Ethics and Independence in the Accounting Profession Term Paper

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Ethics and Independence in the Accounting Profession

There are according to the text, two primary reasons that people act unethically. A person will act unethically if there standards differ substantially from those of society "as a whole" or if the person chooses consciously to act in a selfish manner.

There is no profession more profoundly impacted by the effects of ethical standards that the accounting profession. The effects of ethical and unethical behavior on independence and daily functioning are implicit in everything an individual in the accounting profession does.

Recently there have been many public 'scandals' within the accounting profession, re-establishing the need for attention to ethical standards and training within the field of accounting. Public cases such as Enron have resulted in a diminished sense of trust among the public with regard to the accounting profession.

In times of old individuals pursuing the accounting profession as a career might assume that they would be afforded a relatively stable level of autonomy and independence. However the lack of public trust now associated with the profession has reduced the independence afforded most people in the industry. More and more public accounting officials and private representatives find themselves subject to auditing and continual assessment and measurement, in an attempt to ensure that the highest ethical standards are observed in every day practice and procedures. Many standards have also been established to ensure that the accounting profession remains reputable and wholesome.

The effects of ethical issues on the profession and independence are discussed in greater detail below.

Analysis of Ethics in Accounting

Ethics has had many effects on the accounting profession. More and more the public has questioned the ethical nature of accounting. Thus individuals working within this profession are subject more often to the scrutinizing eye of the public, and more and more required to uphold the highest moral and ethical standards. A number of national standards have been established specifically to the field of accounting to help facilitate the ethical standards within accounting.

Accountants in particular face many ethical dilemmas during the course of their career, and example of which is the client who threatens to seek a new auditor unless offered 'perks.'

Accountants and other professionals within the accounting field are often in a position that allows a great deal of autonomy and independence, which also opens the door for increased temptation and the potential for unethical behavior. Accountants may act unethically for a variety of reasons, though as the text suggests many do so for personal benefit only or selfish reasons, which by nature is a product of natural human tendencies.

There are many justifications an accountant might use to participate in unethical behavior, such as the argument that 'everybody does it' with regard to falsified tax returns, or the argument that 'if it's legal, it's ethical' which is based on the premise that ethical behavior is contingent upon the perfection of laws which is a nearly unfeasible feat. In addition ethical behavior becomes more tempting if the person participating is less likely to get caught in the act or suffer from harsh consequences as a result of participating in less than ethical behavior.

Accountants work largely independently, thus there is much room for ethical or unethical behavior. It is vital then that an accountant have ethical standards that are similar to rather than different from those of society in general. The effects of unethical behavior on the profession can be devastating. A considerable portion of unethical behavior results from an individual's need to act selfishly, rather than in the best interests of society at large.

There are fortunately many frameworks an accountant or individual in the profession can utilize to overcome the tendency to act selfishly and subsequently act in a manner that upholds the best interests of everyone. The best approach is to approach an ethical framework with a formal framework that includes obtaining facts pertinent to a particular situation, determining who will be impacted from the outcome of a particular dilemma, identification of alternate actions and the key consequences of each alternative, and subsequently making a good decision.

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Within the accounting profession, ethical standards "are the foundation for trust building and relationship making" in the eyes of the public.

Thus, in order to maintain a standard of professionalism and leadership, education and training are vital components for professionals entering the profession; in addition, consistent monitoring and measurement of performance and the manner in which individuals operating in the profession carry out day-to-day tasks are warranted.

Studies of the ethical trends and effects of ethics in the public accounting profession show that ethical training and understanding of the value of ethics is essential and fundamental to the success of the profession as a whole.

Thus one might assume that accounting firms would be interested in assessing the level of ethical training a potential employee or candidate would have prior to hiring an individual for employment.

Most professional firms indicate that they rely on institutional training to cover ethical behavior and the rules that govern ethics within the accounting professions, however few firms if any have attempted to verify the extent to which new recruits or employees are actually trained with regard to basic ethical principles a pattern that can lead to temptation and unethical actions on the part of recruits or new hires.

There is a large body of evidence indicating that instruction in ethics at the collegiate level would result in creation of an accounting profession that was more dynamic and one that would attract more qualified and ethical candidates.

Such courses might focus on among other things the tremendous impact the accounting profession has on the public.

The effects on the accounting profession of ethical standards are many. The profession is tasked with the challenges of gaining the public's confidence, in a society where trust in the accounting profession is at this time somewhat scant. Financial 'disasters' and corporate 'scandal' have impacted the ability of the public to trust the profession tremendously. The impacts of ethical issues on the accounting profession have also affected enrollment of students in the accounting profession, which has considerably declined during the past 10 years.

Conclusions/Analysis

There are many potential negative connotations with the accounting profession, and there are many that would prefer to simply avoid the ethical dilemmas that accounting professionals face on a day-to-day basis. The effects of ethics on the accounting profession have been many. One of the most obvious effects is the reduction in independence and autonomy many professionals have realized due to increasingly rigid standards and impositions that require regular monitoring and assessment of daily activities. Such actions however, are often deemed a necessary method of ensuring ethical conduct within the profession.

It is vital that educators work on finding ways to add an "ethical dimension" to coursework, and remind students that the profession is both necessary and rewarding, when appropriate measures are taken to ensure the highest moral and ethical standards.

It is also important that students learn how impacting their actions are in the eyes of the public. The effects of ethics on the profession include an increased awareness of the role the accounting profession has on public opinions and behavior. No other field is at this time more scrutinized in the eyes of the public than the accounting profession, in part because it is often associated with a high level of unethical behavior. Thus it is important that confidence once again be instilled in the public, and that training focus on teaching professionals ethical standards of conduct.

The effects of unethical standards in the profession are often highly publicized, where cases like Enron result in a reaffirmation of the importance of ethics training for accounting professionals.

Schools and universities are currently working to incorporate more ethical training into business courses to encourage….....

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