Chapter Accounting Students Ethics McPhail (2001) stated that to

Chapter
5:  Professional Ethics

5.1
Introduction

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Ethics in businesses and accounting helps to direct individuals to
abide by the code of professional conduct that inspires public confidence. According
to M. Jennings (2006) the collapse of Arthur Anderson and Enron, raised the
question of whether there were any indications of decline in ethics that should
have indicated that there was something wrong in the company. The unethical
behaviour at Enron, by those charged with governance destroyed the ability of a
company to function. Every company’s goal is to maximise its shareholders
wealth, and according to Jennings (2006) to achieve this goal, public trust is
required. The accounting profession to improve its preceding level of respect
and trust, is required to take proactive actions to restore its trustworthiness,
this view has been supported by Bean and Bernadi (p.64 2005).

 

5.2 The Importance
of Profession Ethics

Professional ethics are as essential as
personal ethics. Ethical behaviour is the most critical component of every
business, but it role in the confirmation of auditors to financial statements is
far more critical. Ethical behaviour is the essential element for investors to
benefit from the credibility of the auditor’s confirmation to financial
statements. The stakeholders cannot rely on the auditor’s opinion if the
auditor is not perceived as ethical. Bernard (2005) stated that the auditor’s
required skills and competence are equally important as the auditor’s ethical
trait of providing an honest opinion.

The importance of accountants’ professional ethics cannot be
overstated. According to Dr Smith (2005) the rise of corporate scandals, like
Enron and Parmalat scandals, resulted in regulators passing many legislations,
however the passing of these new laws like the Sarbanes-Oxley Act, would not
restore the investors or public confidence although they maybe helpful. Ethical
leadership from the business and accounting profession is the only important
tool that can restore the confidence of investors or the public. This view was supported
by Melanchon (2002) who stated that the accounting profession leadership must
strive to restore its reputation after the Enron scandal.

 

5.3 Teaching
Accounting Students Ethics  

McPhail (2001) stated that to restore the credibility and
reputation of the accounting profession, ethics must be included in the
accounting curriculum. This view was supported by Bedford Committee (1986, P.179),
by recommending that accounting studies must not focus only on the knowledge
and skills needed in the profession, but must also emphasize the importance of
commitment to the accounting profession and the ethical standards. According
Ketz (n.d., p.346), there was a need to teach accounting students ethics, as
before the Enron scandal ethical issues were not included in the accounting curriculum.

   

 

5.3.1
The need for teaching accounting ethics

After the Enron and Arthur Anderson collapse incident the need to teach
accounting ethics increased, because the accountants had to understand the
accounting ethical standards and the methods used to enforce these ethical
standards of accounting. Further, Stephen Loeb (n.d.) stated that the accountants
need to have both clear knowledge and understanding in applying these accounting
ethical standards in a real-world situation. Therefore, Stephan Loeb (n.d.)
recommended that accounting students’ needs to be taught well enough until they:

·        
Understand both the structure of and the
mechanisms used to enforce different ethics codes that exist in the accounting
profession,

·        
Understand the mechanisms that can be used by
the public to gain assurance that the accounting profession functioning in the public
regulates itself,

·        
Understand the sanctions that the public can
use to public accountant that fails to comply with the stated professional
standards,

·        
Can deal with and focus on the diplomatic
nature of the environment that currently exist in accounting, and

·        
Can also be able to effectively respond to
ethical dilemmas in accounting

 

 

 

 

 

 

 

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