...Review of Accounting Ethics Kelvin Darden Strayer University ACC 557 Darren Tennyuk May 5, 2013 Assignment 1: Review of Accounting Ethics The New Zealand Institute of Chartered Accounts (NZICA) represents over 33,000 members in New Zealand and overseas. The organization audits private companies and public companies that are members of the organization (Graham, 1960). In October 2012, the organization was found to be practicing breaches of accounting with its members when an employee of the organization was found investing in different companies using client’s money. The loans were supposed to be short-term loans but it turned out they were not, this was discovered after complaints from clients. 1. Given the corporate ethical breaches in recent times, assess whether or not you believe that the current business and regulatory environment is more conducive to ethical behavior. Provide support for your answer. In recent times the NZICA has faced several cases of accounting ethical breaches. There were unpredictable increases and collapses of chartered accountants. From every corner, voices rose demanding accountability, demanding tighter regulation and unethical practices to be brought to justice. Clearly, those at fault should have been punished. However, in order for ethical principles to apply it must be shown that the institution is inherently moral or ethically responsible (Graham, 1960). Secondly, an adequate discussion of what accounting ethics...
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...Review of Accounting Ethics Ethics is a very important aspect of accounting and should be taken very seriously as accountant. Shareholders, potential shareholders, and other users of the financial statements rely heavily on the yearly financial statements of a company as they can use this information to make an informed decision about investment. The opinions of the accountants who prepared the statements, as well as the auditors that verified it, to present a true and fair view of the company. Knowledge of ethics can help accountants and auditors to overcome ethical dilemmas, allowing for the right choice that, although it may not benefit the company, will benefit the public who relies on the accountant/auditor's reporting. “As part of the largest financial fraud in U.S. history involving mega thief Bernard Madoff, a New York auditor, David Friehling is facing jail time for deceiving investors by signing off on fraudulent financial statements. Mr. Friehling, 49 years old, worked for Mr. Madoff from 1991 to 2008, running his storefront operation out of an ordinary office in New City, a suburb of New York City, N.Y. Mr. Friehling is to convicted of charges including aiding and abetting investment adviser fraud, securities fraud and four counts filing false audit reports to the United States Securities and Exchange Commission. It was also found by the United States Securities and Exchange Commission that Friehling and his family had $14 million invested in the Mr. Madoff‘s...
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...Accounting Ethics in Healthcare HCS/405 Dr. LaTrina Frazier Accounting Ethics in Healthcare The four goals of good healthcare are to relieve symptoms, cure disease, prolong life and improve quality of life. Access to healthcare has been a perpetual challenge to healthcare providers who must take into account important factors such as equity, efficiency and effectiveness (Maharaj & Paul, Jul 2011, 98) Your customers expect to receive quality medical care at your medical clinics and/or hospitals. They also expect to receive fair and ethical treatment from the staff. This include the accurate and timely billing for services. The non-clinical team is responsible for coding and billing the products and services provided to our customer during their visit. This back office process is seen as part of the overall service provided by your facility. At the end of the day a health care businesses first priority is to provide the best quality service possible to its patients. Keeping the welfare of your patients as the priority leads to good decisions, this is definitely true in any healthcare business. With all of the current financial challenges in our economy, that has reduced reimbursements and add to this the fears of the healthcare reforms. Hospitals are being challenged on all sides, and they need to be able to count on having ethical business partners and employees to help them continue to deliver the highest quality care. As employees in...
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...1) NZICA has set out strong fundamental principles of the code of ethics regarding what an auditor imbody while carrying out an audit. These include XRB PES 110-150; * Integrity * Objectivity and independence * Professional competence and due care * Confidentiality * Professional behavior If someone’s an auditor from a professional body, he has to follow XRB or his professional bodies’ ethical code. In this case Pearson is part of NZICA and in turn must follow the standards set out by the XRB as NZICA follow XRB standards. NZICA’s has 14 rules of Ethics that is underpinned by the above standards set out by the XRB. Although NZICA evaluation of Pearson has been through and they have found Pearson in breach of few the above standards their fine/Cost of $38,000 seems on the low side he was also banned from auditing a public issuer years with the exception of four non - specified companies. In review of the charges against Pearson set out by NZICA I find that they met expectations in the following Standards. The institute found that Pearson was in breach of professional competence in turn in breach of Rule 11 and 9 of the code of ethics. Professional competence Rule 11 1) Information available indicating collective provision for doubtful debts yet, accepting assertions from SCF management that no collective provision for doubtful debts was required. 2) Failing to assess, evaluate and document uncorrected misstatements relating to provisions...
