Accounting Ethics Can Make the Difference Reasons why Morals are Key Research Paper

Accounting Ethics Can Make the Difference Reasons why Morals are Key Components - Research Paper Example They don’t trust the financial statements, they don’t trust the audits, they don’t trust the bond rating agencies.† Indeed, contemporary profession of accountancy has been continuously wrestling with how to improve ethics in the profession. In the wake of prominent accounting scandals such as Enron, WorldCom, Tyco, and Arthur Andersen, the accounting profession in general and accounting ethics in the main has received both public’s and regulator’s glare. In 2002 the U.S. Congress responded to this dilemma with enactment of The Sarbanes-Oxley Act. However, when it seemed the regulatory field for adherence to accounting standards and ethics had been prepared, the world witnessed yet another crisis of accounting ethics triggered by unnoticed 50 billion Ponzi scheme invented and managed by Bernard Madoff for almost twenty years. Because the accounting profession is the gatekeeper of the financial affairs of the business community, it must strive t o cultivate and maintain ethical standards and principles that must not be compromised. Ethical sensitivity is paramount in conducting business honorably and fairly. Business communities around the globe hold accountants in high esteem and expect them to be beyond reproach, ethically. The primary existing paradigm related to accounting ethics is based on the premise that individuals make ethical choices because of individual integrity. This may be partially true; however, ethical or unethical accounting practices usually reflect the values, attitudes, beliefs, and behavior patterns of the organizational culture (True & Pelton, 2005). Early ethical and moral theorists have gone to great lengths to understand human behaviors and to define what behaviors constitute good morals. Some people believe that morality is contingent on environmental and situational circumstances. Dawson (2005) asserted that the character traits defining the ethical nature of the business are embedded in the social values of its culture. Dawson (2005) also believed that businesses with a strong rational and bureaucratic culture, such as financial institutions, have difficulty promoting individual ethical behavior beyond the rules in the absence of a compensating culture of social values such as trust and honesty. Businesses that thrive on the quality of human relationships internally and externally have more opportunity for building such a culture to promote ethical behavior. Those businesses with high employee turnover and a higher percentage of part-time/casual workers with low intrinsic valuation of work have difficulty sustaining a work ethic conductive to ethical behavior. Thus, ethical behavior is as much an organizational issue as it is a personal issue. Further, in some instances, ethical behavior is learned behavior that is based on formal educational instruction and personal experiences/modeling. According to position formed by Duska and Duska (2005), "accountants have a number of ethical responsibilities, to themselves, their families, and their profession as well as to the clients and company for which they work" (p. 30). Practically, most of accounting crises occurred in past primarily due to CEOs not adhering to the rules and regulations of the accounting practices as well as the U.S. Security Exchange Commission requirements. According to Healy-Burress (2010), "a professional code of conduct explicitly states the expectations of behavior and character for the members of the profession" (p.57). Therefore, a professional code of ethics that is followed by participants represents a defining feature of a profession, and the major document which formulates the ethical conduct of accounting