Business Ethics

Accounting ethics are under more scrutiny than ever, especially with big business.  We have seen time and again the loose and creative accounting that has gone on with some of these corporations, and have watched as businesses have crumbled to pieces and CEOs have been arrested and put behind bars.  In this article, I will be presenting facts for you to consider to help you form a sound ideology, as it relates to accounting ethics. 

The term creative accounting is more than just a buzzword.  In fact, it's a euphemism to refer to a particular type of accounting practice that is meant to be excessively complicated, and employ novel ways of characterizing different incomes, assets or liabilities.  The result is that no one really knows the true numbers.  This may be beneficial if you want to mislead your stockholders, and make it hard for them to understand the true position of the company. 

While certain accounting practices are open to interpretation, you have to be careful going down a slippery slope.  When you become innovative or aggressive and your accounting, it becomes very easy to step over the edge.  Make sure you keep your accounting strict and to the book, and make it as uncomplicated as possible.

Also, you have to be careful with your accounting information, as it relates to accounting ethics.  Otherwise, insider trading may occur.  Insider trading occurs when a related party trades based on material nonpublic information obtained during the performance of that person's duties to the corporation.  Oftentimes, this is related to accounting information that the individual becomes privvy to.

Additionally, accounting ethics extends to how the executives in the business corporation are compensated for their work.  Also, you have to concern yourself with bribery, kickbacks, and facilitation payments.

It is important that the chief aim of the accountant is to make the information presented in the accounting statement reliable and objective.  This requires a high degree of integrity.  In fact, if you're outsourcing your accounting, make sure you do so with an individual who has a good reputation, and is known for their ethical business practices.

Each accountant follows their own code of ethics, as a relates to their profession organization.  For example, each major professional association for accounts has their own code of ethics.  Be aware of certain codes of ethics that an account follows, based on their professional organization.

Business Ethics |