Discursive Literature Review : Epistemological Advances In Accounting Ethics

When auditing a publicly held company, auditors need to observe principles. The ethical principles of the American Institute of Certified Public Accountants (AICPA) Code of

“ In order to prevent fraudulent financial reports and statements, the American Institute of Certified Public Accountants(AICPA) has created ethical standards” (Ethical standards in a financial statement, 2011). These standards aim to make financial professionals accountable for their accounting practices. This includes the integrity of financial reporting and ensuring financial reporting is done fairly and factually. Financial accountants and professionals should maintain professional integrity, objectivity, and independence to reduce the risk of resulting legal action, loss of profits, and a poor reputation if improper financial reporting is done (Ethical standards in a financial statement, 2011).

On the other hand, from a deontological point of view, the German philosopher Emmanuel Kant with his categorical imperative states that, “Act as if the maxim of thy action were to become by thy will a universal law of nature.” (Trevino & Nelson, 2014) We can presume that those people who commit crimes to gain financially value their lives based on the assumptions that they exert to achieve this profit for the business which can give them the funds to improve their lives. In regards to the individual’s rights, we have a duty to keep social responsibility in our work and personal lives even if to opposing unethical decisions made similarly in the Tax Fraud Case of Carl William. Correspondingly, there are central principles for accounting employees to help them understand, and comply with a certain sets of ethical standards identified in the

Accountants are held to a higher ethical standards and they must performed their duties in compliance with standards or ethical values of honesty, integrity, objectivity, due care, confidentiality, which must be fully committed to. They must put clients or public interest first before their own. They must have and ethical values and maintain those values way beyond what the society or the company’s code of ethic. It is important that accountants’ behavior or ethical values is in conformity with the

Ethics are crucial to the accounting profession and the business world, so choosing an ethics system to base your moral decisions on is extremely important. Accountants and all business professionals will be confronted with moral dilemmas on a daily basis. Being strong in your faith and knowing what you believe in will help you to always make the right decision. Based on this reasoning, this essay will explain why deontology is the best ethics system for the accounting profession.

Therefore, they require acceptance rather than mere adherence. The article presents individual principles which are applied to accounting: utilitarianism and deontological. Pros and cons of utilitarianism when applied to accounting, its influence in the business context in the sense that most economic and finance concepts are implicitly or explicitly built on the assumption that companies are interested in maximizing short-term self-interest. However, the accounting concepts are often presented as neutral or as morally correct, and accounting control has a moral quality (Preuss,

The importance of information and work in the realm of accounting requires all accountants to remain consistent in standards and ethics. However, perception of an entire culture can shift as seen in the Arthur Anderson debacle in 2002 and the establishment of Sarbanes-Oxley Act (SOX). Also, there is the ongoing concern of global companies attempting to adhere to the same standards and ethics, when social standards differ around the world. Studies show that, “people from different cultures can be expected to hold different implicit theories, which lead to divergent cognitive processes and behavior” (Wong-On-Wing and Lui, 2013, p. 17). Therefore, having an understanding of each ethical system has never been more crucial in organizational culture in the accounting profession. “Accounting ethics incorporate social standards of behavior as well as behavioral standards that relate specifically to the profession”

When determining and defending the use of a particular ethical system within the confines of a profession, it is important to evaluate the system in terms of the professional culture as well as the expected professional conduct laid out within the vocation itself. The accounting profession has been evolving for thousands of years. Early accounting records date business transactions back as far as third century B.C. (Schroeder, Clark, & Cathey, 2009). Early record keeping was for internal purposes and as societies and economies expanded, it became important to maintain records for external purposes as well. According to Schroeder, Clark & Cathey (2009), by the ninetheeth centruy, bookkeeing expanded into accounting (p. 3). From this time, it has been the duty of the accountant to serve the public interest and the profession has been culitvated into an organizational culture with professional norms and standards constantly taking shape in an effort to complete an all-inclusive conceptual framework.