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...Were there any abuses of power by the management and breach of fiduciary on the part of the director? Yes, there abuses of power by the management and breach of fiduciary on the part of the director. Abuse of power is the act of using ones position of power in an abusive way, this can take many form such taking advantage of someone, gaining access to information that should not be accessible to the public or just manipulating someone with the ability to punish them if they do not comply. Breach of fiduciary duty is people in position on the trust or fiduciary relationship such as director, high level of employees of business owe certain duties of their principles. According to this case, there some issue that show the abuses of power by the management and breach of fiduciary on the part of the director. The issue are: 1. En.Zayed and Pn.Hashimah tried to negotiate with the Auditor to not qualify the Financial Statement. Base on this issue, under the statutory duty of company act, section 181(1), Duty to Act in Good Faith. ‘A director of the corporation must exercise their powers and discharge their duties. Section 181(1)(a) In the good faith in the best interests of corporation and Section 181(1)(b) for a proper purpose. Section 132(1), a director shall at all-time acts honestly. Section 169 and ninth schedule of the companies Act 1965, financial information that companies are required to disclose are mainly though the director report and financial report. According...
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...Ethical Breaches ACC 557 Name Date Instructor Introduction In recent years, accounting ethical breaches has emerged as a major problem for most of the organizations. With growth of businesses, the number of accounting ethical breaches has also increased in organizations. Accounting ethical breaches may be defined as the misappropriation and misconduct of financial data by the auditors and accountants of the company (Duska & Ragatz, 2011). The accounting ethical breaches not only affect the organization, but also the stakeholders involved with the organization. The paper will discuss the accounting ethical breach in Enron. The paper will also discuss the ethical issues, accounting ethical breaches and the recommendations to prevent such breaches. Ethical Behavior in Current Business and Regulatory Environment With increasing number of corporate ethical breaches, the role of ethical behavior has increased in organizations. The organizations are more supportive to ethical behavior ensuring risk, compliance and governance culture within organization. As a part of this culture, effective communication around ethical practices has been followed by the organization. Since ethical breaches are mainly done for the sake of money, rewarding and ethical practices has effectively helped organizations to minimize the ethical breaches (Ferrell & Fraedrich, 2009). At the same time, ethical breaches have not only affected the image of the company, but are also responsible for...
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...the Ethics case, "A Sad Tale: The Demise of Arthur Anderson" located in the WileyPLUS Week Fundamentals of Corporate Finance Chapter readings. Discuss the mistakes made by Arthur Anderson and potential actions that leadership could have taken to prevent the organizational failure. Write a 350- to 700-word summary of your discussion. Click the Assignment Files tab to submit your assignment. Team A, You did a great job on the team paper! I like how you stated what caused the downfall and what the company should have done to fix the issue. You received a 4/4 Thank you, Robert Summary of A Sad Tale This paper summarizes “A Sad Tale: The Demise of Arthur Andersen,” a consulting firm once known for its strong ethics, that was eventually destroyed by unethical practices. A discussion of the mistakes made by the organization, and what leadership could have done to help prevent the organization’s failure concluded with the following. According to dictionary.com, a consultant is a person who gives professional advice or services to companies for a fee (dictionary.com, 2014). Merriam-Webster.com states that an accountant is a professional person who performs accounting functions such as audits or financial statement analysis (merriam-webster.com, 2014). An individual giving professional advice to a company along with providing accounting functions and audits leads to a serious breach of ethics if they are acting for the same corporation. Arthur Andersen accounting firm...
