation and ethical appraisals of practicing
accountants.
Keywords: ethical behavior; practicing accountant; responsibility; society
How to cite: Ionescu, Luminia (2016), Mechanisms for Enhancing Ethical Behavior in the
Accounting Profession, Contemporary Readings in Law and Social Justice 8(2): 263269.
Received 10 June 2016 Received in revised form 28 October 2016
Accepted 28 October 2016 Available online 15 November 2016

1. Introduction
The business realm grasps accountants as knowledgeable, impartial and
reliable experts, depending on their qualified services for decision-making.
Professional accountants should be highly competent in accounting knowledge
and be endowed with a significant level of probity (Nica, 2016, 2015) and a
comprehension of ethical criteria. Public accounting is unexampled in contrast
with other occupations as ethical behavior does not merely empower it to
keep on to assist the business sphere efficiently (Bratu, 2015), but the whole
underpinning of the line of work is established on confidence in the proficiency and rectitude of the accountant. Public accounting functions to check
the financial veracity and soundness of information supplied by diverse entities. Misbehavior from a professional undermines his particular practice and
jeopardizes the foundation of the occupation. (Chiang and Braender, 2014)
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2. The Relevance of Ethics in Public Accounting

There are broad ethical duties that accrue to experts and particular duties that
result from being an accounting professional. Supplying precise financial
depictions of business undertakings is a useful operation (Cesaroni, Sentuti,
and Buratti, 2015), as it provides a crucial service to individuals who require
that information to participate in financial decision-making. Instrumental
activities may generate both substantial benefits and considerable disservice
to individuals. Accounting and the abilities of the accounting professional
may be employed to bring about considerable disservice to society if the
intentions for which the information is utilized are detrimental (Giroux, 2016)
or against the law. Accounting may be misapplied to assist some individuals
to the detriment of others: the accounting itself may be carried out adequately, but the accounting professionals practice and abilities are degraded
by their unethical utilization. Being an expert compels the accountant to
perform in the best interests of diverse constituencies. (Duska, Duska, and
Ragatz, 2011) Distinct features are likely to have an outstanding impact on
ethical predispositions of accountants and the manner in which ethical
matters are undergone. The traits and dynamics of the communities (Jenner,
2016) accounting professionals associate with might influence the fashion in
which distinct accountants experience and puzzle out ethical quandaries.
Accountants practices of ethics tend to differ being contingent upon their
age, gender features, their position in an entity, and the character and
framing of the matter. The unambiguous linguistic and spatial traits of
accounting practice (Ionescu, 2016a, b) might be associated with the manner
ethical topics are constituted and undergone by accountants. The ethical
propensities of distinct accountants should be grasped with reference to an
intricate combination of separate features, contingent properties and issuerelated elements. Accounting practice concerns rights, and within established
free-market economics, give precedence to a certain set of rights, being
instrumental in an irregular sharing of economic outcomes. (McPhail and
Walters, 2009)
The auditees most exemplary reaction to the auditors more relevant
motivation to carry out high-effort (fraud detection) audits should be to diminish their likelihood of fraudulent reporting. Auditors have little motivation
to supply low-quality audits as the expenses of audit failures to a professionals standing and client base may be harmful. Auditors should selfimplement audit standards as they endeavor to defend their standings.
Regulators might re-distribute resources more suitably by assisting distinct
audit companies in enhancing their evaluations of risk and payouts (Popescu
Ljungholm, 2015a, b, c, d e) instead of dissipating important resources by
carrying out audit standards. As long as auditors cannot investigate every
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business deal of an audit client, there may be a possibility that the former are
unsuccessful in altering an audit report on financial statements that are
materially distorted. A better grasp of how client ethical conduct (Zaharia
and Zaharia, 2015), audit endeavor, and exogenous variables impact audit
risk should bring about decreases in fraudulent reporting. (Jones, 2010)
3. Ethical Matters in the Accounting Profession
The fundamental ethical responsibility of the accounting professional is to
do his job. Accounting means advancing information that is to be utilized. If
the utilization of the information is harmless and the latter is factual, no
ethical issues emerge. If the information convinces individuals to perform in
one manner or other, and their undertaking either assists or prejudices the
people providing or obtaining the information (Kets de Vries, 2015), the latter
giving acquires ethical relevance. Accountants should be honest in their
professional interrelations, should assist others, should stay away from undermining or taking advantage of others, should fulfill their duties as they have
obligated themselves to them, should act with probity, and have a duty to
display the most factual financial representations of an entity. As auditors,
they should assess other accounting professionals depictions and be responsible for their veracity, achieving the objectives of their profession (Lzroiu,
2015a, b), i.e. satisfying the demands of the clients or firms for which they
perform, or working for the best concerns of the stockholders/stakeholders
who are in their own rights to accurate pictures of an entitys financial status.
(Duska, Duska, and Ragatz, 2011) Organizational backing should disregard
the concern of punishment when the auditor reports malpractices, and the
team standards and moral strength should support the auditor when confronted
an ethical quandary. Whistleblowing act is a pro-social authorized conduct
determined both by deliberate and duty-related exposure of malpractice. When
subordinates consider they are evaluated impartially, they are likely to have
pro-social conduct against the firm, raising the likelihood to report malpractices. Organizational backing and standards put into operation in the
entity (Nica and Hurjui, 2016) are instrumental in enhancing the auditors
ethical approaches, and thus they have a purpose of whistleblowing to report
inaccuracies or illegalities. The moral strength the auditor is endowed with is
important in taking into account any extent of the effects, the likelihood of
subsequent losses, and the related link with the entity or person in assessments (Popescu, Comnescu, and Sabie, 2016) or undertakings to blow the
whistle. Organizational backing supports the auditor when confronted with
perceived stress and standards influencing the nature of a public accountant.
With the moral strength possessed, the accounting professional can perform
with relevant judiciousness. The individual-level precursors may raise the
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public accountants purposes of whistleblowing. (Latan, Ringle, and Jabbour,

