What is ethical accounting? The idea of ​​accounting ethics deals with the moral and value-based judgments and decisions that an accountant or accounting agency faces daily in their practice. Due to the nature of their work as communicators of financial information to company managers, shareholders and the general public, as well as the accounting and auditing of commercial entities, accountants and accounting agencies are subject to the highest standards of transparency and morality in regard to their investigations and the information they convey. Accounting can be used as a way to study how and why a company can succeed or fail, but above all it is a public service; those who practice it must make judgments and decisions that can sometimes prevail over the interests of their clients in favor of the interests of the general public.

The failure to apply ethical standards to accounting creates the opportunity for the manipulation of facts and information which, if used to mislead, could cause an individual to invest under false pretenses, or a company to misrepresent its finances. before its shareholders. It is of utmost importance that the public can trust accountants and accounting, because your financial future, and that of your family or business, could be at stake.

Why is it important for accountants and accounting firms to be ethical?

Over the years, there have been a number of major accounting scandals in the United States and the world at large, causing private investors and public shareholders to lose billions of dollars, and giant corporations and accounting firms to go bankrupt. to falsified or incorrect information. about the companies in which the money was invested. The Enron scandal is perhaps the most recent and blatant example of unethical accounting causing widespread negative effects, including the loss of $25 billion in shareholder assets, the closure of auditing firm Arthur Anderson, and the subsequent loss of 85,000 jobs when unethical practices were eliminated. reported and the company was dissolved.

Ethical accounting is not only important for private companies or individuals to obtain reliable information on their respective financial statements, but has a responsibility to the public to provide transparent assessments of publicly traded business entities. Ethical accounting can help eliminate the serious problems that arise when incomplete or incorrect information about companies or individuals is released, saving money and jobs and helping to increase stability in financial markets.