|Type of paper:||Essay|
|Categories:||Audit Equity Accounting Business ethics|
Unethical accounting practices in various companies globally to cheat their investments with substantial amounts of money. Accounting and financial experts should decide on the appropriate ethical standards that control the nature of businesses that companies engage, their customers, and a suitable way of using their skills. Financial organizations are vital in determining ethical standards. There are debates regarding the best approach to accounting standards; mostly, accountants support integratingn ethical principles in the accounting standards for different businesses. For businesses to maintain a positive reputation must be familiar with accounting principles as well as general ethical principles in finance.
Accounting Standards Versus Ethical Principles
Ethical principles often tend to evade rules favouring particular general guidelines; an accounting expert uses the general principles to guide their profession. It is usually better to adjust to the principles to the company transactions than complying with accounting rules (William, Glover & Prawitt, 2016). However, these principles must be comparable to other company information, readable and applicable to present financial statements. Conversely, accounting standards often involve a set of rules that are very specific on the various circumstances that accountants face while organizing financial statements. Many accounting experts favour accounting standards since on numerous occasions they might face the court when there are discrepancies in the financial statements (Thomas, 2018). Companies must adhere to accounting standards while compiling financial statements.
Advantages of Customized Ethics Principles
Each State and local government should develop their own customized ethics requirements, outlying their objectives and definition of financial reporting and provide guidance. This would give a broader guideline to the states that are applicable in various instances. These principles are favourable since it would assist evade drawbacks associated with the requirements permitting writing of contracts particularly to influence their intention. Therefore, it would improve the depiction of truthfulness in the financial statements. Secondly, it allows flexibility since accounting experts will better respond to alterations in any business environment (Thomas, 2018). These principles will apply to different types of transaction or financial instruments directly.
Moreover, principles would reduce the manipulation levels and improve accounting accuracy in accounting statements that replicates the actual financial performance. Thirdly, it will allow professional judgment since it will encourage accountants to examine the substance of the transactions in the financial statement. Therefore, it helps accounting experts make an appropriate professional judgment while evaluating a financial statement (William, Glover & Prawitt, 2016).
Disadvantages of Customized Ethics Principles
There are higher chances that the information included in the financial statement will display inconsistencies. Information in the financial report should be relevant and reliable concerning the ethics requirements; hence organizations will implement reporting that best suits their entity. There is a high probability that different account professional will assess the data and conclude differently regarding the performance of a particular company. Therefore, various companies with similar assets can present accounting informing individually in the financial statements (Mele, 2005). Secondly, it is more difficult to comply with accounting principles since it is time consuming and multifaceted. It will require highly experienced accounting experts to interpret the different accounting frameworks set by the local government. It may need more time for an accountant to understand a financial statement prepared by a lower level accountant. Thirdly, it is more difficult to enforce since firms, as well as accounting experts, are often alleged to misstate financial information, and it gives judges without a proper financial background to interpret the principles during enforcement. It gives courts a challenge to conclude by accounting principles.
Mele, D. (2005). Ethical education in accounting: Integrating rules, values and virtues. Journal of Business Ethics, 57(1), 97-109. Retrieved from https://doi.org/10.1007/s10551-004-3829-y
Thomas, S. (2018). Management Accountants' Professionalism and Ethics. Research on Professional Responsibility and Ethics in Accounting, 169-192. doi:10.1108/s1574-076520180000021006
William, M., Glover, S., & Prawitt, D. (2016). Auditing and assurance services: A systematic approach (10th ed.). London: McGraw-Hill Education. Retrieved from http://www.gao.gov/assets/590/587281.pdf
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Essay Sample on Unethical Accounting Practices. (2022, Dec 15). Retrieved from https://speedypaper.com/essays/unethical-accounting-practices
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