Ethics are a decision one makes in knowing the right thing to do and essentially doing the right thing. They are the rules of behavior based on one’s belief of what is morally good and bad. A person may hear the word ethics and immediately think of government or the law. Not only does ethics have a role in government, it also plays a major role in business, including accounting. Schroeder, Clark & Cathey (624) states that the “reason for a high level of ethical conduct is the need for public confidence in the quality of services provided by the profession.” Ethical conduct not only encourages a high standard of performance; it also encourages a high quality of professional service. Enron’s financial scandal put a huge damper on that confidence. The Enron scandal made the public aware and conscientious of what could happen when dealing with unethical individuals. Since then, the public has educated themselves and are continually becoming more informed. Ethics in the accounting profession is not going away, it will only continue to change as business transaction change and become more complex.

Ethics is a decision one makes in knowing the right thing to do and actually doing the right thing. They are the rules of behavior based on one’s belief of what is morally good and bad. A person may hear the word ethics and immediately think of government or the law. Not only does ethics have a role in government, it also plays a major role in business, including accounting. Schroeder, Clark & Cathey (624) states that the “reason for a high level of ethical conduct is the need for public confidence in the quality of services provided by the profession.” Ethical conduct not only encourages a high standard of performance; it also encourages a high quality of professional service. Enron’s financial scandal put a huge damper on that confidence. The Enron scandal made the public aware and conscientious of what could happen when dealing with unethical individuals. Since then, the public has educated themselves and are continually becoming more informed. Ethics in the accounting profession is not going away, it will only continue to change as business transaction change and become more complex.

Ethics is a term that refers to a code or moral system that provides criteria for evaluating right and wrong. Accounting ethics is a primarily a field of applied ethics, the study of moral values and judgments as they apply to accountancy and accounting ethics were first introduced by Luca Pacioli, and later expanded by government groups, professional organizations. Accounting has been deemed difficult to control as accountants and auditors must consider the interest of the public while ensuring that they remained employed by the company they are auditing. Knowledge regarding the information of ethics helps accountants and auditors to overcome ethical dilemmas. Sometimes the decisions made not be beneficial to the

Ethics in all forms is concerned with the good and bad, right and wrong in a situation. (Duska) In life you will be placed in a situation where you have to make a choice. These situations are not always black and white, in other words they do not have a clear answer. You will not know what your reaction would be in any given situation until you are there and have to make the decision. This is present in both our personal and professional lives. However, if you always follow the guidelines set by God and treat all as you wish to be treated then more than likely you will make a fair and impartial decision when necessary. The accounting profession is based on the honesty, integrity, and word of those in this profession. That is truly who they are in the eyes of the public and with this comes great responsibility to all those involved. We will be evaluating two ethical systems in this paper and deciding which would be the most appropriate for the accounting profession.

The definition of accounting theory according to Coetsee (2010) is described in two different ways. The first philosophy concludes that accounting theory is a set of general principles that guide the evolution of accounting practice. The other philosophy describes accounting theory as activity of explaining and predicting accounting practice. What the viewer can see from the statement of the first philosophy is that the accounting theory exists before accounting practices meanwhile the latter states that the accounting practice exists before the theory. Since there are many arguments about this matter, many academic researchers have concluded that accounting theory can be divided into two categories which are positive and normative theory.

3. Duska, R.F. and Duska B.S. (2003), Accounting Ethics: Foundation of Business Ethics, Blackwell Publishing Ltd., Oxford, UK.

These presumed languages borrowed from other fields of knowledge which give the accounting body more credibility which in turn spreads beyond the meaning for which they are applied without considering implication of such arrangement. Such rationales, become clear when preparing financial statements that include expenses, revenues and profits or losses, are usually associated with notions of accountability, transparency, responsibility and efficiency (Potter, 1999). These rationales aid financial statement seen as tool for accountability and measure of firm’s performance, (Miller, 1994 ).these rationales are rooted in almost all organization which makes it almost impossible to question, in my opinion the fact that this rationales are unchallengeable makes accounting two powerful which is a big problem to society. Scholars have divided the rationale of accounting under two main points: accounting as a legitimizing device, and accounting as a linguistic device. Accounting as a legitimizing Device several theorists have looked at the legitimizing abilities of accounting. The writers describes accounting as a skill that can control development of modernized societies, using accounting as an essential means by which organizations react to environmental pressures to improve their legitimacy through impression management. Impression management comes to play when organizations norms and values are not in line with