Essay Example on Ethics in Accounting: From 1494 to Today

Introduction

Ethics in accounting is traced back in 1494 when Luca Pacioli published the book on accounting ethics. The standards were then adopted in government groups, organizations, and independent companies. These groups require accountants working in them to follow the moral rules in their work. The accountant societies have a code of ethics that guide their members when working. In 1887, the American Association of Public Accountants was created within the United States. The association, later in 1905, created the moral codes that guided its members. Various accountant groups discussed the importance of ethics. The American Association of Public Accountants was later changed to the American Institute of Certified Public Accountant. The association came up with ethical principles that were to be employed by its members. Among the tenets were responsibilities to colleagues, duties to clients, competence and technical standards, independence, integrity, and objectivity.

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Acceptable business practices

Different practices that are clear on the code of ethics and do not damage the business relationship are terming to be acceptable. They include reporting unethical business practices. Questionable accounting and improper use of confidential information are unethical practices that ought to be saying once realized. The business should practice fair competition. The company should put favorable prices as setting low prices is seen to be predatory pricing. Appropriate terms are promoted, like allowing customers to access services from other competitors. The business should spin off the elements into independent entities to interrupt monopolies and improve competition. Regulations should are be reducing to permit more business into a marker, which creates a good match, and a merger should be designed to boost business activities. Another practice is being taxed compliant. The business should register with the revenue commissioners on tax.

Increasing legal and regulatory awareness of the business is another acceptable practice. The operation should be accepted by the authority and will follow the regulations needed for it to work. Records required by the company should be kept just in case of any arise. The business should have insurance that permits its operation. The market should have good terms of trade and paperwork. With this, the company should be quality in promoting its business. Branding and promotional materials of the industry should be excellent. Integrity should be practiced in business. There should be no bribes given for the customer to accumulate services from the company. Employment within the industry should be on the merit of a person, and there should be no bribes to induce jobs within the business. Loyalty also should be practiced in business. The needs, customer service, and satisfaction of customers should be met.

Compliance

Ethical behavior is an integral component of all the actions by an individual. They require one to act with credibility, reliability, and accountability at all times. Individuals need to adjust to the laws and regulations as neglect to them contradicts the accounting culture. A sturdy foundation should be established to make compliance. A robust foundation is forming when there are written standards of ethics within the place, training the accountants on the rules, evaluating the moral standards, and disciplining the violators of the ethics. The moral standards may comply with workers when implementing various programs at the workplace. Rewarding accountants who adjust to the ethics, having regeneration for ethical standards, and having the freedom to question management about the ethics should be established. Non-compliant individuals may be prevented, detected, or punished for violation.

Various factors influence the compliance of ethics. Factors starting from personal code of ethics, legislation, government rules and regulations, and also the ethical climate of the workplace influence compliance. Complying helps within the smooth functioning of the organization. This can be because people are aware of why it must be followed and why it is within the interest of the business.

Ethical Dilemmas in Accounting

Importance of Ethics in Accounting Reputation

Reputation is the good, bad, or the sum of specific characteristics of professional behavior. Reputation entails general public feedback or verbal feedback on someone certain positive or negative activities. It is more of a cultural value aspect, organizational behavior, public interest, and private dimension. Ethics in accounting have a more significant positive impact on reputation. Ethics creates credibility in accounting. Reliability is very important within the practice and competition. Credibility is creating a complementary image, market prestige, and value preferences. Credibility in accounting is helping to possess great success, recognition, and also the morals of the business. It also creates stability, integrity, and security of the company. Recognition, admiration, and quality branding are putative indicators that are used to measure the reputation of the business.

Ethics are essential in reputation as they build trust. There should be a building of good faith among the accountants. Accountants who have good ethics are transparent in their work and trustworthy. Since accountants house financial information, they make their reputation to the general public by being honest. Reputation is constructed because the accountants are assessed, review, and report any information without the mandated audit. Ethics also are essential in the account as they build a reputation by creating confidentiality. An accountant who has ethics keeps the financial data as a top-secret. The knowledge of the customers is not disclosed whatsoever to anybody except the owner. It is helping in building confidence within the accounting firm as the customers entrust you with their finances. It is making the reputation of the firm because the clients recommend others. Confidentiality attracts more customers to receive essential services.

