Ethics in accounting

BAC8034 ADVANCED ACCOUNTING

Lecturer: PROF. WAN FADZILAH BINTI WAN
YUSOFF

Abdulla Saeed Alhamad
1111800065
Enron
Parmalat
Waste Management
WorldCom
Qwest Communications
List and discuss characteristics of a professional
Explain how those characteristics apply to the management
profession
Define ethics
Discuss various models / schools of ethical decision making
Explain and apply the professional ethical codes of various
management professional organizations
Explain how to resolve ethical dilemmas
Give examples of recent ethical cases
Objectives
Characteristics of a professional

Communicates
effectively
Thinks rationally,
logically and
coherently
Appropriately uses
technical
knowledge
Integrates
knowledge from
many disciplines
Exhibits ethical
professional
behavior
Recognizes the
influence of
political, social,
economic, legal
and regulatory
forces
Actively seeks
additional
knowledge
3-5
Ethics concepts
Definitions
Ethics
Moral philosophy
Systematizing,
defending, and
recommending
concepts of right and
wrong behavior
Rules or standards
governing the conduct
of a person or the
members of a
profession
Met ethics: where ethical
principles come from
Normative ethics: moral
standards that regulate
right and wrong behavior
Applied ethics: specific
controversial issues

Utilitarianism: the
end justifies the
means.
Rights and duties:
individuals have
certain rights;
others should not
interfere with them.
Schools of ethical
thought
Justice: people
should get what
they deserve
Virtues: everyone
should do what is
right, moral and
virtuous
Ethics codes in accounting

Principles
Honesty and fairness
Objectivity and responsibility
Standards
Competence and confidentiality
Integrity and credibility
Ethics codes in accounting
Association of Certified Fraud
Examiners:
Commitment to
professionalism
Avoid illegal and unethical
conduct, conflicts of
interest
Exhibit the highest levels of
integrity
Comply with lawful court
orders
No expressed opinion on
guilt or innocence
Keep information
confidential
Reveal all matters which
could influence outcome
Strive to increase
competence and
effectiveness
Ethics codes in accounting
American Institute of CPAs
Principles of
Professional Conduct
Rules: Applicability
and Definitions
Independence,
Integrity and
Objectivity
General Standards
Accounting Principles
Responsibilities to
Clients
Responsibilities to
Colleagues
Other Responsibilities
and Practices
Importance of Ethics in Accounting
Fraud
Fraud is an intentional deception, misappropriation of a companys
assets, or manipulation of its financial data to advantage of
perpetrator.


Symptoms can include:
Key executives appearing to be living beyond their means.
Key executives have close associations with suppliers.
Company uses several different banks, none sees full financial
picture.
One or two individuals dominate the company.

Importance of Ethics in Accounting
Losses on the Way
Losses due to Unethical Behavior:
Costs of legal action taken against
perpetrators.
Costs of reduced productivity.
Increased unemployment as companies are
forced to downsize or go out of business.
Economic loss to organization, hence to
society.

Solution???
Investigate
Motives for
Unethical
Practice
Administer
Effective
Ethical and
Internal
Controls
Low
High
Ethical
Motives for Unethical Behavior
High Low
High
Low
Opportunities
Situational
Pressures
Personal Characteristics
(Integrity)
Unethica
l
(Hall, 2004)
Effective Ethical Controls
A code of conduct that applies to the
practice of a profession.


Objectivity

Independence

Due Care

Integrity
Effective Internal Control System

Control
Environment:
Influence Control
Awareness of
Management and
Employees.
Risk Assessment:
Identify, Analyze, and
Manage Risks
Relevant to Financial
Reporting.
Monitoring:
Entities Activities.
Information and
Communication:
Quality of Info
Impacts Reliability of
Financial Statements.
Control Activities:
Transaction Authorization
Segregation of Duties
Supervision Accounting
Records Access Control
Independent Verification
Safeguard Assets of the Firm
Ensure Accuracy & Reliability of ACCT
Records & Info
Promote Efficiency in the Firms
Operations
Fulfill
Main
Objective
s
(Dina,2008)
Conclusion
??????
!!!!!!!!
References
Hall, James A (2004). Accounting Information Systems. Thomson. South
Western.

Alexander, Jeffrey Craig, (2002). "Ethics in Accounting?" University of
Tennessee Honors Thesis Projects.

Catherine Gowthorpe.(2005). Creative Accounting: Some Ethical Issues of
Macro- and Micro-Manipulation. Journal of Business Ethics 57: 55-64,
2005. DOI 10.1007/S10551-004-3822-5.

Felix Pomeranz, (2004),"Ethics: toward globalization", Managerial Auditing
Journal, Vol. 19 Iss: 1 pp. 8 14.