Ethics Reflection Paper Ethics Reflection Paper Ethics is an important and fundamental part of every society and, specifically, applies to professionals. The reason is that members of the society place greater expectations on individuals belonging to certain professions, like medicine, engineering or accounting, and have confidence in the information and service provided by them. Almost all these professions have their own codes of ethics, which outline the regulations and levels of discipline required to ensure respect and integrity for the profession and the professional. Ethics are an important part of the field of finance and accounting.
The shift towards a more ethical workplace began after the Enron debacle, where the management was found guilty of using unethical means to show inflated revenues and profits (Bolt-Lee & Moody 2010). The shareholders who are usual citizens of the society had confidence in the practices of the management and made them responsible for running their business. The management, however, misinformed the shareholders of the profits to ensure hefty bonuses for themselves. Before the Enron episode, management was awarded for their actions if the outcome was beneficial for the shareholder, irrespective of whether the actions were ethical or unethical.
(Bolt-Lee & Moody 2010) After Enron, the philosophy changed to awarding management only if the actions were ethical, fair and respected the rights of others. Employees in either case are unethically forced to do as the management deems fit for the organization. (Bolt-Lee & Moody 2010) Any employee, who dares to speak against any unethical practices of the management, or any whistleblower, is bound to receive harsh punishment for disobeying the seniors. (Larsen & Mosich 1988) Professional bodies have their own code of ethics which every individual of that profession is bound to follow.
These ethical codes outline the duties of a professional when carrying out business and clearly mentions what an individual should refrain from. Apart from the ethical codes of the profession there are accounting standards that are followed in each country like the US follows the GAAP (Generally Accepted Accounting Principles) and many other countries follow IFRS (International Financial Reporting Standards). These accounting standards are a guideline for the finance and accounting professionals on how each financial statement should be prepared to disclose full information to the shareholders (Gowthorpe & Amat, Larsen & Mosich 1988).
On top of this, each country has a Securities and Exchange Commission (SEC), which is responsible for ensuring that shareholders are safeguarded from any unethical practices that may be present in an organization (Tenbrunsel 2007). The most common offences that are made by finance and accounting professionals are due to conflicts of interest where the shareholders appoint management to maximize their wealth and the management is interested in maximizing their personal wealth too.
Other offences include insider trading, fraudulent dealings, corruption, insufficient record-keeping, misuse of customer funds and unauthorized trading. (Larsen & Mosich 1988) The recent financial crisis in the US can also be attributed to ethical issues which built up into a huge bubble that was bound to explode. Companies have resorted to ways in ensuring that employees behave in an ethical way during business dealings. They have started by focusing more on corporate social responsibility (CSR) to help employees understand the importance of sharing profits of an organization with society.
They have also started visiting their mission statements to incorporate an ethical element in these statements. Mission statements with an element of ethics could induce moral values and strengthen character. (Tenbrunsel 2007) References Bolt-Lee, C. E. & Moody, J. (October, 2010). Highlights of Finance and Accounting Ethics Research. Journal of Accountancy. Retrieved June 24, 2012, from http: //www. journalofaccountancy. com/Issues/2010/Oct/20102896 Gowthorpe, Catherine & Amat, Oriol (n. d.) Creative Accounting: Some Ethical Issues of Macro- and Micro-manipulation. Universitat Pompeu Fabra – Department of Economics and Business. Retrieved June 24, 2012, from http: //www. econ. upf. edu/docs/papers/downloads/748.pdf Larsen, E.
J. & Mosich, A. N. (1988). “Chapter 1: Ethical Issues in Modern Accounting” Modern Advanced Accounting. New York: McGraw-Hill. Tenbrunsel, A. (January 01, 2007). Todays Ethical Issues: A Perspective from Accounting, Finance, Management, and Marketing. Journal of Business Ethics, 70, 1, 1-3.