It is safe to say that accounting and ethics go hand in hand. Everyone who is an accountant and/or an auditor knows the principals they must uphold in order to do their job well – and legally.
Accounting was originally created to keep track of one’s transactions and financial status. Throughout history, the ways how accountants and companies keep their records have changed: the means have changed, but the fundamentals are still there. Ethics itself has always been an integral part of accounting, but the first studies about the role of moral in accounting rose in the renaissance era. Luca Pacioli, the creator of the double-entry bookkeeping system still used today, published the book Summa de arithmetica, geometria, proportioni, et proportionalita in 1494. The Summa studies accounting ethics among other themes (Lauwers & Willekens 1994, p. 290).
Accounting ethics and standards have been developed further ever since through professional associations, by both state-owned and independent organizations, and different companies. Some of these associations, such as the American Institute of Certified Public Accountants (AICPA), has developed its own principles by which accountants should carry out their responsibilities as professionals. Different countries also have laws to specifically regulate how bookkeeping should be done, such being e.g. Sweden and Finland. The accounting legislation in the mentioned countries more or less follows the same principles as the main professional principles for the members of the AICPA, which are as follows:
1. “In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities
2. Members should accept the obligation to act in a way that will serve the public interest, honor the public trust and demonstrate the commitment to professionalism
3. To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity
4. A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services
5. A member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.
6. A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided. ”
(Duska & Duska 2003, p. 77)
Personally, I think these principles are applicable throughout the world as a preliminary guideline on how to be a professional and ethical accountant and/or auditor. A professional in this field must perform their tasks in such a fashion that is acceptable both morally and professionally. An accountant and an auditor must follow the laws applicable to their profession, the prevalent ethical and moral values of both the society and their professional field.
Accounting and auditing are in essence very public professions – they serve the public interest by keeping track of a business’ financial assets and transactions, and the very taxation of these businesses is determined by their bookkeeping. Thus it is crucial that the accountant does his or her job responsibly, otherwise the figures produced by their work cannot be trusted, which results in further problems. (Dunn 2010, p. 40)
To be able to stay relevant, it is crucial for an accountant and auditor to continue educating themselves. It is important on both professional and personal levels: if unemployment looms just around the corner, it is more important than ever to know where your field is currently and where it is going to secure your position in a business. (Duska & Duska¨2003, p. 88-89)
In light of the recent scandals and the financial crisis of 2008, it is increasingly important for an accountant – and especially an auditor – to stay objective and steer away from situations that could lead to conflicts of interest. Failing to uphold to this responsibility can result in serious measures all the way from fines to a prison sentence due to fraud.
So remember these keywords: competency, responsibility, integrity, objectivity and independence, professionalism, self-education and accountability to the profession. With these principles, you cannot go wrong. And when in doubt, consult your friendly-neighborhood solicitor. (Duska & Duska 2003, p. 77)
- Dunn, John. (2010). Financial Reporting and Analysis. Padstow, Cornwall. John Wiley and Sons Ltd.
- Duska, Ronald F., Duska, Brenda Shay. (2003). Accounting Ethics. Bodmin, Cornwall: Blackwell Publishing Ltd.
- Lauwers, Luc, Willekens, Marleen. (1994). Five Hundred Years of Bookkeeping, A Portrait of Luca Pacioli. [Online]. Available at: https://lirias.kuleuven.be/bitstream/123456789/119065/1/TEM1994-3_289-304p.pdf (Accessed: 6.10.2014).