Accounting ethics require accountants to behave ethically and consistently, with due diligence, avoiding conflicts of interest, and reporting illegal activities. Ethical misconduct can harm clients, society, and investors. Accounting schools teach ethics to promote high standards, but some accountants and organizations still cross ethical lines.
Accounting ethics is a field of professional ethics that refers specifically to accounting. Whether accountants work in public or private practice, they are expected to abide by ethical standards that are designed to ensure that accountants behave in an ethical and consistent manner. In some regions, to become certified as an accountant, one must indicate their agreement to abide by an ethical code, and individuals may be stripped of their certification if they fail to comply with ethical codes. For most professional organizations of accountants, in order to become a member, individuals must accept and abide by ethical standards, and they will be removed from the organization if they do not.
The first documented discussions of accounting ethics appear to date from the 1400s, and many of the ethical issues associated with accounting remain the same, even if today’s financial world were unimaginable to a 15th-century accountant. One of the key issues with accounting ethics is that ethical misconduct by an accountant not only potentially harms a client, but can also harm society. If, for example, an accountant conspires to falsify financial statements, this hurts a company’s investors, taxpayers who may get caught up in government bailouts or regulatory efforts related to the company, and company workers.
Accountants are supposed to use due diligence in their work, confirming that the records they work with are accurate and fairly presented. They are also supposed to avoid conflicts of interest that could compromise their work, prevent illegal activities, and report suspected illegal activities by clients. Accountants are also expected to behave responsibly toward their clients by billing them accurately, disclosing information fully, protecting their financial documents, etc.
Accounting schools typically devote classroom time to instruction in accounting ethics, expecting students to complete ethics courses that include writing ethics essays, as well as completing other assignments. These courses promote high ethical standards, familiarize students with the expectations found in accounting codes of ethics, and make students aware of the consequences of failing to meet ethical standards.
A series of financial crises around the world have shown that accounting ethics are not enough to prevent accountants from behaving unethically. Some accountants and accounting organizations have clearly crossed ethical lines for money, prestige, and other reasons.
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