Ethics in Accounting! How Diligent are You in Following Accounting Ethics?

People across the globe are impacted daily by the actions of those they are not familiar with. And when it comes to managing accounting books, ethics are critical in several aspects of businesses. Accountants take care of the confidential financial information of companies and individuals. While some have the authority to transact millions or even billions of dollars, others help with protecting pension funds of social workers and corporate employees. 

Accountants have the distinct responsibility to offer professional services to clients while producing an accurate and truthful analysis of a business’s financial health to the general public. Hence, they must work fairly and transparently as organizations count on them, and numerous lives bank on their integrity and honesty. 

Here are some areas in ethics that deserve the attention of individuals working in the accounting field: 

Integrity

Showing integrity means accountants need to be honest and straightforward with clients’ financial details. Accountants should keep themselves from personal gains or leverage using confidential information that they suspect is materially false or misleading.

While mistakes or differences in opinion about the relevance of accounting codes do exist, certified accountants must avoid the intentional opportunity to fabricate financial information and double-cross businesses.

Private companies or public accounting firms establish a code of conduct or ethics for accountants, ensuring that every professional acts consistently. Without specific standards or rules, accountants should check their actions to ensure they are in line with the widely accepted principles. 

Confidentiality

Accountants must not reveal the acquired knowledge to third parties by defying the terms of confidentiality that are the foundation of a professional relationship, no matter what. Additionally, they should not share classified data internally without the consent of decision-makers unless there is a professional or legal agreement to do so. However, if accountants feel or know any evidence that goes against the public interest, they should seek assistance from a professional lawyer.

Independence and Objectivity

Ethics and independence are closely related in the accounting realm. While independence is a business aspect and objectivity is an individual accountant’s aspect, all accountants must conduct both the essential ethical codes. 

Accountants’ professional judgment must remain free from conflicts of interest and other shady business relationships. Also, their recommendations must not be subject to personal interests or external/internal influences. Failure to remain independent and objective hampers an accountant's capability to offer honest opinions about an organization’s financial structure.  

Often, the accounting industry limits the number of services public accounting companies or individual certified public accountants (CPA) can offer to clients. Accountants delivering more than one of these services for a client can come under suspicion for their objectivity and independence.

Professional Behavior

All accountants have to commit to professional behavior by adhering to the laws and regulations governing their administrations and profession. Avoiding actions that can adversely impact the accountant’s reputation is a reasonable obligation that business partners and others should hope for.  

Competence and Due Care

As legislation, technology, and best practices evolve, accountants must always be up to the minute with these changes by learning the critical skills to do their tasks. Having a holistic understanding of the profession and delivering the same with due diligence is tremendously important for ethical accounting. Further, to practice sound judgment, they must keep pace with developments that can impact a decision’s outcome.

Exercising due care means observing all ethical or technical accounting norms. Often, certified accountants have to examine generally accepted accounting principles (GAAP) and implement this framework to an organization’s specific financial data. 

Moreover, competence is based on an accountant’s education and work experience. As such, similar guidelines apply to senior accountants who manage others. These accountants need to ensure that the underlings get proper guidance and training as they perform their responsibilities with competence. 

Ending Thoughts

An accountant’s job is not a walk in the park, and their one wrong decision can bring chaos across the entire company and industry. While they can make a few dimes through embezzlements, a minor mistake and they will lose everything over the long run. Respect the profession and you will be bestowed with success.

So, coming back to the original question: Are you diligent enough while following the above accounting ethics?