...Chapter 1 THE PROBLEM AND ITS SETTING Background of the Study The business world changes in every tick of the clock. As a result, businesses tend to rise or fall and the stability of the business enterprise is always at stake. But, business sustainability depends on its financial performance and the people governing the business. And to measure whether companies are capable of handling potentially unexpected corporate risks, companies’ accounting transactions are reported through financial statements. These financial statements are the masterpieces of accountants who analyze the transactions and measure the financial stability of the company if they are sustainable enough to defray any business risks. However, in presenting these statements, some accountants may mislead owners or decision makers through financial mistatements which affect the business itself. Because of this accounting malpractice, it may cause to a major problem that will put CPAs into grave misconduct such as allegation of fraud and engangement in corporate accounting scandals. Accounting malpractice are affecting the businesses globally. It decays the economy of the country and slowly creeps into different industry until they are no longer outlive in the business world. In fact, the Report to the Nations on Occupational Fraud and Abuse in Asia-Pacific Region led by Wells (2010) found out that the Asia Pacific median has a loss that was significantly higher than the global median loss of $160...
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...Accounting Ethics Accounting ethics is primarily a field of professional ethics, the study of moral values and judgements which are applied to the accountancy. “Accounting ethics can be defined as a set of distinct guidelines for a business to maintain clean balance sheets, accounting for their profits, losses and expenses incurred and prevent it from mishandling financial reports and statements” (Buzzle 2011). The nature of the work carried out by accountants and auditors requires a high level of ethics. Shareholders, investors, managers, and other users of the financial reports rely heavily on the financial statements of a company in order to make some big decisions and investments. And in the current business world, due to more and more business frauds and corporate collapses came out, attention has been drawn to ethical standards accepted within the accounting profession. In China, I often heard about that many companies act in some immoral ways, for example, preparing three books, overstating/understating their assets or net income, overstating the cost of inventory, and so on. The companies which misstate or hide some financial information may bring some substantial benefits to them in a temporary short time. This is the most obvious reason for the accounting frauds. As far as I know, preparing three books is the most common problem in many small companies. When they want to get a loan from the bank in order to make new investments or enlarge the productivity...
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...keeping track on their performance and also can focus on timely processing of weekly and monthly payroll of the employees. An accountant can also keep the records updated by compiling and analyzing the information related to financial activities of the company to prepare entries to the accounts, such as general ledger accounts, document business transactions. Due to the proper updating of the records systematically by the accountant the company will be able to provide the financial information of the company to its internal and external sources whenever needed without any disputes or errors . • Paid taxes on time An Accountant can help the company by paying taxes on time. There will be no need to calculate taxes separately as it will be calculated by the accountant which will in turn save the time and hence can be used in some effective and efficient manner. Apart from this he can also provide much relevant information related to taxes like : • Amount to put aside per month for tax bills • What type of taxes will have to pay and when will have to pay them? • What expenses can be claimed? • Is there any need to set up a business bank account and what happens if the company doesn’t? • Does the company need public liability insurance or Professional indemnity? What could be at risk if the company has a problem in a client’s office? • How do the track of money coming in and going...
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...What does ethics have to do with accounting? Everything, since there have been some recent financial accounting scandals; a few examples being Xerox, WorldCom, Enron, which have generated much unwanted and unfavorable publicity for CPA's, including those working as controllers or chief financial officers for organizations. When you hear the word "ethics," what is the first thing that comes to mind? Having to make the decision of doing what is right versus doing what is wrong. Some idealists say that decisions of ethics should not be conditional. However, that is not as simple as it may sound. What constitutes "right" to one person may be "wrong" to anther; what clearly distinguishes the line between right and wrong? What some may look at as being unethical does not necessarily make it illegal. In the predicament of David Duncan, the lead audit partner at Arthur Anderson the Accounting Firm for Enron, underscores the penalty that accountants may face under professional accountability. Duncan had pleaded guilty to obstruction of justice when he was involved in the connection with document shredding. The scandals have made some big implications on the profession as a whole. One being the decision from the Public Company Accounting Oversight Board (PCAOB), created by the Sarbanes-Oxley Act (SOA) of 2002, in April 2003 they voted to assume the responsibility for establishing auditing standards. The Auditing Standards Board of the American Institute of Certified Public Accountants...
