VERELL LERIAN - 008201800048 - SUMMARY CH 10 Ethics Applied To The Accounting

Name : Verell Lerian
Class : ACC 2 Morning
Student ID : 008201800048
SUMMARY CHAPTER 10
Ethics Applied to the Accounting Firm
In 1997, the Subcommittee on Reports, Accounting, and Managing of the United States
Senate Committee on Governmental Affairs (the Metcalf Committee) released a report titled.
The Accounting Establishment in which it expressed deep concern about improving the
professionalism and independence of auditors. Whether the regulatory scrutiny worked during
the 1970s to the 1990s is a matter for dispute. A series of high-profile corporate accounting
frauds that auditors missed at companies including Cendant, Sunbeam and Livent occurred.
Public shareholders lost hundreds of millions of dollars in these cases, and confidence in
accountants was shaken.
It is important to ask what brought about the accounting scandals, and whether or not
those practices still exist in the profession. Critics of the direction that accounting is taking claim
that it has ceased to be a profession and is driven by the profit motive. John C. Bogle, former
CEO of the Vanguard Group and former member of the now defunct Independence Standards
Board, contends that the accounting profession, rather than remaining an honorable profession
where members look out for clients and the public, got involved in the enterprise of business,
where its main concern is fidelity not to its various trusts but to the bottom line. Such critics
insist that, just as commercialization is infecting professions like medicine, teaching, and law,
profit - motivated business interests are interfering with accountant professional responsibilities
and corrupting their behavior. This tension between the demands of professionalism and the
demands of business has created an identity crisis in the industry today.
A. Accounting as a Business
The old adage says that there is no such thing because of ethical values. A more
complicated version of the saying goes that business ethics is a meaningless term like military
intelligence. Sometimes, this economic empowerment program in our community does not feel
most true to the business of academics or artists, who rarely get involved in the business.
Ethics is a critique of businesses run by entrepreneurs only to rationalize unethical behavior of
their own business. That most of their business affairs are unethical. Criticism also comes from
individuals who realize that there are ethical behaviors in business starting from their
competitors. Although under control it seems that the greed of Enron and similar cases is that
ethics is very important for the business to run smoothly.
Good business ethics is generally good business. If he gets the good of ethics then it is
not a good business situation but rarely then, business interests must capitulate with ethics. For
example, in situations where ethics does things that will jeopardize profits, a businessman with
integrity will delay the pursuit of profits to do what is right.
B. The Social Responsibility of Business

Contemporary business ideas such as social institutions are developed from the
perception that the main concern is making a profit. The principal main purpose of producing
business products and services is to raise money in accounting.
This concept that the main function of business is making profits has roots from the 18th-
century property of others with the people of Adam Smith. Smith introduced a rational model of
the maximizer of people concerned with self-improvement and utility as well as being strong in
seeing as if motivated by self-interest. He noted, he was not great than the butcher, the brewer, or
the chief baker, who we expected for our dinner, but from them is related to their own interests.
C. Good Ethics is Good Business

Ethical behavior how do we motivate? Current thinking, driven by ethical attention, is to
try to conflate business goals and motives. Therefore, both ethics is good and maxim business.
To start good ethics can have an impact on the good name of the company and build trust.
That proves that trying to get the cheapest costs in the short term will only erode the company's
reputation. This unreliable corporate accounting is meaningless because people have a great
dependence on companies and individuals to provide them with accurate calculations.
D. Ethical Responsibilities of Accounting Firms

Enterprises, through their owners and managers, enter into relationships with individuals
and groups, relationships involve responsibilities. These relationships form the basis of ethical
obligations between the company and its stakeholders.
Accounting firms must make some profits or increase the value of a business or
partnership, but there are limits to profits. To be sure, accounting can never or vice versa survive
in existence without attention, but accounting for corporate profits has been the responsibility.
Accounting is a service industry that appears to benefit clients and the general public.
Therefore, it is detrimental to the client or community by naming profits that violate explicit
objectives. The accounting firm has specifically obtained a business license. Another way is to
prove the accuracy of the information. Thus, a good accounting company must present as an
image of the financial condition of an organization or prove the fairness of that picture.
E. The Accounting Profession in Crisis

Arthur Andersen or Enron, has failed to make it very clear that it is naive to think that
corporate accounting is not manipulated by profit-making motives. There are problems in the
profession and between companies.
 Adequacy of GAAP
First of all, it is related to the generally accepted accounting principles, or GAAP.
Accountants must examine the completeness and hidden assumptions of the total around
them using principles. These principles have ethical implications concerning accountants'
obligations to correctly and accurately draw.
 Earnings management
The second thing that bogle identifies, revenue management, diplomatic representation
for the possibility of damage to the book. Accountants are known to tell you that you can
show whatever you want or use accounting principles. an accountant can manage the
picture of job wages, Therefore, Bogle states that we live in a world of managed income,
where stable income growth is from a minimum level of one 12 percent if possible.
According to Bogle, if the stock market is to be the one that will end up with value, that
is the best job if many regulated companies are accurate based on financial reports and
focus on the long-term prospects of a Preferred company.
 Accounting for stock options

Bogle examines accounting issues for stock choices. The office quoted the warren buffet
as he said if the option was compensation. Bogle thinks the profession must be more
aggressive in the fact that the financial statements place choices in a kind of "land" where
options are not treated as compensation paid during the melt.
 Overly aggressive tax shelters

Fourth, the address of Bogle's most recent issue which was already the one discussed at
the previous work meeting was too aggressive and had the potential to become an illegal
tax shelter. Bogle states that it must be clear that every company that has helped develop
similar health programs in the future or Opines Validity is recognized they bring in with
the clients involved, and will begin to run the risk of high blood pressure that could
damage the reputation.
 Alternative Business Structure

Fifth, the problem that Bogle raises is how accounting firms, now and in the future, will
withstand a sense of conflict of interest generated by the newly evolved form of structure.
Note, that the Bogle partnership is being replaced by an alternative business structure.
For example, a smaller group proves that the company is getting its consolidation through
the sale of non-audit practices to third parties (in a private or public offering) with such
audits being maintained by partner practice.

VERELL LERIAN - 008201800048 - SUMMARY CH 10 Ethics Applied To The Accounting

Uploaded by

Copyright:

Available Formats

VERELL LERIAN - 008201800048 - SUMMARY CH 10 Ethics Applied To The Accounting

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

VERELL LERIAN - 008201800048 - SUMMARY CH 10 Ethics Applied To The Accounting

Uploaded by

Copyright:

Available Formats

Name : Verell Lerian

Class : ACC 2 Morning

Ethics Applied to the Accounting Firm

B. The Social Responsibility of Business

C. Good Ethics is Good Business

D. Ethical Responsibilities of Accounting Firms

E. The Accounting Profession in Crisis

 Accounting for stock options

 Overly aggressive tax shelters

 Alternative Business Structure

You might also like