Ethics in Accounting Discussion I will be putting you into groups to look at how ethics play a role in accounting. As a group. you will review the case and then address what ethical codes were violated. In accounting, there are 5 codes that must be followed and they are detailed below: 1. Independence and Objectivity Ethics and independence go hand in hand in the accounting profession. A critical component of trust is making unblased deckions and recommendations that benefit the client. Conflicts of interest, for example, demand exposure under independence guidelines. Benefiting from the sale. of one financial product over another could lead to a blas that skews financial advice to a client. To remain objective and independent, it is also necessary to ensure that recommendations are not subject to outside influence. An accountant's professional judgment is compromised if they subordinate their judgment to someone else's. 2. Integrity Demonstrating integrity means being straightforward and honest in all business and professional relationships. Uphoiding integrity requires that accountants do not associate themselves with information that they suspect is materially false or misleading - or that misleads by omission. 3. Confidentiality Disciosure of financial information or revealing the disposition of a potentiat merger by an accounting professional without express permission violates the trust that is the foundation of a professional relationship - unless there is a legal or professional reason to do so. 4. Professional Competence As technology. legistation and best practices change, a professional accountant must remain up to date. To exercise sound judgment, an accountant must stay abreast of developments that could affect a decision's outcome Practicing due care means recognizing your skill level and not suggesting that you have expertise in an area where you do not. Consulting with other professionals is a standard practice that helps to bond a network of individuals and senerate respect Similar guidelines also apply to accounting professionals who supervise others. These accountants must ensure that the subordinates receive prope training and guidance as they carry out their responsibilities. 5. Professional Behavior Ethics require accounting professionals to comply with the laws and regulations that govern their jurisdictions and their bodies of work. Avoiding actions that could negatively affect the reputation of the profession is a reasonable commitment that business parthers and others should expect. 2st Case - Your group will look into the ethical case for one of the companies below and tell me what did the CFO of those organizations do that was unethical and which of the 5 pillars did they violate, and in what way. Waste Management Scandal (1998) Enron Scandal (2001) WorldCom Scandal (2002) Tyco Scandal (2002) HealthSouth Scandal (2003) Freddie Mac Scandal (2003) American International Group (AIG) Scandal (2005) Lehman Brothers Scandal (2008) Bernie Madoff Scandal (2008)