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...AICPA May 26, 2014 ETH/376 According to Ethical Obligations and Decision Making in Accounting, The America Institute of CPAs (AICPA) is an association made of up volunteer CPAs. Their main objective to ensure that CPAs continue to conduct their business in an ethical manner. The values described in the Code of Professional Conduct are based on common principles and virtues and designed to guide CPAs in a positive light and maintain professionalism with the public in the accounting world. The Principles described are: Responsibilities, Public’s Interest, Integrity, Objectivity, Independence, Due Care, Scope and Nature of Services (Mintz&Morris, 2011). I believe that the three most important principles are: Integrity, Public’s Interest, and Due Care. Integrity would be the most important to me. Dictionary.com states that integrity means, “Adherence to moral and ethical principles; soundness of moral character; honesty.”(Howe,2010). It is important that CPAs are honest with their work and with the public, and are able to say when they make mistakes as well. Accounting Ethics and Integrity Standards states that businesses, investors, and creditors need to be able to trust the financial records of a company; if there is false reporting then investors could be victims of fraud and could potentially lose large amounts of money. The same would go for creditors, they might never get their money back (Media&Petryni, 2014). Public Interest would be the second most important...
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...The Role of Accounting in the Medical Office By Joy Hicks Medical Office Expert An accounting department plays an enormous role within the medical office. As the backbone of the organization, the accounting department allows the organization to operate at its fullest potential. Without an accounting department, it would be impossible for any type of organization to operate in a cost effective manner. General Accepted Accounting Principles (GAAP) are the common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP, are simply put, the customarily accepted ways of recording and reporting accounting information. Each organization may operate differently but all have to follow by set guidelines within the organizations community, state and at the federal level. If these standards and procedures are not followed the U.S. Security and Exchange Commission (SEC) will fine the organization and possibly pursue criminal action to enforce compliance. Within accounting and financial management, there are four key elements recognized. The four elements are: Planning, Controlling, Organizing and Directing and Decision Making. The planning element allows an organization to set forth goals and guidelines to ensure the future success and accomplishments of the medical office. Controlling provides the organization the opportunity to ensure that all areas within the organization are following the previous planned...
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...Ethics Essay In my opinion I would define ethics as having a set of minimum standards for doing what is right. Ethics are a part of everyone’s day. It is how a person conducts themselves as they go through their day. Many areas of studies have their own specific set of ethics or minimum standards that they follow. At Xavier University I have many classes that have established ethics specifically for their area of study. We discussed in class that ethics is to be the most moral human you can be throughout your life. Since my father is a CPA, I am familiar with various types of ethics which he has to follow. All throughout my life he has taught my siblings and I to always try to do the right thing. He has also taught me how in business everyone must deal with ethical situations. In accounting there is a “Code of Ethics” which all accountants must follow. He told me some of the rules include being responsible, due professional care and maintaining integrity. CPA’s help ensure companies are conducting business in the right way and protecting the owners or shareholders of the company. I think CPA’s are ashamed of the companies that are involved in the recent significant scandals. It just makes all CPA’s look bad, even though only a few companies disobeyed their ethical code. People may have a bad opinion about CPA’s when they see companies are trying to steal and be misleading. I always try to do what is right, so I consider myself as to following my own set of ethics. Although...
