Problems of Ethics in Accounting

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Accounting is a career field where high ethics and morals are important character traits for individuals. Poor accounting ethics can lead companies into bankruptcy from improperly reported financial information.

Fraud

  • Accountants with poor ethical standards may conduct fraudulent activities, such as overbilling clients or delaying vendor payments. Most fraud cases involve hiding cash for internal purposes.

Embezzlement

  • Accountants may embezzle from their employers when given too much responsibility and little oversight. These situations give accountants more control than necessary and the ability to mislead their employers on financial information.

False Information

  • Some companies employ accountants who have the ability to manipulate financial transactions into positive company results. These ethical situations were seen in the accounting departments of Enron and Worldcom.

Tax Evasion

  • Some accountants create illegal tax shelters to hide company income. Companies use these shelters to avoid paying government income tax.

Personal Loss

  • Poor accounting ethics can cause great personal damage in addition to business problems. Accountants found guilty of manipulating financial information are sent to jail, creating difficult situations for the accountant's family members.

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