Essay Acct3102

1063 Words Apr 23rd, 2013 5 Pages
Question | ONE

Accountants owe the duty to act in a professional and ethical manner concerning clients, as well an obligation to respect the laws that are involved with the profession. This is where a crossroads of ethics and legalities are formed and potentially the defining point of crucial decision-making. Stephen Richards and his actions under employment with Computer Associates (CA) are then examined in light of this concept.
Accusations against Stephen Richards permitting the backdating of contracts unlawfully were confirmed, giving sanction to the unethical nature of his behaviour. Henderson describes that illegal behaviour will not be deemed unethical when the legal system, accounting profession and society all agree upon the
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CA would no longer be participating in fraudulent behaviour but referred to as adopting earnings management strategies or “aggressive accounting”. These flexibilities within the constraints of regulations therefore socially and legally accepted in the accounting profession.

Question | TWO Within the accounting profession, “grey areas” are created through the vague definitions between legal and illegal. Often difficulties arise when there are such pressures to meet expectations that it comes down to “individual interpretation” (Soltes, 2011). Richards’ belief that the vulnerability of a company can derive from subjective decision-making in these “gray areas” exposes a void in which managers should be monitoring more closely.
“Strong governance involves balancing corporate performance with an appropriate level of monitoring” ”(Brown et. al, 2011). CA has culturally been described as to “live[d] on a knife edge”, in regards to the expectations on performance, explains Richards. Even his involvement in the board only dealt with operational aspects leaving strategic and directional managing unaccounted for. “Non performance was not accepted. My behaviour… was a direct result of these pressures” (Soltes, 2011). It is fair to say that management should have played a better role in providing guidance for situations that involved such ambiguity when performance based demands were causing biased

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