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...AYB 301 Audit & Assurance ------------------------------------------------- Group Ethics Project ------------------------------------------------- ------------------------------------------------- Semester 1, 2015 ------------------------------------------------- Total Word Count: 1250 ------------------------------------------------- This case study will analyse the ethical dilemmas faced by David, audit manager at C & A who is hired to do the financial year-end audit for MAL. The six step ethical framework will be adopted to gain an understanding of principles and obligations for analysing the situation faced by David and arrive to a professional and responsible resolution. Step 1: Relevant Facts of the Case MAL-Marburg Appliances Ltd | * White goods company listed on the ASX * Reckless furnishing of financial statements. * Issues not identified in previous audit report * Unqualified audit reports issued for the previous 5 years * Closing inventory count is overstated as it included obsolete goods. | Penny Yang | * The CFO of MAL * Offered David a discounted yearly gym membership * Intimidated David and Michael to finish audit within 6 weeks, or MAL will change the audit team | Joe Miller | * A new warehouse manager * Inexperienced in large volume of purchase and sales | Michael Thompson | * New lead audit partner at MAL * Not familiar with “white goods industry ” | David Brown | * Employed by mid-tier firm...
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...Surrounding the Professionalism of Accounting | | 3.0 Literature Review | | 4.0 Presentation of the main Idea about the Professionalism of Accounting | | 5.0 Analysis and discussion | | 6.0 Conclusion | | 7.0 Reference | | 1.0 INTRODUCTION 2.0 ISSUES SURROUNDING THE PROFESSIONALISM OF ACCOUNTING Twenty years ago, Briloff (1986) alerted the profession to the crisis of credibility being faced because society perceived accountants to have lost their commitment to public service. The credibility of the profession is threatened when the ideals of integrity, independence, public service and ethical standards come under suspicion. Well-known scandals of one of the major leading accounting firms in the United States Arthur Andersen coupled with alleged unethical acts committed by Enron have arouse the conscious of the public and stakeholders as to the moral decline and unethical posture of public accountants unveiled a decline in moral reasoning and ethical standards of public accountants (Dellaportas, 2006; Esmond-Kiger, 2004). Over the last few years, the accounting profession has been beaten up badly in the media, somewhat justifiably. The forces at work were numerous and complex and a variety of phenomena created the entire profession had its reputation tarnished. Some forces were not new: delivering services that acted to impair independence; becoming too cozy with clients, active participation in finding ways to circumvent accounting standards, and even simple...
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...Topic 1: Ethics (Code of Ethics for Professional Accountants) Topic 1: Ethics (Code of Ethics for Professional Accountants) ------------------------------------------------- ------------------------------------------------- Introduction According to the Institute of Internal Auditors a Code of Ethics is a comprehensive statement of the values and principles, which should guide the daily work of auditors. The Code of Ethics states the principles and expectations governing the behavior of individuals and organizations in the conduct of internal auditing. It describes the minimum requirements for conduct, and behavioral expectations rather than specific activities. Fundamental Principles The Code of Ethics mandates that internal auditors behave and practice with integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. These are the fundamental principles of professional ethics and all members of the professional accounting bodies are to comply with these principles (APES 110, S.100.4). Purpose of the Code of Ethics Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. A code of ethics is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its objective assurance about governance, risk management, and control. The Code of Ethics extends beyond the definition of internal...
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...working for. Even though an independent accountant may be hired by a company’s management, the responsibility of an accountant is owed to many others as well. The duty to uphold principles, standards and laws of accounting is owed to the companies, stockholders and creditors they account for. Accountants have an ethical responsibility to these entities that rely on their work to be accurate and precise. Accounts must use extreme care and follow established conventions and standards to present the true and fair view of the financial position of a company. Accountants owe the ethical and professional obligations to the previously mentions entities of management, stockholders, investors, creditors and regulatory and taxation authorities. These entities are divided into three groups: clients, third parties, and the government. Clients are people or groups that use the professional advice or services of an accountant. Accounting clients could be small or large business, private parties, individuals or other accounting firms. The accountant-client relationship is unique and has never occupied the same status as the client relationship with other professions. An accountant’s responsibility to their client is to regard information obtained during the course of the professional relationship as a sacred trust of...
