Impact of Accounting

The accounting profession emerged as an integral part of the Industrial Revolution. The general aim of professional bodies in most English-speaking countries was to bring together those practising accountants who hoped to put the profession on a higher plane than it previously occupied in society and so raise its public esteem. This was achieved by obtaining charters and statutes from governments which ceded a virtual statutory monopoly on auditing and accounting services to the various professional bodies. These charters and statutes were legitimated by reference to the profession’s vital the mandate to conduct independent appraisals of the truthfulness and fairness of reported results of management’s stewardship as shown in the annual financial statements and to comment on them in terms of their proper application of generally accepted principles of accounting The practice of the the profession of public accountancy is defined as holding one’s self out to the public, in consideration of compensation … services which involve signing, delivering or issuing … any financial, accounting, or a related statement or any opinion, report, or certificate for such statement if, because of the signature, or the stationery is implied that the practitioner has acted or is acting, concerning said financial, accounting, related statement, reporting as an independent accountant or auditor or as an individual having or purporting to have expert knowledge in accounting or auditing. In accounting, the financial statements should be useful for end-users to ease their financial decision-making process. Business society expects accounting professionals to adhere to ethical standards and ensure the timely, accurate, and transparent information is presented to all end-users. Any attempts to deliberately construct false financial statements could severely damage the reputation of a business and lead to the following:

a. Increased criminal and fraud activities: Poor ethical considerations by a company’s accountants minimize the level of oversight and control by superiors. There are 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. Damage the reputation of the business: Unethical activities by the accounting professionals affect an organization’s trustworthiness and reputation to its stakeholders. Unethical activities due to the absence of trust taint the firm’s identity, which makes it difficult to conduct business.

c. Limited use of financial statements: Unethical behaviours of accountants are violations of the regulations because they entail financial statement information manipulation. As such the financial statements do not have an appropriate legal status, which greatly affects the decision-making process.