Accounting ethics is all about representing the accounting profession properly. Ultimately, every accounting professional has to show that they have professional competence and proper training and that they understand the ethical principles of the work they are carrying out.
But why is it so important for accounting professionals to show a deeper understanding of ethical guidelines than maybe other professions?
Well, today, we’ll explore the professional ethics in accounting and discuss accounting practices in greater depth to understand exactly that.
Understanding Accounting Ethics
The accounting profession needs guiding ethical codes for a number of different reasons. For example:
- They deal with sensitive information
- They are seen as professionals who should have proper understanding and training
- They must keep their independence and objectivity to provide fair and accurate information
- They are being relied upon by others in the business (business partners, fellow accountants, etc.)
Without fair and accurate reporting as a professional accountants, they can’t do their job properly. Ethical accounting is not just being a good accountant; it is more than just protecting the accounting industry as a whole. It’s about protecting the accountants that work within the industry, too.
Think about it. If these accountants are being asked to sieve through financial statements for businesses and report back their findings from the financial information they’re provided with, then ethics in accounting protects them as much as the business.
The business can be certain that the accountant is carrying out their business following accounting principles and following professional conduct whilst looking through potentially confidential information.
And likewise, the accountant can be sure that they are allowed to remain objective whilst consulting, which allows them to be honest with their client.
Auditox Accountants in Darlington covered the code of ethics for accountants in detail and enabled us to pull in some interesting facts. The importance of ethics in accounting cannot be overstated because accountants have rules and regulations they must adhere to, which allows them to keep their professional integrity and avoid pressure from ‘higher-ups’ to report things falsely.
Examples Of Ethical Accounting
Now let’s look at some of the guiding ethical and accounting practices that help accountants avoid negative consequences whilst working within (or with) a business.
A Note on Governing Bodies
Accountants do have an overarching set of rules, expectations, and regulations they must adhere to. Failure to do so can result in losing their role as an accountant as they’re legally required to follow these ethical standards & guidelines to uphold the integrity of the profession.
The following are examples of the different ethics they focus on.
Independence And Remaining Objective
The key to success as an accountant is being able to be in control of your own decision-making. By remaining independent and objective, an accountant is able to make unbiased decisions without the interest of the business, company, or clients interfering.
An accountant’s professional judgment is supposed to be independent of all conflicts of interest, and what makes ethics important is exactly that: accountants are protected and must be honest whenever they’re delivering their services because laws are in place to say that they must.
Thanks to these ethics, an accountant can keep their decision-making clear and unbiased, and outside influence can’t negatively affect or skew their decisions.
All accountants must keep confidentiality at the forefront of their minds when working with a business or company because they’re often dealing with sensitive information. Financial data, statements, and information must all be handled with care.
It is the job of an accountant to look at each financial product with subtlety and independence to set an example of how to carry out their work in the ethical and professional manner that the profession demands of them.
Integrity in accounting is all to do with being open and honest in all aspects of their work. That means honesty with the company, honesty with interested parties and employees, and especially honesty with oneself.
An accountant must understand the importance of delivering only the facts when it comes to giving financial advice. The information they feel is misleading, omitted, or false can’t be dealt with when delivering their services as their profession’s principles, ethics, and rules forbid it.
There is, of course, an expectation that an accountant will have the proper academic knowledge, experience, and training – so that they can complete their work competently and in a timely manner.
How well trained and familiar with the subject of an accountant is matters. Without meeting professional expectations, an accountant could very well affect the performance of a business negatively.
The importance of ethics in accounting is about more than just protecting businesses, employees, and accountants themselves; it’s also about professional development and continued pursuit of training and knowledge so they can do their job to the best of their ability.
Accounting is also about being responsible. Responsible for the business you work for, but also about making yourself responsible for the work you carry out. If there is a problem in accounting, then the accountant is responsible.
That’s why being responsible is included in accounting ethics, because it’s an important job and role, and it’s one that must be treated with the respect it deserves.
Consequences Of Poor Ethics
Failing to stick to the ethical principles and guidelines expected of an accountant can have serious repercussions.
Unethical practices can lead to:
- Loss of respect in the industry
- Poor results for the businesses you work for
- Loss of work
- Loss of your role as an accountant
- Serious legal repercussions
That last one is really important because landing yourself in legal trouble is a very real possibility for accountants who deliberately mislead businesses, fail to follow guidelines and practices, and who don’t stick to the legal requirements of an accountant.
An unethical approach in accounting can lead to loss of work, loss of your job, and serious trouble with the law if you aren’t careful.
Hopefully, today’s post has proven just how important ethics in accounting really is. By knowing what’s expected of an accountant, you can carry out work in the correct manner (if you’re an accountant yourself), or you can monitor the work of the accountant you’re working with to ensure they are following the rules, regulations, guidelines, and ethics that they are required to meet.
Ethics in accounting is important because it prevents disputes from all angles. It protects businesses, and it protects accountants, so that is why it’s so important for accountants to be ethical.