The Importance of Accounting Ethics

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Confidentiality

Based on AICPA Standard code SECTION 140 (2013)

The principle of confidentiality imposes an obligation on all Members to refrain from:

(a) Disclosing outside the Firm or employing organization confidential information acquired as a result of professional and business relationships without proper and specific authority or unless there is a legal or professional right or duty to disclose; and

(b) Using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties.

Accountants should beware of possibility of leaking, especially to close family members and business associates, potential customers and employers, and organizations. The principle of confidentiality need to continues after the relationship of clients and accountants ended. For some particular circumstances the confidential information required to disclose, such as

(a) Disclosure is permitted by law and is authorized by the client or the employer;

(b) Disclosure is required by law,

(c) There is a professional duty or right to disclose, when not prohibited by law,（Chartered Institute of Management Accountants, 2015)

Many relevant cause should be considerate when the confidential information disclosed.

Profession Competence

to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards. The profession competence means the attainment and maintenance of a status of knowledge. Professional accountant required to keep the knowledge and skills updated, such as continuing education programs(Meymandi, Rajabdoory,Asoodeh, 2015). Continuing professional development enables a professional accountant to develop and maintain the capabilities to perform competently within the professional environment.

The importance of accounting ethics

Accounting ethics can provide a better professional working environment. The code of conduct enforced the employees behaviors and ensure the daily accounting functions. It is a guideline to accounting firm. A high degree of accounting ethics can increase the reputation of the company. Consumers tend to have a positive assessment of organization can act ethically and maintain a high level of professionalism. Reputations should be treat as a intangible asset of companies, it may increase companies market share and earn profits. When there is immoral behavior, accounting firm would facing legal liabilities. Comply with the accounting standards could avoid employees’ appropriate actions. Profession accounting ethics decrease the legal liabilities. Saremi and Naghshbandi(2014) point out that ethics can have a progressive effect on teamwork and the productivity of the organization. Managers who have ethical behavior can increase the income and reach the target of company.

Conclusion

Base on the above research, it give the definition of the fundamental principles of accounting ethics that AICPA required their members to adhere: commitment to public, integrity, objectivity and independence, confidentiality, and profession competence. Accounting ethics is the instruction of daily accounting practice, and have significant impact on decision making. One of the most important things that shows ethical behavior of an accountant is that he needs to remain impartial and loyal to the business organization while performing the related activities sincerely and in all honesty. Since the accounting information drawn from the financial statements is of great value and significance to be relied upon and upon which the success or failure of a business immensely depends,

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Reference

Chartered Institute of Management Accountants, (2015). Code of ethics, Part A - General application of the code 140 Confidentiality, Retrieved from http://www.cimaglobal.com/Professional-ethics/Ethics/CIMA-code-of-ethics-for-professional-accountants/Part-A---General-application-of-the-code/140-Confidentiality

Duska, R., Duska, Brenda Shay, & Ragatz, Julie. (2011). Accounting ethics [electronic resource] (2nd ed., Foundations of business ethics; 9). Chichester, West Sussex, U.K. ; Malden, MA: Wiley-Blackwell.

Greenawlt, M. B. (2001). Ethics in Accounting. In B. S. Kaliski (Ed.), Encyclopedia of Business and Finance (Vol. 1, pp. 316-318). New York: Macmillan Reference USA. Retrieved from

Hamid Saremi, & Nader Naghshbandi. (2014). ROLE OF ETHICS IN PROFESSIONAL ACCOUNTING AND EFFECT ON MANAGEMENT DECISION-MAKING. Indian Streams Research Journal, 4(11), 1-5.

Meymandi, A. R., Rajabdoory, H., & Asoodeh, Z. (2015). The Reasons of Considering Ethics in Accounting Job. International Journal Of Management, Accounting & Economics, 2(2), 136-143.

Sweeney, J. (2007). Ethics in Accounting. In B. S. Kaliski (Ed.), Encyclopedia of Business and Finance (2nd ed., Vol. 1, pp. 261-264). Detroit: Macmillan Reference USA. Retrieved from

Thibodeau, J., & Freier, Deborah. (2011). Auditing and accounting cases : Investigating issues of fraud and professional ethics (3rd ed.). New York: McGraw-Hill Irwin.