The Importance of Ethics in the Field of Accounting

What is expected of accountants by clients?

Clients expect various things from their accountant. First, they expect their accountant to behave ethically and to observe their professional obligations to them. The code of ethics that governs accountants is very similar with that which governs other professions. It focuses most on how accountants are supposed to handle the kind of information they deal with. The concept of ethics comes up in every profession where people handle things that are of value like money.

For clients, ethics imply a variety of things. First, accountants are not expected to disclose their clients’ information to others (Cohen, Pant & Sharp, 1996 p60). Accountants often get access to information that their clients would prefer kept private. This information could be the net worth of individuals, their banking days or similar information. If this information gets into the wrong hands, the client’s life may be endangered. It is the accountant’s role to ensure that such information is kept safe.

Second, accountants are expected to display honesty and integrity. Accountants who have these two qualities would not participate in inappropriate behavior based on the information they get access to in the course of their jobs (Cohen, Pant & Sharp, 1996 p58). People who do not have these qualities on the other hand are likely to participate in activities such as fraud and theft against their clients.

The code of ethics provides a basis upon which clients measure their competency. Along with the above concepts, the code of ethics covers a variety of other matters including the willingness and capacity to provide valuable information that will solve the client’s problem. In order for accountants to meet the expectations of the client, they must at all times strive to live by the code ethics.

Sarbanes Oxley Act

The Sarbanes Oxley Act of 2002 (the SOX Act) was created in response to various outright fraudulent and misleading activities of big companies in the 1990s (Hooper, 2010). The scandal involved certain companies jacking up their stock prices by publishing false financial statements that showed an improvement in the financial position of the company where none existed. Before the creation of the Act, various companies like Enron, Global Crossing and Xerox crashed.  At the same time, nearly one thousand publicly traded companies reviewed their statements. The result was that close to $ 6 trillion worth of stock market value disappeared (Hooper, 2010). The SOX Act was created to regulate financial reporting and prevent such activities from recurring.

Describe your ethical philosophy as a future accountant

My ethical philosophy is based on three concepts. First, I would want to deliver value to my clients. In this regard, I would want to do more than the client expect. This way, I will expect to win various clients. Second, I will want to show integrity to my clients. Being in a position to handle other people’s money and valuable property will require me to show integrity to my clients. Finally, I want to show integrity to my clients. It is very common today to find people who do not honor their appointments. I will strive to always honor my appointments so that clients know they can always rely on my word. However, I will make it understood to them that my time is valuable and that I will always strive not to waste any bit of it. It is very hard to honor appointments if clients do not honor theirs. In order to handle such clients, I will always have a back-up strategy to ensure that clients always get their services when they need them.

Why do accountants need to focus on ethics?

Ethics are important for various reasons. First, obeying the code of ethics lowers the chances of conflicting with clients. Accountants who conflict with their clients are likely to be met with a series of legal issues (Langenderfer & Rockness, 2006 p346). Legal issues have various implications on the performance of accountants. If an accountant is involved in legal issues with their client, they lose a lot of valuable time. This time could otherwise be invested into more valuable activities. Second, legal cases can lead to the cancellation or suspension of the license of practice. The accounting profession is highly regulated and unethical activities could lead to extreme measures.

Observing the code of ethics also raises one’s reputation. People who are ethical are likely to call for higher esteem and regard from clients. This brings about demand for those services. If the demand of a person’s services is high, then they are better placed in their business. On the other hand, people whose services have low demand are likely to meet difficulty in their business. This raises the chances of participating in unethical behavior.

Can you teach accountants to be “ethical”?

Being ethical in my opinion comes out as being reliable. People who are reliable show integrity in all their actions. They want to be trusted and therefore act in their best behavior at all times. People who are reliable also watch their time. Time is very important in the accounting profession. Failure to keep time makes the accountant’s reliability come short. If an accountant is able to keep time, they are capable of commanding some form of respect (Langenderfer & Rockness, 2006 p346). This respect serves to steer the company to new heights.

References

Cohen, J., Pant, L., & Sharp, D. (1996). A methodological note on cross-cultural accounting ethics research. The International Journal Of Accounting, 31(1), 55–66.

Hooper, C. (2010). Why was the Sarbanes-Oxley Act of 2002 created and how does it impact financial reporting today? – Charles Hooper. Charleshooper.net. Retrieved 15 October 2014, from http://www.charleshooper.net/blog/why-was-the-sarbanes-oxley-act-of-2002-created-and-how-does-it-impact-financial-reporting-today

Langenderfer, H., & Rockness, J. (2006). Integrating ethics into the accounting curriculum. Accounting Ethics: Theories Of Accounting Ethics And Their Dissemination, 2(1), 346.