Research Paper on Ethics in Accounting and Finance

4 pages
908 words
Wesleyan University
Type of paper: 
Research paper
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Accounting is a critical pillar in every business since it governs the day to day operations of a company and plays a very crucial role in the sound decision making. Financial decisions are made depending on the records kept by the accountants since they record the previous expenditures and profits. Due to this seriousness of the job total honesty is, therefore, need to be paramount to guarantee the success of the business.

Therefore accountants are required to be ethical when carrying out their day to day activities especially if it involves a business. In all businesses, they pay extra attention to the accountant employees most importantly when it comes to integrity. Having a trustworthy accounting manager guarantees a company growth and expansion of the business. This is mainly significant when it comes to the resource allocations because they give priority to the most agent departments depending on their needs. It ensures that all the tools for work are evenly distributed especially the funds and any materials that need to be purchased. Everyone in an organization looks up to the accountants to make any plannings on the future task to be carried out. Hence fairness and flexibility are critical in a department, and also it calls for honesty for a company to undertake future tasks smoothly. Also, a maximum ethical behavior is expected for public accountants since people put trust on them when it comes to taxation and assurance services since they are viewed as professionals. The same case applies to the accountants in every business since they are professionals taking care of salaries whether it is the public or private business (Carpenter & Reimers, 2005).

Investors or shareholders of any company mainly rely on the accounts scorecards to make decisions like whether the business should continue running. Without these accounting books that are up to date, any investor cannot be in the position to decide whether to invest in the company or not. Hence, unethical behaviors like not updating the accounting books or misquoting the financial books may lead to the investors not putting their resources in that particular company. This greatly influences the companys future especially if it needed the investors for it to make it. Hence good practices of the accounting ethics can save a company a major downfall. In most cases before the sale of a business takes place the shareholders analyzes the cash flow and all the financial records to allow them to make that decision. In case a company is bankrupt it will be difficult for it to find buyers and sometimes its sold at a very low price (Enofe, Nakpodia & Moruku, 2014).

In an upcoming company or organization, misrepresentation of some facts like the balance sheets and prices may not only lead closure of the company but also it will majorly contribute to the bankruptcy of such a company. In the situation where a company has been accused of embezzling public funds or employees benefits, the first place they investigate is the accounting statements. In most cases, if the company is falsely accused it can be set free by the presentation of financial books that have been updated and audited by a fully accountable organization. This means that in some cases accounting books act like evidence in fraud cases where they can easily prove the innocence of a company. This can only be the case only if the books have been thoroughly audited and updated failure to which it will be hard to prove anything. This calls for the accountants to ensure that they uphold ethical behavior like ensuring that all purchases and sales are clearly documented, and there is no forgery of the signatures, particularly when Cheques are involved.

Accountability of a company especially if it involves with the public is majorly measured through how well it monitors its funds. The ability of a company to conceal any loopholes of fraud puts it in the limelight with the public. This mainly applies to banks; they become more reliable to the people hence contributing to the growth and expansion. Most people want to be involved in a bank that its financial manager has no cases of fraud. This makes a company or an organization to minimize conflicts with its employees and also its customers. Some customers may complain in case they paid for a service or goods from a company, and they are not delivered to the same standard they paid for. This lowers the trust of the customer from that company and gaining it may take a long time until the company delivers its expectations (Phuong, Fisher & Mujtaba,2014).

In conclusion, all businesses should take it upon themselves to make their accountants and their financial analysts through an ethical training regularly. This will not only enhance its accountability, but also it will solve cases of business backslide in the future. In most successful companies like the Raytheon, they ensure that that ethical training is compulsory for all the employees. Ethical behaviors emphasis on the principle of integrity and also confidence which is paramount in every company.



Carpenter, T. D., & Reimers, J. L. (2005). Unethical and fraudulent financial reporting: Applying the theory of planned behavior. Journal of Business Ethics, 60(2), 115-129.

Enofe, A. O., Nakpodia, J. O., & Moruku, J. A. (2014). Ethics and Role of Accountants. Ethics, 6(27).

Phuong, N. T., Fisher, G., & Mujtaba, B. G. (2014). Ethical decision-making of banking and finance professionals and students. Asian Journal of Business Ethics, 3(2), 141-153.


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