Ethics is usually perceived as a set of moral principles and values that guide perception, behavior, and judgment of society members (Armstrong et al., 2003). Accounting profession maintains its own ethical standards and principles, which all members of accounting profession are required to adhere to. Ethics is vital for accounting profession in order to ensure that the public is assured that accountants are doing their job correctly and serve the public interest.
Accountants, like lawyers or doctors, are considered to be members of professional group in society. Characteristics of professionals separating them from other society members include special knowledge and skills, and also special responsibility in providing special services required by society. Accountancy, as any other profession, also has a specialized body of knowledge that is perceived by the public to be hard to attain. Once a person attains the required body of knowledge and skills for accounting profession, the society gives them benefits of being an accountant such as high social status and allows professionals to regulate themselves and develop their own ethical standards serving in public interest. Therefore, accountants are expected to behave in a certain way and exhibit certain skills in terms of which they carry out their jobs, so that they can retain membership of that profession.
Failures in professional ethics can lead to instances of bribery and corruption, money laundering, fraud and other crimes. On the other hand, ethical standards benefit members of accounting profession as their services gain necessary credibility and recognition by all society members. Ethical behavior helps to maintain the image of accountants generally and ensures sustainable provision of the services in society (McPhail & Walters, 2009).
Key ethical issues, or principles, in accountancy include professionalism, maintaining high quality of the provided services, credibility, objectivity and integrity, and confidence (Duska et al., 2011). First of all, an accountant has to be clearly identified as a professional and have the required special knowledge and skills. Accountants have to be competent in providing their services in order for the public to have trust in them. Accounting services provided to customers are assumed to correspond to the highest standards of performance. To preserve public trust in their services, accountants are required to use credible information, as well as trustworthy information systems. Objectivity and integrity, as ethical issues in accounting profession, presuppose not allowing bias, conflict of interest, or undue impacting of the third parties on the provision of services. Finally, users of financial statements should be able to feel confident on the account of the framework of professional ethics that guided provision of accounting services (Duska et al., 2011).
The key role of ethical standards in accounting profession, as it was emphasized by the International Federation of Accountants, is preserving the public interest and social responsibility in provision of the services (“Ethics Standard Setting in the Public Interest | IFAC”, 2017). This implies considering the ethical and social implications of decisions and interests of society rather than interests of an accountant or their employer. International Federation of Accountants has elaborated the Code of Ethics for Professional Accountants, which is currently “adopted by more than one hundred jurisdictions” (“Ethics Standard Setting in the Public Interest | IFAC”, 2017). Rules and ethical standards are important to ensure public confidence in accounting services, convey ethical principles of accounting profession to different stakeholders, control unethical actions, and motivate ethical behavior among the professionals.
To sum up, accounting profession has its own ethical values and principles, compulsory to comply with for any member of the profession. Accountants must ensure that their actions correspond to the highest ethical standards in order to gain credibility of their profession as it is perceived by other society members. There is a number of ethical issues in accounting, such as professionalism, ensuring high quality of accounting services, maintaining credibility, objectivity and integrity of professionals engaged in providing accounting services.
- Armstrong, M. B., Ketz, J. E., & Owsen, D. (2003). Ethics education in accounting: Moving toward ethical motivation and ethical behavior. Journal of Accounting Education, 21(1), 1-16.
- Duska, R., Duska, B. S., & Ragatz, J. A. (2011). Accounting Ethics. New York: John Wiley & Sons.
- Thomadakis, S. Ethics Standard Setting in the Public Interest. Retrieved from https://www.ifac.org/news-events/2015-10/ethics-standard-setting-public-interest
- McPhail, K., & Walters, D. (2009). Accounting and Business Ethics: An Introduction. London: Routledge.