Why ethics are an integral part of accounting

As discussed above, scandals in the global financial crisis reinforced the need for an ethical code in accounting and the need for accountants to provide a fair portrayal of the entities they work for.

Ethical codes help companies ensure that they meet the standards for accurate financial reporting. Here are the reasons why the Code of Ethics exists:. It is inherent to the accounting profession.

Accounting and ethics go hand in hand with the accounting profession. As accountants, it is important that we make neutral, unbiased decisions that help the client. If the company benefits from the sale of one financial product over another, it could lead to bias and misrepresentation of information for the client.

As part of the ethics code, it is important that the information provided is not subject to any external influence. These policies provide companies with principles for recognition, measurement and treatment of accounting transactions in the financial statements. The goal of Ind AS is to bring consistency to the accounting principles and practices followed by companies.

Information needs to remain confidential. Disclosure of any financial information during, for example, a merger or an acquisition by an accounting professional would violate the trust code. It would also be considered unethical on the part of the accountants. The Ethics code prevents a firm or organisation from doing this unless there is a legal reason for doing so.

The integrity of the employees. The Ethics code ensures that all members of the company demonstrate integrity and honesty in their work with clients and other professional relationships.

The ethics code also prevents accountants from associating themselves with any information that could be misleading or damaging to the client or the organisation. If companies or individuals fail to comply with the rules and regulations listed under GDPR, it could result in serious consequences. Therefore, it is essential for companies to maintain the integrity of the employees and ensure that they abide by GDPR rules. The accountant needs to be knowledgable. The accounting industry is constantly evolving and with the introduction of new technology such as automation of accounts payable , the role of accountants is changing.

This means that accountants need to stay updated on their skills to provide an accurate judgment on issues faced by clients. Possessing professional competence also includes being aware of where your skills and expertise lie and not implying that you have knowledge in areas you are not familiar with.

If you are a supervisor, the code of Ethics ensures that your subordinates only carry out their duties after they receive the proper training.

By: Geoffrey Weed. Share It. Why are Ethics Important in Accounting? Resources More Information on Accounting Ethics. Confidentiality An accountant should not disclose the acquired information to third parties by violating the terms of confidentiality at any cost. Competence An accountant must always be up to date with the best practices and technology trends by acquiring the necessary skills to perform their task.

They should undergo proper training under professional guidance to carry out their responsibilities with competence Professional Behaviour: All accountants should commit to professional behaviour by complying with the laws and regulations of their profession.

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