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Code of Ethics for Accountants

Brittany Jones

Kaplan University

AC504

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Introduction

A clear distinction between personal and professional ethics exists. Although each

individual believes in some form of ethics, varying perspectives are individually held. In order

for advancement in one’s personal career it becomes essential to first discover the ethics and

morals he/she maintains in life. Once a person is able to sustain the principles of ethics in his/her

personal life the individual is then able to uphold the same ethics in his/her professional life. The

following will discuss ethical standards and codes which are the building block of the accounting

standards and will investigate the influence of further development and advancement of the

ethical standards and codes on a professional practice in the field of accounting. Lastly, the

importance of professional ethical standards and codes will be examined in the field of

accounting. Therefore, what exactly are ethical standards and codes?

Ethical Standards and codes

A dictionary defined “ethical standards” as principles that when followed, promote values

such as trust, good behavior, fairness, and or kindness. There is not one consistent set of

standards that all companies follow, but each company has the right to develop those standards

that are meaningful for their organization. Ethical standards are not always easily enforceable, as

they are frequently vaguely defined and somewhat open to interpretation. Others can be more

specific, such as “Do not share the customer’s private information with anyone outside the

company. This same business term dictionary defined “Code of Ethics” as a written set of

guidelines issued by an organization to its worker and management to help them conduct their

actions in accordance with its primary value and ethical standards.

Accountants Professional Ethics

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With the recent mega bankruptcies of Enron, WorldCom, there have never been a more

appropriate time to focus is the ethics of individuals and professionals in business. The Financial

Executives International business group (FEI) uses phrases such as:

Act with honesty and integrity

Avoid conflicts of interest in personal and professional relationships

Provide information that is accurate, complete, objective, and timely

Comply with the rules and regulations of federal, state and government (Eber, 2010,

Paragraph 1).

A professional accountant is required to comply with the following fundamental principles in

the code of ethics:

Integrity - A professional accountant should be honest and straightforward in

professional and business relationships

Objectively – A professional accountant should not allow bias, conflict of interest or

undue influence of others to override professional or business judgments

Due Care – Continuing duty to maintain professional knowledge and skills to ensure

receipt of competent professional service – act diligently and in accordance with

technical and professional standards when providing professional services

Confidentially – A professional accountant needs to respect the confidentially of

information acquired and should not disclose any information to third parties without

authority

Professional Behavior – A professional accountant should comply with relevant laws

and regulations and should avoid actions that discredit their profession. (Saeed, 2000,

Page 2)

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Importance of Ethics in Accounting

Ethics are important throughout the business world, but they are especially important for

accountants and all accounting practices. In general, this is because accounting deals more with

facts, figures and hard data than any other business area. This means that there is less room for

perspective, and the results of unethical behavior are much more widespread.

Ethics in accounting and financial decision making

Ethics is the system of rules that governs the ordering of values. Ethics in accounting is

another environmental factor affecting accounting, and business in general, is the growing

concern over ethics. This concern has been a focus of the accounting scandals of the early 2000s.

Enron, WorldCom, and Tyco (to name a few) each resulted from upper management’s falsifying

financial reports (with the help of the company’s internal accountants) and external auditors not

detecting those falsifications. Accounting rules and the resulting information are designed to

capture and reflect the underlying performance of a company (University of Phoenix, 2008).

Conclusion

When discussing the topic of ethical standards and codes in the field of Accounting,

many areas in which one can explore the topic exist. Throughout discussions involving ethical

codes in general, it becomes clear how vital they are to the field, research, and occupations of

accounting and its practitioners. Without ethical standards and codes there would truly be no

rules to live by, creating possible chaos in the field. The overall importance of established

professional ethical standards and codes are all necessary in mitigating the full understanding of

ethics in psychology overall.

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When you become an accountant, you should be familiar with the standards and rules of

the position, accept personal responsibility for the foreseeable consequence of your actions, and

realize the long term effects of your behavior on the accounting industry and the citizens. At all

times, an accountant should conduct themselves with integrity, dignity, and respect for the

position held in society.

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References

Eber, William A. 2010, Accountants Professional Ethics,

Retrieved from http://www.metrocorpcounsel.com/articles/4037/accountants-

professional-ethics

Maughen, Jennifer, N.D., Basic Accounting Code of Ethics,

Retrieved on April 6, 2010,

http://www/life123.com/career-money/accounting/accounting-ethics.shtml

Saeed, Ghazala, 2003, Are Ethics Important for Professional

Accountants? Retrieved from http://www.ezinarticles.com/?Are-Ethics-Important-For-

Professional-Accountants?&id=516791