Reasons for Practicing Accounting Ethics

Financial statements and accounting documents are essential in every business venture. These documents help management understand the growth, or decline, of the enterprise. These are important tools in the decision-making process. When the information contained in the documents is inaccurate, the development plan will be faulty too. The people designated to handle the tasks of preparing these documents must possess high moral standards. Financial accountants must be firm advocates of business and accounting ethics.
Financial accountants are expected to act with integrity. Lack of integrity among key personnel will cause the business to breach many of its own regulations and third party obligations. The absence of integrity within the organization is a direct route to failure.
The primary character trait that an accountant must self-cultivate is honesty. This virtue will be the compass that ensures every financial report written is truthful and credible.
The moment that any of the accounting documents are tampered, either by adding or subtracting data entries, the code of ethics is violated. The accountant losses its credibility, the documents loss its purpose, and the business losses its direction.
Payroll services, for example, is among the vulnerable accounting transactions that are assigned to company accountants. Wrong payroll preparation is always prejudicial to a business. It is a violation to one of the oldest ethical maxim that “no one shall unjustly gain at the expense of another.” When payroll services are not meticulously performed two scenarios are obviously possible: First, employees will be paid more than the work done and the business will lose limited cash resource. Second, employees will be paid less than they deserve and the business will face labor problems or suffer legal repercussions. Either scenario is undesirable yet completely preventable. It requires equal portions of accounting skill and accounting ethics. For more interesting information, visit this great site.
As already mentioned, financial statements and accounting documents are decision-making tools. Along the worksheets and within the pages of the report lies the state of the business. It provides decision-makers and stakeholders the information will allow them to plan, to project, and to direct the business’s future developmental programs. If the financial reports are the tools, then investments are the fuel that propels the business forward and upward. Investors look at financial reports like tourists look at brochures to help them determine their courses of action. What investment area is the business engaged in? How will it increase the investment value? When will be the turnaround of the investment? Amidst the numbers game, these are the basic information that an investor can discern from properly made and faithfully prepared financial statements.
Once the accountant realizes the value and impact of his tasks to the organization and to the business, he must also acknowledge the weight of responsibility he bears. The business management must likewise recognize the significance of financial accountants to the organization by compensating them well. The compensation is not only for services rendered, it’s an investment that safeguards the business’s financial integrity.