Objective 1.03 Understanding Ethics Needed

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Accounting I

• Objective 1.03 Understanding Ethics Needed
• For Employment In Accounting

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What is meant by Ethics?

• Ethics is the study of right and wrong and and
  how people choose what is morally good and bad.
• Business ethics refers to how a company uses a
  code of conduct, which is designed to encourage
  ideal behavior when making decisions.

Objective 1.03 Understanding Ethics
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Professional Organizations That Provide
Guidelines for Accountants to Make Ethical
Decisions

• AICPA American Institute of Certified Public
  Accountants
• www.aicpa.org
• IMA Institute of Management Accountants
• www.imanet.org
• IIA Institute of Internal Auditors
• www.theiia.org

Objective 1.03 Understanding Ethics
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Key Principles for Ethics in Accounting

• Integrity
• Objectivity
• Independence
• Competence
• Confidentiality

Objective 1.03 Understanding Ethics
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Integrity

• Accountants must choose between right and wrong.
• Accountants are responsible for entering correct
  entries.
• Accountants are responsible for true and correct
  financial statements.
• Integrity is necessary for accountants to build
  trust in regards to their professional judgments.

Objective 1.03 Understanding Ethics
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Objectivity

• Accountants must be
• Impartial
• Honest
• Free of personal conflicts
• Accountants must not be influenced by personal
  interests.
• Accountants should behave in a way that does not
  suggest inappropriateness.

Objective 1.03 Understanding Ethics
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Independence

• Accountants do not have an interest or profit
  financially from the companies they audit.
• Accountants must have the publics confidence in
  their professional services.

Objective 1.03 Understanding Ethics
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Competence

• Accountants should be knowledgeable in their
  profession.
• Accountants must have the skills necessary to
  perform their jobs.
• Accountants must have experience in their field.
• Accountants are expected to keep abreast of
  current laws by continuing education classes.

Objective 1.03 Understanding Ethics
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Confidentiality

• Accountants must not share private information
  regarding their clients.
• Accountants are expected to protect personal and
  private information regarding their clients.
• An accountant should not use information learned
  for personal gain.

Objective 1.03 Understanding Ethics
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Ethical Decisions Checklist

• Is the action illegal?
• Does the action violate company or professional
  standards?
• What should my response be?

• Who is affected by this decision?
• How are these parties affected?
• What should my response be?

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Ethical Dilemma

• Don applied for a payroll clerk job with Search
  Services, a market research firm. To improve his
  chances in getting the job, he exaggerated his
  work experience on his resume. Based on this
  resume, Don was hired. After one year, he
  received above average ratings during his annual
  performance review. Shortly thereafter, his boss
  met Dons former supervisor and learned the
  truth.

• 1. Is the action illegal?
• 2. Does the action violate company or
  professional standards?
• Who is affected, and how, by the action?
• see analysis in notes section of PowerPoint-
  not visible in slide show view

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Critical Think ing

• Based on the previous slide, Dons actions were
  unethical but not illegal?
• 1. When Don exaggerated his experience on his
  resume, do you think he believed he would be
  caught? What affect did this belief has on his
  behavior?

• 2. If you were Dons employer, would you fire
  him? Why or why not?
• 3. If you were another applicant for the job Don
  applied for, would you be temped to do the same
  as Don? Why or why not?

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Professional Organizations

• Use internet to research the three professional
  organizations. Type a one page summary
  including
• History
• Purpose
• Criteria for membership
• Benefits of membership
• List several publications available
• Salary information
• Scholarships
• Advocacy
• Store offerings