2016)
Managers are generally motivated by profit boosting and thus may commit
fraud taking into consideration enough motivation and reduced likelihood of
detection. A rise in the proportion of disreputable managers (Mulligan, 2015)
generates a decline in the separate likelihood of fraudulent reporting. Auditors
are progressively carrying out high-effort audits, bringing about a diminution
of the separate likelihood of fraudulent reporting. A rise in the likelihood of
low returns or an economic depression (Popescu, 2016a, b) complements a
diminished separate likelihood of fraudulent reporting. An economic depression may correspond with an initial rise in the amount of occurrences of
fraudulent financial reporting because an expanding amount of disreputable
managers should choose whether to deceitfully report high returns or flawlessly report low returns. As the likelihood of low returns raises, auditors
remark a complementary boost in the probability that reports of high returns
are the consequence of fraudulent reporting instead of current firm performance. (Jones, 2010)
4. The Ethical Criteria that Establish
How Accounting Operates within Society
The accounting profession has advanced numerous codes of ethics that established the criteria for accounting professionals conduct. The codes clarify
what is properly demanded of certified public accountants. They should
accomplish their duties with probity (Nicolaescu, 2015), impartiality, appropriate professional consideration (Nica, Manole, and Potcovaru, 2016), and
an authentic concern in serving their clients. To be legitimate experts,
accounting professionals should attain the qualities of astuteness, reasonableness, self-discipline, and determination. To preserve their honorableness,
accountants should, more than anything else, be honest to themselves and
their profession (Ionescu, 2016a, b), and inspect the suitability and concealed
inferences of the accounting norms they employ as the latter have ethical
consequences regarding the accountants responsibility to provide factual and
precise pictures. (Duska, Duska, and Ragatz, 2011) Accounting professionals
should stick to practices of privacy, neutrality, and autonomy. Their ordinary
activities entail handling confidential files concerning the personal and business matters of numerous persons. Judgments made on information supplied
by accounting professionals may considerably impact the activities of stakeholders. Confidence is a principled notion (Peters, 2015) that compels the
accountant to carry out his function conscientiously (accounting is established
on a moral underpinning of trust). Ethics is relevant to accounting professionals and individuals who depend on information supplied by the former
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(Ionescu, 2016a, b) as ethical behavior requires taking the moral perspective.

In exchange for the self-determination admitted to it, the accounting profession has a particular public interest accountability to community to continue
its activity knowledgeably and without prejudice. Rectitude is typically considered in the situation of detecting fraudulent financial reporting, auditing
the justness of ambiguities, putting into operation analytical procedures,
inspecting internal control, and conveying issues with regard to the character
and extent of the audit. Rectitude steadily entails the quality of trustworthiness
(Petcu, 2015a) that is broadly considered as indispensable to the accountant.
Impartiality is a critical component of probity, i.e. being receptive to the
reporting demands of diverse interest groups. Impartiality indicates exposing
fraud or the evasion of figures and identifying and reporting real expenses and
advantages to community. To achieve this, accounting professionals should
take up an authentic responsibility for other individuals. (Carroll, 1998)
The reduction in managers aggregate tendency to commit fraud brings
about a decline in the likelihood of a high-effort audit. Companies frequently
unintentionally raise the payment for committing fraud by providing substantial volumes of stock-based returns and performance-based motivations.
As the latter boost, unprincipled managers confront an ever-greater impulse
(Pera, 2015) to misreport, which can generate a rise in fraudulent reporting.
Auditors may sense that fraudulent financial reporting decreases as they feel
that the likelihood of unprincipled managers diminishes (Ionescu, 2016a, b)
or their clients experience an economic improvement (Petcu, 2015b) that
brings about reports of high returns arising from concrete performance instead
of fraudulent reporting. (Jones, 2010)
5. Conclusions
As public accounting cannot function without unquestionable ethics, considerable endeavors should be made to identify the ethical quandaries (Carr,
Biggs, and Kimberley, 2015) accounting professionals may confront, the
analysis used by them to establish the most advantageous manners to respond
to ethical impasses, and to improve the instruction and grasp of ethical
decision-making for accountants. Raising the cognizance of ethical quandaries
that an individual may undergo (Androniceanu, 2015a, b) can assist people
in identifying contexts that may question a persons ethical values. The most
discernible incentive to accounting professionals is an emphasis on current
rules and circumvention of penalties that might be subjected to upon their
infringement. (Chiang and Braender, 2014)

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