People all around the world are affected on a daily basis by the actions of people they don’t know or have met. Most people’s everyday lives are affected significantly by the work of an Accountant and therefore accountants need to know the importance of ethical accounting and should always be principled in their accounting practices or else a series of negative ripple effects can turn the lives of ordinary people upside down. One such example was the Enron scandal of 2001.
The Importance Of Ethical Accounting and how to practice it:
In today’s globalized market, ethical accounting has become even more important and Accountants need to act in a fair and transparent manner since businesses are counting on them and many lives depend on their honesty and integrity. So, why exactly ethics are an important part of every professional accountant.
Well, here are a few reasons why:
- An accountant is dealing with sensitive information that is vital to many
- An accountant’s mistakes can affect many
- To maintain healthy and long-term business relationships with your clients
- Grow your professional network since everyone respects a professional
- Avoid any legal repercussions that may harm your career
While Accountants are expected to act within an ethical framework, here are the 5 common code of ethics every accountant should demonstrate in their accounting profession:
While the thirst for illicit gains can drive Accountants to unethical ways, exhibiting a set of strong moral principles needs to be exercised in order to manage client’s information with full honesty without using their financial knowledge and available information for personal gains. Accountants are morally responsible to provide fair and accurate reporting with completeness.
An accountant should not disclose the acquired information to third parties by violating the terms of confidentiality at any cost. Also, they shouldn’t share confidential information internally without the consensus of the owner. However, if an accountant feels or knows any information that is against the public interest, s/he should seek help from a professional lawyer
Independence and objectivity
While Objectivity is an individual accountant’s attribute and independence is a business attribute, both are imperative ethical values that every accountant needs to inculcate. Objectivity defines the mental attitude to be straightforward and honest in their work whereas independence promises no impartial or unbiased judgments to be made on their behalf, under any influence.
An accountant’s professional judgment should not be biased and driven by conflicts of interest. An accountant shouldn’t make a judgment based on either personal gains or under the influence of someone else, thereby ensuring independence and objectivity while delivering their services.
An accountant must always be up to date with the best practices and technology trends by acquiring the necessary skills to perform their task. Exercising a proper understanding of their profession and delivering the same with due diligence is very important for ethical accounting. They should undergo proper training under professional guidance to carry out their responsibilities with competence
All accountants should commit to professional behaviour by complying with the laws and regulations of their profession. Commitment to professional behaviour ensures that the accountant doesn’t discredit or negatively affect the profession.
An accountant’s job is not an easy one and his/her one wrong decision can bring turmoil across the whole industry. While embezzlements can earn them a few dimes, a small mistake can and they will lose everything in the long run
Be respectful to the profession and you will be rewarded with success!!