The role of accountants in timely and accurate preparation of financial reports is of vital importance in decision-making by investors, managers, and other senior managing directors. Sticking to the ethics in accounting also helps in ensuring compliance of internal control systems with standards. Therefore, accountants can recognise and measure resource wastage, investigate, and perform roles that can provide to the development of policy creation and fraud identification in an organization. Unethical behaviours not only degrade the reputation and credibility of an individual but the company as well, increasing the likelihood of criminal activities that could result in a decrease in profit levels.
Ethics in accounting can be referred to as applied ethics, which strongly emphasizes human and business ethics, judgments, moral values, and their application in accountancy. Generally, the major ethics in accounting are proper practice and a good standard of professionalism. As per the ethics, the financial statements should be helpful for end users in order to facilitate their financial decision-making process. Everyone in society expects the accounting professionals to adhere to ethical standards and ensure the timely, accurate, and transparent information is presented to all end-users. Any attempts to carefully create false financial statements could seriously degrade the reputation of a business and lead to the following: a. Risen criminal and fraud activities: Poor ethical considerations by a company’s accountants minimize the level of oversight and control by superiors, which creates loopholes for auditors to engage in unethical behaviour and conceal evidence. It creates opportunities for significant data manipulations, leading to the commitment of serious crimes such as tax evasion and fraud. b.The reputation of the business: Unethical activities by accounting professionals affect an organization’s trustworthiness and reputation to its stakeholders. Absence of trust due to unethical activities affects the firm’s identity, which makes it difficult to conduct business. c.Financial statements: Unethical behaviours of accountants are violations of the regulations because they entail financial statement information manipulation. Consequently, such financial statements have a less relevant legal status, which greatly influences the decision-making processAccountants are required to ensure that the financial statements’ opinion is in accordance with the framework of financial reporting so as to develop ethics in accounting.
Auditors must have a high level of confidence in managing and controlling the financial statements to aid the users, such as investors and lenders, in their decision-making process. Auditors must also help in the set of sufficient and suitable evidence and observe, compare, test, and confirm the validity and fairness of financial reports to enhance reasonable assurance. Auditors help in understanding and evaluating internal control systems and provide support for developing the procedures for performing analytical auditing strategies.