Question

Importance of ethics in Accounting?

Answer 1

Ethics can be defined as moral principles that govern a person's behavior or the conducting of an activity or the branch of knowledge that deals with moral principles. In each and every profession ethics play an important role as ethics serve as a guide to moral daily living and helps us judge whether our behavior can be justified. Ethics refers to society's sense of the right way of living our daily lives. It does this by establishing rules, principles, and values on which we can base our conduct.

Ethics has an important role in accounting profession. It is where the judgment of being professional belongs. It is whether the act of one accountant is right or wrong, ethical or unethical. One of the key traits of a professional is adherence to a rigorous set of ethical guidelines. When someone leaps too far from ethical standards, their trustworthiness and judgment come into question. The role of ethics in accounting is legal, practical and moral. You must keep your books with honesty and integrity because you are legally required to do so in a way that accurately reflects your company's financial workings.

Some of the importance of accounting is listed below:

1. Independence and objectivity: Ethics and independence go together in the accounting profession. In order to provide fair and accurate information, accountants must approach their work free from bias or agenda. A critical component of trust is making unbiased decisions and recommendations that benefit the client. Having preconceptions can affect the accuracy of financial data and benefiting from the sale of one financial product over another could lead to a bias that affects financial advice to a client. While errors or differences in opinion regarding the applicability of accounting laws do exist.

2. Professional behavior: Accountants are also responsible for performing work in accordance with the standards set by their profession. These include legal parameters as well as guidelines set by trade organizations that protect the integrity of the industry as a whole. Avoiding actions that could negatively affect the reputation of the profession is a reasonable commitment that business partners and others should expect. Accountant should be ready for any backlash from customers as each customer to its own has different opinion and suggestions for various working.

3. Confidentiality: As an accountant every day you come across very sensitive information for the firm you work in. This sensitive information can have bad impact on the firm if it happens to fall in the hands of wrong people. Accountants are morally obligated to make sure this information isn't shared with anyone who doesn't have the right to see it. This ethical obligation is especially important for public accountants who handle the books for multiple companies but must not divulge one client's information to another.

4. Dependency: The company is counting on its accountant to be trustworthy towards their clients ,to keep the confidentiality of the books .Just like the customer expects the business to be ethical it is expected that accountant is also ethical towards the firm .If someone gets comfortable in being unethical, in later years it backfires the firm as well as the accountant.

5. Competence: The act of performing a professional service includes both an ethical and a professional commitment to do it right. False accounting puts a client at risk of legal trouble and poor decisions. As technology, legislation and best practices change, a professional accountant must remain up to date to exercise sound judgment, an accountant must stay along with developments that could affect a decision’s outcome.

6. Integrity: Accountants are morally and legally obligated to do their work with conscience that is, to exercise honesty and a willingness to handle information thoroughly and carefully. Upholding integrity requires that accountants do not associate themselves with information that they suspect is materially false or misleading or that misleads by omission. It is their responsibility to engage in fair and accurate reporting with regard to the trustworthiness of the data they provide as well as its completeness.

Hence, Ethics is important in accounting because it helps in independence and objectivity, professional behavior, confidentiality, dependency, competence and integrity.