Ethics are essential in reputation as they build collaboration. Collaboration creates a platform where ideas are discussed to enhance the operation. A good reputation is made when people are ready to work together as each contributes to the expansion(Rankin & Driskill, 2018). The institution's growth through collaboration ends up in increasing productivity in accounting. Accountants also become committed to helping the firm to realize its sets goals. Ethics are essential as they bring about consideration. Accountants who have excellent ethical standards tend to enhance the firm. Other investors also grow interested in assisting the firm in increasing, and customers believe in the firm ends up in more profits. Once there is growth within the firm, there is the maintenance of a positive image.

Importance of Ethics in Accounting laws

Ethics requires accounting professionals to fits with the laws and regulations that govern their profession. When the accounting follows these rules, they avoid negative reputation that may destroy the image of the accountants. Ethics helps an individual to be at a lesser risk for being in legal trouble. This can be because the professional accountant is awake to what the laws and regulations of the body governing them require. Ethics helps the accountant to be familiar with the commonly accepted accounting standards that are set by the Financial Accounting Standards Board. These regulations help to avoid penalties and adverse outcomes within the accounting profession. Ethics also are important in-laws. With ethics, the firm has the legal obligation to report financial information that is accurate on taxes. Accurate information by the firm helps it to avoid fines and perjury charges; because of this, the tax forms of the firm are completed and are transparent with no problem.

Critical Thinking

Problem-solving and Judgment

Problem solving and judgment are essential skills in business. Problem- solving using includes judgment that is essential in leadership. These aspects help to investigate issues systematically, organize information, identify critical factors on causes, and generate solutions. These elements are being utilized in solving problems. Problem- solving has been identified jointly of the fundamental life functions of human life. Problem- solving skills are essential when the cognitive factors are reshaped to supply clarity and assist in prying a controversy. An individual should have the skills to understand how they may help him or her solve the matter they are facing and have in mind its resolution. Having an ineffective problem- solving skills make those within the profession to return up with poor judgment. Poor judgment results in the collapse of many firms, while practical problem -solving skills results in the expansion of the accounting firms.

The judgment given by an individual on a selected problem tends to work out the features of their personalities. Emotion tends to influence opinion on the facing of matter. Leaders within the accounting firms have to come up with a functional problem -solving skills that help in judgment. It can be because they accommodate financial matters. A leader who keeps good experience within the problem solving has multidimensional wisdom that helps them in making a judgment. Extensive knowledge of self, social network, organizational, and contextual help them to own good experience. A series of steps are to be followed by when making judgments during problem-solving. The primary step entails sensing and identifying the difficulty, the second is to the border and name the challenge, and the ultimate stage is mobilizing the stakeholders to place energy in helping come up with sound judgment.

Interpretation and Judgment

The role of judgment in interpretation is depicting in some form of ways. Understanding is vital in view. It is the flexibility of one to speak well and to be understood. Interpretation is incredibly crucial within the accounting firms. Information about the matter the judged is effectively communicated. A reasonable explanation is looking as if it would result in sound judgments- Interpretation help to supply services that are needed in a sense. Services like communication require in view. The immediate support that is given in translation is generally essential when giving a taste. Poor judgment arises when the person has not gotten when the data is about and that they do not understand. This results in having a poor decision on difficulty. A person must not conclude interpreting. The interpretation that results in good judgment only arises when the person interpreting the data have a superb language proficiency, ready to analyze the information, and quickly transfer the message.

Values

Honesty as a Responsibility of Public Accountant

Honestly could be a responsibility that ought to be practiced within the public accounts. Honesty could be a primary characteristic that permits the profession to create a sound financial judgment. It is essential because the information received by the investors is trusted. Honesty is made when there are rules and regulations in place to enable both the external and internal to read the knowledge. It is also created when the financial information is gathered, tracked, and reported. It is a responsibility that is developed by the Financial Accounting Standards Board. Several approaches are put in place to make sure that professional accountants are honesty (Shawyer & Miller, 2017). First, the employment of recent technology that strictly monitors and discusses the behaviors of the accountants. Supervision bodie...