The Effect Of Professional Ethics

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The Effect of Professional Ethics in U.S. Accounting
Businesses, investors, creditors rely on accounting ethics. The accounting profession requires honesty, consistency with industry standards, and compliance with laws and regulations. The ethics increase the responsibility and integrity of accounting professionals, and public trust. Ethical requirements influence the management behavior and decision-making. The financial scandal of Enron and Arthur Anderson demonstrates the failure of fundamental ethical framework such as off-balance sheet transactions, misrepresentation of financial statements, inaccurate disclosure, manipulations with earnings, etc. The confronted accounting profession and concern for ethics in businesses forced regulators to revise the conceptual framework of the accounting processes.
The professional ethics in U.S. accounting contain the following problems:
- Ethical issues of financial reporting – falsified financial statements to mislead investors.
- Ethical issues of earning management – manipulation of accounting records to boost the company’s stock price.
- Ethical issues of external accounting – failure to correct errors and omissions due to client’s pressure and personal material interests.
The research on identified problems is necessary due to vagueness of ethics concepts and their difficulty to translate, gray areas of ethical judgment, and harmful ethical conflicts. It is important to advocate ethical accounting settings to build a strong
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