Ethical issues in Accounting & Finance

1
Ethical issues in Accounting Finance
2

• Ethical issues in Accounting
• Provides fair and accurate reporting of the
  financial position of a business
• Ethical issues
• Reporting income, falsifying documents,
  allowing or taking questionable deductions,
  illegally evading income taxes, engaging in
  frauds etc

3

• Fraud in financial statement can be committed in
  5 ways
• Fictitious revenue-revenues not actually earned
• Fraudulent Timing differences
• Concealed liabilities and expenses
• Fraudulent disclosures or Omissions
• Fraudulent asset valuation-false statement of the
  inventory available

4

• Types of Accounts
• Financial Accounts
• gtcompany uses to report to their shareholders
• Internal Management Accounts
• gtshows the internal operations of the business
  and its financial activities

5

• Role of Accountants
• To provide information to the new investors
• 2 types of accountants
• Accountants employed by the orgn
• gttakes care of the internal management accounts
  of various depts

6

• 2 types
• gtManagement accountant-
• formulating policies
• planning and controlling the activities of the
  employees
• decision making
• disclosure to shareholders etc
• gtFinancial accountant
• Economic information to the investors, employers,
  suppliers, outside people involved in the
  business etc

7

• Accountants in professional practice
• provides 2 types of accounting service
• 1. The auditor
• Appointed by shareholders to to audit a
  particular company
• Duties include
• to give an accurate statement about the state of
  affairs
• to meet the objectives of the Companies Act
• to be reasonably skillful and careful in
  identifying the true nature of accounts

8

• 2. Accountants in related services
• Offer services in different fields like
• Tax services
• Management consultancies
• Insolvency services
• Environmental audits

9

• The Ethical Audit
• Main purpose- check the actions of a firm
• Objectives
• Assess the bus. structure and procedures, systems
  and policies
• Whether busi. Activities comply with the
  standards
• To identify the way in which it does business
• Evaluate whether mgmt has relevent infor. in
  running the busi.

10

• To help busi. undergo major alterations like
  restructuring
• To identify the training necessary for the
  employees
• Establishing ethical conduct of business to
  attract valuable investments
• Establish code of conduct
• Helps the shareholders to evaluate the
  performance of the directors and vice versa

11

• Ethical issues in Finance
• Importance of Financial Statement
• Steps to be taken by the management for true,
  fair and reliable mgmt accounts
• Determining the key elements of the business like
  the objectives and see how they are defined and
  measured
• Making sure that the funds are allocated to
  different activities on the basis of their
  importance
• Frame rules that have a positive effect on
  business activities