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Ethical Risks and Threats in the Accounting Profession

In: Business and Management

Submitted By helloaussie
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Ethical risks and threats in the accounting profession

Accounting ethics is primarily the study of moral values and judgments as they apply to accountancy. Accounting ethics were first introduced by Luca Pacioli in 1494 in his book “Summa de arithmetica, geometria, proportioni, et proportinalita”, and later expanded by government bodies, professional organizations and independent companies (Humphrey 2005). Throughout 2001 and 2002, the financial scandals in in the USA and some other countries, such as Australia, dramatically demonstrated how the efficiency of financial markets is based on assumptions of trust and ethical behavior of corporate managers (McPhail 2001). The collapse of companies such as Enron, WorldCom and Global Crossing in the USA, HIH Insurance and OneTel in Australia, and Parmalat in Italy, has led to a loss of confidence by the investing public in the system of financial reporting and accountability. The globalization and diversification of accounting services, combined with market competition and high profile corporate collapses has drawn attention to the accounting profession and its perceived ethical standards. (Cooper 2007)
Ethical values provide the foundation on which a civilized society exists. Without the foundation, civilization collapses. On a personal level, the answer to the question of the highest aspiration might be wealth, fame, knowledge, popularity, or integrity. But if integrity is secondary to any of the alternatives, it will be sacrificed in situations in which a choice must be made. Such situations will inevitably occur in every person's life (Cooper 2007). Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports. Whether a person derives ethical values from religious principle, history and literature, or personal observation and experience, there are some...

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