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...ACCOUNTING MINICASE: ACCT – 17 TEACHING NOTES BUSINESS ETHICS PROGRAM Ignore the Error? Teaching Notes What Are the Relevant Facts? 1. 2. Compo, a major client of the CPA firm, does not want to make an adjustment for the cutoff error. 4. Kelsey, the audit senior, knows a material cutoff error exists in Compo’s financial statements. 3. What Are the Ethics of the Alternatives? • Contrary to the firm’s policy, Bruce, the audit manager, has asked Kelsey not to document the cutoff error. 2. Kelsey has a professional responsibility to document proposed material audit adjustments. Kelsey has been asked by the supervisor to ignore this requirement. Should Kelsey violate professional and personal standards of integrity to comply with the request? • • • • • • • Kelsey, the audit senior Bruce, the audit manager The partner in charge of the audit and the entire CPA firm The owners of Compo Corporation (family members or others holding shares in the company) Third-party users of Compo’s financial statements Compo Corporation employees What are the benefits and costs to each stakeholder? 2. Do the net benefits exceed the net costs to all stakeholders? Based on a “rights” perspective, for each alternative: 1. What are the responsibilities of Kelsey, Bruce, the CPA firm, and Compo? 3. • What are the rights of each stakeholder? 2. What responsibility does Kelsey have to inform affected parties...
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... Mintz, DBA, CPA Professor of Accounting California Polytechnic State University, San Luis Obispo Roselyn E. Morris, PhD, CPA Chair and Professor of Accounting Texas State University-San Marcos Boston Burr Ridge, IL Dubuque, IA Madison, Wl New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto Table of Contents Chapter 1 Integrity: The Basis for Ethics in Accounting 1 What Is Ethics? 1 Definition 1 Application of Ethical Reasoning in Accounting DigitPrint Case 33 32 Conclusion 34 Discussion Questions 34 Endnotes 36 Chapter 2 Cases 37 2 Case 2-1: A Faulty Budget 38 Case 2-2: Better Boston Beans 39 Case 2-3: Eating Time 40 Case 2-4: Is Internal Whistle-Blowing "Right"? Case 2-5: Play Ball 43 Case 2-6: Supreme Designs, Inc. 44 Case 2- 7: The City of West Buckle 46 Case 2-8: The CPA Review Course 47 Case 2-9: The Ethics ofiPod-ing 48 Case 2-10: The Tax Return 49 Distinguishing between Ethics and Morality Religious and Philosophical Foundations of Ethics 3 Teleology 4 Deontology 6 41 Acting with Integrity Personal Integrity 8 7 The Moral Point of View 7 The Six Pillars of Character.... 8 Trustworthiness 8 Respect 10 Responsibility 10 Fairness 11 Caring 11 Citizenship 12 Chapter 3 Ethical Decision Making in Business 50 What Is Business Ethics? 51 Ethical Issues in Business 51 Virtue, Character, and CPA Obligations 12...
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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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...Ethics in Accounting Tonya Thompson Carlene Wilson Immediate Accounting ACC305 November 17, 2010 What is Ethics? Business ethics are moral values and principles that determine our conduct in the business world. Commercial ethics standards activities are needed; whether you have a single client or several business organizations. Ethics Standards can be applied to all aspects of business, from generation of an idea the sell of the particular item. While the objective of all business is to make profits, ethics should contribute to the interest of the society by ensuring fair practices. Being ethical is a theoretical inquiry into the standards of right and wrong or good and bad. Ethics deals with morality insofar as it embodies a set of rules already accepted or formulated for potential acceptance. In studying morality Ethics primarily describes, analyzes and criticizes different moral codes as to their consistency, viability and legitimacy. But it also envisions better norms based on human ability to learn and get a better insight into the nature of our own conduct. Each type of business sectors have associations that has set some kind of ethical standards for them to follow. One association for CPA’s is Financial Executives International (FEI) they were founded in 1931 as the Controllers Institute of America. The expansion of responsibilities of financial executives into policy-making areas led us to change...
