Ethics Flashcards
Integrity
adhering to strict ethics and principles where you are honest and straightforward with clients about financial information
Objectivity and Independence
remaining unbiased and free from conflicts of interest
Honesty
Accounting information must be fair and factual
Professional Behaviour
all laws in regards to the profession must be followed and situations which discredit the profession must be avoided
Confidentiality
a customer’s financial information must not be told to third parties without proper authorization
Professional Competence
must have knowledge and skills on par with the level required for the profession
What are ethics in accounting?
This is concerned with how to make moral decisions in the preparation, presentation and disclosure of accounting information
List 5 ethical issues in accounting
embezzlement
fraudulent financial reporting
misappropriation of assets
disclosure violations
unprofessional conduct
Define Fraudulent Financial Reporting
This is when incorrect figures are purposefully entered into the books, information is omitted from the books or the recorded information is not in accordance with generally accepted accounting standards. These are done to hide areas of weakness or concern and attract the right users
Define misappropriation of assets
When company assets are used for things not concerning the company this is called misappropriation of assets
What is embezzlement?
Embezzlement is when assets or money are intentionally stolen from the business
What is a disclosure violation?
If you fail to tell information to investors that could alter their decision or you choose not to enter certain information in the books, you have committed disclosure violation
What implications can the business face due to ethical issues?
loss of reputation
loss of investors
loss of human capital
bankruptcy
criminal penalties (jail time or fines)
