Accounting: Effects of Unethical Behavior

Identifying situations that might lead to unethical practices and behavior in accounting

Various situations have been identified to lead to unethical practices and behavior in accounting. One situation which has been identified is undue pressure to meet unworkable objectives within a constrained time limit. This may make the accountant unaccountable by forcing him to sloppily discharge his duties. In addition, any individual wishes to protect his livelihood and progress in his profession. This may make some accountants engage in unethical practices in order to be seen to be progressive and worthy of promotions. In some institutions, there exist lax disciplinary measures against unethical behavior and this may make some accountants unworried about the repercussions of their conduct. In some cases, accountants may have vested interests in their work. For instance, an accountant who is also a shareholder in a company may wish to manipulate the financial records even in situations when the company is making losses in order to show that their stock portfolio is growing or so that they benefit from dividends (Oseni, 3). In such instances, the Pressure to obey the boss’ orders may also lead to unethical behavior. Unethical practices and behaviors in accounting can be viewed as a competitive advantage that has significant strategic value for any organization. Accounting ethics is the only strategy to address integration issues in the organizations (Oseni 7). Companies used to adopt accounting ethics in conducting business whereas nowadays, such provisions have been overturned. In other words, the business processes need to be adjusted to fit within the set ethical systems. Organizations will gain extensively from accounting ethics by incorporating the system in a strategic and organizational context. Moreover, through providing universal, ethical, and real-time access to operating and financial data, the accounting systems allow companies to simplify the management structures and produce a flexible and democratic atmosphere. These indicate the situations that might lead to unethical practices and behavior in accounting as well as the importance of maintaining ethical accounting practices within an organization. This is a critical provision when scrutinized critically in diverse contexts.

Examining the effect of the Sarbanes-Oxley Act of 2002 on financial statements

The Sarbanes-Oxley Act of 2002 has helped in enhancing disclosure and financial reporting. It has also established accounting procedures to be followed by the accountants and other financial institutions. Before 2002, companies’ financial reporting standards were less regulated and companies were likely to be involved in fraudulent financial practices if they so wished (Clark, 4). Accurate financial reporting is important in increasing the confidence of investors and this has been achieved through the enactment of the Act. The Sarbanes-Oxley Act has also increased the number of shareholders who succeed in winning proxy fights. The Act has resulted in improved corporate responsibility in terms of auditing and reporting financial reports. It has been noted effective auditing is very important in financial reporting. The Act has also created active internal controls which have made it possible to detect and deter fraudulent activities. The Act also prescribes the necessary punitive measures against fraudsters. This indicates the effect of the Sarbanes-Oxley Act of 2002 on financial statements as well as the management of the available financial books. Basically, the Sarbanes-Oxley Act was established in order to bring financial sanity within organizations in diverse contexts.

Preparing at least one question based on the article analysis for class discussion

Are accountants justified to behave in unethical behaviors in order to please their bosses?

Works cited

Clark, Kiersten. The Effects of Sarbanes Oxley on Current Financial Reporting Standards.2012. Web.

Oseni, AbubakarIdris. Unethical Behavior by Professional Accountant in an Organization. Research Journal of Finance and Accounting. 2.2 (2011): 1-8.

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