Question

identify & discuss at least 5 reasons why people cheat &lie from Accounting ethics perspective.

Answer 1

Reasons why people lie and cheat from Accounting ethics perspective:

1. To attract investment:

This is the prominent reason why people follow unethical practices while engaging in accounting. To better present its financial position than actually is and trying to attract more investors to invest in its business.

2. To save taxes:

This is the second most prominent reason why people engage in unethical accounting practices. By engaging in unethical practices people lower their taxable income and effectively pay lower taxes than actually required to pay.

3. To earn more incentives:

Where incentives are earned based on the performance of a particular line of product or services, people tend to overstate the performance of that particular line.

4. To get bank finances:

Banks or financial institutes adhere to their statutory guidelines while making finances. To comply with ratios of loan sanctioning norms of the bank or to show better performance to bankers to get excessive finances.

5. To comply with regulatory requirements:

To show that the performance of the entity is in compliance with securities law or entity is compliant with local government regulations people tend to indulge in unethical accounting practices.

6. To Manage cashflow:

People tend to indulge in unethical accounting practices to manage their cashflows and to delay certain payments or to receive some receipts early.