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...An Analysis of Accounting Ethics Anna Aspras ACC 770 Proposal Hunter College INTRODUCTION Ethics refers to the discipline that deals with the bad and the good and also with the moral duties as well as moral obligations (Stolowy and Breton 2004). As Weidmann and Lenzen (2006) points out, ethics entails doing the right thing. Accounting ethics is mainly in the area of applied ethics and at the same time, it is also a part of business ethics as well as human ethics. It is worth pointing out that the kind of work that is always carried out by the auditors, as well as the accountants generally needs very huge ethics levels (Stolowy and Breton, 2000). The shareholders of the firms, the potential shareholders, as well as the other people who use the financial statements that are prepared by the accountants generally depend on the annual financial statements of the firms given that they are capable of using the information in making highly informed decisions concerning investments. At the same time, they depend on the accountants’ opinion and the verification of the financial statements by the auditors in order to make sure that the financial statements are giving a true, as well as a fair view of the firm (Weidmann and Lenzen, 2006). It is worth pointing out that the knowledge of ethics is capable of helping the accountants, as well as the auditors to overcome various kinds of ethical dilemmas, and this generally ensures that the correct choice is made though it might not be of benefit...
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...and ethical guidelines they must follow in their practices. In this paper, I will what the four elements of financial management are. There will also be a summary of generally accepted accounting principles (GAAP) and financial ethical standards. Business’s mist follow these standards in order to comply with federal agencies such as the Financial Accounting Standard Board. I will also provide examples from articles that explain how corporations comply with these standards and deal with fraud or abuse. The four elements of financial management. The key to good financial management is to be well organized and have good finical discipline. Health care is a business and having a good concept of financial management will help those businesses run smoothly. “The healthcare industry is a service industry, its essential business is the delivery of healthcare services.”(Refaat, 2014) Having a good understanding of the elements of financial management can help to explain the financial management of that service industry. The first element is planning, planning helps identify the steps that must be taken in order to accomplish the organizations objectives. The second is controlling, this is in place to help ensure that the financial manager makes sure that each organization is following the plan that has been established. The next element is organizing, just as its name suggests, this element helps the financial manager decide how to use resources of the organization to effectively...
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...Accounting and Ethics DO ETHICAL STANDARDS EXIST IN ACCOUNTING DEPARTMENTS? Purpose: This analytical report is a required assignment in Kimmerly Brady’s Business 205 course. Due to time constraints the primary data (survey) required for the report were gathered in a limited fashion. A survey was developed, an a procedure was considered; however, the responses are the results of only ten collected surveys. The responses are only included to demostrate a n understanding of primary data usage. The purpose of this report is to convey the message that ethics are the foundation of the accounting profession. In order to maintain discipline & order in the professional realm, rules of ethics are not satisfactory enough to ensure the integrity of Accountants. Education and training in ethical matters should be mandatory for Accountants; evaluation and monitoring of their adherence to these rules is climacteric for maintaining standards. Ethical codes of conduct and compliance of these codes should be required in today’s accounting firms for honorability to exist. CPA’s are licensed practitioners, who as Accountants express opinions about financial statements. The globalization of business operations and technological advances have radically changed how accountants work. New ethical issues have been raised by this ...
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...pivots on the strength of the business behind it, the focused efforts by accounting and manageability of an industry of leadership, and standards that when faced with challenge, must meet the rising needs of the world. Born from the necessity of standardization, the hurdles of international business, and the wave pool that is the global economy, today, accounting at all levels faces challenges unlike any ever seen in history. To understand how to continue to move forward and face these challenges, it is important to first examine the standards in accounting, and to explore the differences in U.S. standards versus worldwide standards. To look at the development process and the governing bodies surrounding this change, and then examine what change will bring, and whether it is attainable. For continued growth, understanding the modern realm of international business and the changes being seen in accounting leadership as well as the growth of technology, and the mounting concern for ethics in the world environment is as vital as any other component. It is important to explore the economy of the United States versus the world, the impacts of these economies, and how the current political and conflict-areas impact international business, and also what lies ahead. Accounting is an area that is broad and necessary, bringing both the components of business and finance with it, but it also encompasses a large amount of challenge as the world of business continues to move toward a global...
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