Questions
- Discuss the importance of ethics in accounting.
Proper ethics is very critical in accounting. One of the reasons for this is because accountants handle very sensitive information like bank account numbers of employees (Weed, 2019). Their work is based on trust, which must not be abused. It is, therefore, essential to practice honesty and integrity in all business relationships. Auditors and accountants must keep such information confidential. It is vital to practice proper ethical behaviour to avoid legal trouble. Not complying with accounting practices puts a company at risk of lawsuits (Weed, 2019). Moreover, malpractices in accounting could lead to financial losses and loss of reputation.
- Why is it important for accountants to maintain high ethical standards?
An accountant needs to exercise care as not understanding accounting practices cannot be used as a defence for unethical practices. Those found guilty of accounting malpractices could be subjected to lengthy jail terms and jeopardize their career (Freedman, 2018). They must act ethically to protect their jobs. Firms end up sacking accountants who fail to adhere to ethical accounting practices. Such malpractices could result in losses for a firm. Thus, employers find it appropriate to sack unethical employees.
- What are the potential penalties to the accountant and the accountant’s employer for behaving in an unethical manner?
Accountants and their employers who act unethically to the point of fraud are subject to civil and criminal penalties. The Sarbanes-Oxley Act indicates the fines to be charged and the prison time for intentionally falsifying financial information (Freedman, 2018). The shareholders could also sue a company for any civil damages incurred due to the presentation of false information. Companies and accountants could also lose their reputation due to engaging in fraudulent practices. Customers prefer to shop with ethical firms. Moreover, most good employees do not work for unethical organizations.
References
Freedman, J. (2018). Consequences of ethical accounting practices. Retrieved from https://www.google.com/search?q=%E2%80%A2%09What+are+the+potential+penalties+to+the+accountant+and+the+accountant%E2%80%99s+employer+for+behaving+in+an+unethical+manner%3F&ie=utf-8&oe=utf-8&client=firefox-b-ab
Weed, G. (2019). Why are ethics important in accounting? Retrieved from https://bizfluent.com/how-does-4571925-why-ethics-important-accounting.html