Why Are Ethics Important in the Field of Accounting?

Accounting ethics provides the honesty and accuracy that all other parts of business depend on.

Ethics are important throughout the business world, but they are especially important for accountants and all accounting practices. In general, this is because accounting deals more with facts, figures and hard data than any other business area. This means that there is less room for perspective, and the results of unethical behavior are much more widespread.

CPAs

CPAs are certified public accountants, or accountants who work at large firms offering tax and audit services to a large number of companies and individuals. It is important that CPAs be honest and accurate in all their services, because from a personal perspective, their jobs depend on it. A firm suspected of unethical behavior will not be able to remain in business. There is no demand for an accountant without ethics. CPAs must take courses in ethics, and the American Institute of CPAs (AICPA) requires members to follow a specific code of conduct.

Accuracy

For accountants who work in businesses or for businesses, accounting needs vary, but ethical behavior is always paramount. Businesses depend on accurate information to make most of their key decisions. Investors, in turn, depend on accurate financial statements to make decisions about investing in the company. Accountants are in charge of making sure these reports are honest, forthright, and accurate. The entire business structure depends on this ethical approach.

Fraud

Fraud is the act of misrepresenting information, and in accounting it usually means misrepresenting financial data. This does not usually mean replacing one number with another--these mistakes are often easy to catch--but rather showing certain types of financial data in more positive categories where the data do not belong. This type of fraud is easy for accountants to commit, which is why there are such strict laws regarding ethical behavior and fraud.

Larger Economic Issues

In a general sense, the entire economic condition of countries (especially countries that tend toward capitalism, like the United States) depends on accuracy, fairness and honesty in accounting. Accounting documents are used as a basis for almost every business and government decision, from marketing to taxes. Widespread fraudulent behavior leads to widespread mistrust in financial systems, so people refuse to invest their money for fear businesses are not being honest. The stock market suffers, as well as businesses trying to raise capital. A chain reaction begins that causes underfunded businesses to raise prices, further worsening economic conditions.

Codes of Conduct

Since ethical behavior in accounting is so important, there are numerous codes of ethics created for accountants. Business and accounting firms typically have their own code of ethics for accountants and accounting processes. Every accounting organization that accountants belong to (depending on their position) also has a code of ethics that the accountant must uphold.

References

• Corporate Journey 2 U: Business and Accounting Ethics
• Smartpros: Ethics in Business
• Enotes: Ethics in Accounting