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... ethics in accounting: Accounting error or fraud? By Rasha Amin R_7419@yahoo.com Submitted in Partial Fulfillment of the Course Requirements for Current Issues in Accounting Acct 525 Professor: Kenneth Shinedling 08/27/2014 Ethics in Accounting: Accounting error or fraud? Introduction: Accounting profession all over the globe has developed its own principal based professional ethics where integrity, objectivity, diligence, loyalty and professional behavior are the five virtues professional accountants should have all the way. Integrity: it means simply, that you have to be honest and straightforward in all professional and business relationships. Objectivity: it is that professional accountant shouldn’t be influenced by others in a way that affects his professional or business judgment or opinion. I.e.:- to avoid any conflict of interest and not to be biased to any party. Diligence (Professional competence and due care): To maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation, and techniques and act diligently and in accordance with applicable technical and professional standards. (Albert D. Spalding Jr., 2012) Confidentiality: Professional accountant...
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...Part 1: Law in Society A) A responsible business person would set a comprehensive code of ethics and values to be met by employees and associates, and would make clear how this code is to be enforced and in what matter it will be followed-up. A legal risk plan will be outlined and the business person will make the decision to retain a lawyer or hire an on-staff lawyer to handle all legal issues that may arise, and to follow up on the legal risk plan ensuring it is implemented accordingly and adhered to. Every business requires a budget and projected cash flow, which goes along with recruiting investors. All creditors will want to know the debt collection plan in place so the company can collect on its debts owed by customers and buyers. Employees will need to be hired and trained, and requires a review schedule to be implemented, ensuring that employees are meeting levels of service, hitting all the targets for sales, abiding by the code of ethics and upholding the company values. A clear and concise business plan is really the starting point, because any investors will want to know the advertising strategy (including target market), product lines, manufacturing/purchasing plans, management hierarchy, inventory monitoring and management, and the accounting policy to be used (IFRS vs GAAP.) A stupid business person would hire anyone, qualified or not, provide little to no training, and would likely be ignorant of legal risks surrounding their enterprise. There would be a lack...
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...CHAPTER 5 MAS PRACTICE STANDARDS AND ETHICAL CONSIDERATIONS I. Questions 1. “Role” refers to the relationship of the CPA as a consultant to the client management and personnel. The basic role of the CPA in performing MAS is to provide advice and technical assistance to the client. 2. Practice standards are necessary in the consulting practice in order to promote the highest quality of performance of the practitioner. 3. Refer to page 71, par 2 4. Refer to page 71, par(s) 4 and 5 5. Refer to page 72, par 3 6. Refer to page 73, par 1 7. Refer to page 74, par(s) 2 to 4 8. Refer to page 75, par(s) 2 to 6 9. Refer to page 75, par 4 II. Multiple Choice Questions |D |D | | | |A |C | | | |C |D | | | |D |D | | | |D | | | | III. Cases Case 1 Nondisclosure is not considered an acceptable alternative because it makes you an accessory to the fact. Disclosure to the offending party only - with no action - may...
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...Issues in Accounting Research Prof. Allen J. Rubenfield Paper 2 The Jane, CPA Dilemma Independence is perhaps one of the most important attributes of the public accountant. Before pursuing a course of action to resolve ethical dilemmas, a CPA may want to consult with legal counsel, applicable professional bodies, and appropriate firm or employer personnel. The AICPA[1] provides an ethics hotline to assist members in this and other ethics issues. Going through the case, one can see that there are a few breaches of some accounting rules and there is a dilemma about what exactly Jane’s responsibilities are and what she should do in this situation. What are Jane’s responsibilities? What are the issues in the case? There is the question of ethics and responsibilities both as a member of the board of directors and also as a CPA. Should Jane disclose to the board about the financial position of her client? Or should she maintain client confidentiality and allow the bank to lend money to her client knowing her client is on the brink of bankruptcy? In my opinion, there was a breach of the ethics and responsibilities on the part of Jane as a CPA. In the following paragraphs, I will analyze the case and suggest what Jane should do or should have done. To begin with, as a CPA, Jane is supposed to abide by the accounting laws...
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