Definition of Ethics in Accounting
Ethics are set code of conducts or behavior governing a society. Every profession has its code of ethics. Accounting ethics entail five principles which are integrity, objectivity, professional competence and due care, confidentiality and professional behavior.
Some unethical behaviors in accounting profession include self interest, fraudulent accounting and falsification or misrepresentation on financial statements. There are huge scandals emanating from unethical behaviors causing pensioners, investors, companies and governments a lot of money and even leading to bankruptcy.
Some of the major scandals are Enron, AIG and Lehman Brothers’ Holdings Limited scandals. Despite the scandals there are ways of ensuring that accounting ethics are maintained like teaching professional values and ethics in schools, maintaining independence of accountants and establishing bodies to oversee accounting practices.
Ethics in accounting-introduction
Ethics is a branch of psychology that addresses questions about morality, that is, concepts like good or bad, right or wrong, virtue and matters of justice (wikipedia). Ethics can also be defined as the generally perceived as a set of societal standards that encompass the norms of the community. Ethics could also be seen as the system or code of morals of a particular person, religion, group, profession etc.
It could also be viewed as the discipline that deals with what is good or bad and with moral duty and obligation.
Accounting ethics is a field of applied ethics, the study of moral values and judgments as they apply to accountancy. The accounting code of ethics requires an accountant to adhere to five fundamental principles which are integrity, objectivity, professional competence and due care, confidentiality and professional behavior which entails compliance with relevant laws and regulations.