Wednesday, 31 October 2012
Unethical behavior in accounting
Unethical behavior in accounting...Unethical behavior in accounting
Self interest is the most common unethical behavior in accounting profession due to lack of objectivity, independence and professional judgment. Self interest motivates the accountant to act in his own interest when faced by a conflict of interest for example receiving bribes.
When accountants fail to comply with the principles outlined in the codes of ethics they practice unethical behavior, such unethical behaviors include;
Falsification of accounts and provision of erroneous information. This is meant to reflect the wrong financial position of the company or in order to obtain personal gain. For example, in the case of Enron where they concealed debts to keep them from reflecting in the accounts.
Another unethical practice is fraudulent accounting. This could occur when expenses and liabilities are overstated or when values of some assets are exaggerated like corporate assets. It is mostly done by accountants in order to embezzle funds and misuse funds.
Although many accounting and audit firms have gone to advertising and getting higher revenues this was viewed as unethical. However it could lead to conflict of interest and spill over to fraud or overstepping the auditing mandate.