A 2017 report Building Ethical Capability for Accounting Professionals, by two Swinburne University of Technology staff, Dr Cristina Neesham and Dr Mohammad I. Azim, provides useful information for applicants faced with questions on ethical issues.
The purpose of their project was to ‘identify ethical capability needs of Australian accounting professionals and produce policy recommendations that can inform future measures to improve ethical behaviours and culture in the profession, as well as the design of an ethical capability building program’. [P. 4]
The authors point out that ethical improprieties by accountants can be ‘detrimental to society, resulting in distrust by the public and dysfunctions in the economy’. [P.6] Plus, due to globalisation, the ethical practices of accounting professionals can have worldwide implications.
Accounting benefits from one of the strongest ethics regimes among the business-related professions. [P.6] Yet accounting professionals are still confronted with moral dilemmas and ethical challenges. The authors point out that ethical competence, i.e. the cognitive ability to identify and understand an ethical issue when it arises, should not be confused with ethical performance, i.e. the actual behaviour that enables a decision maker to follow through with an ethical choice. [P.7] This distinction marks the so-called judgment-action gap, i.e. why and how the recommendations provided by ethical competence are superseded and lead to undertaking unethical action.
Ethical capability is defined as ‘the ability to identify and respond effectively to ethical issues, by making, implementing and managing ethical decisions (particularly) when influenced, pressured or forced to do otherwise – either as an organisation or as an individual.’ [P. 7-8]
The authors collect perceptions of Australian accounting and related professionals with regards to ethical issues encountered, response practices observed, recommended solutions, and support actions and resources needed to strengthen ethical capability of individuals and organisations. They conceptualise the integrated knowledge of these four areas as knowledge of ethical capability needs. [P.8]
Based on interviews and questionnaire responses, the authors identify the main ethical issues faced by accountants as:
- Misleading or inaccurate reporting, including inaccuracy, incompleteness and questionable re-categorisation
- Fraud and tax evasion
- Lack of transparency in accounting decisions
- Breaches of confidentiality
- Misrepresenting expertise
- Overcharging fees or over-servicing clients
- Bribery. [ P. 14]
The main sources or causes of these ethical issues were
- Pressure from the client
- Conflict of interests
- Pressure from the employing organisation’s management or leadership.
The most frequent response practices were reported to be:
- Saying ‘no’ to external pressures
- Seeking advice
- Educating either fellow professionals or clients.
The dominant criteria for determining whether an issue is of an ethical nature were:
- Accuracy and correctness
- Justice (fairness) and impartiality
- Completeness and transparency
- Negative effects or consequences, mostly on the integrity of the profession and on clients. [ P. 15]
The authors note an interesting distinction between truth and honesty. Being accurate is seen as related to being truthful, while being complete with information is seen as being honest. An inaccurate person is seen as incompetent, while producing incomplete information is seen as a character shortcoming.
For applicants in the accounting field this report can be used to identify common ethical issues and to help explain responses to ethical issues. For supervisors and managers, the report helps with identifying actions that help build an ethical culture and provide professional development for staff.
Dr Ann Villiers, career coach, writer andauthor, is Australia’s onlyMental Nutritionistspecialising in mind and language practices that help people build flexible thinking, confident speaking and quality connections with people.
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FAQs
Lack of transparency in accounting decisions. Breaches of confidentiality. Misrepresenting expertise. Overcharging fees or over-servicing clients.
What are the ethical issues in accounting? ›
Lack of transparency in accounting decisions. Breaches of confidentiality. Misrepresenting expertise. Overcharging fees or over-servicing clients.
How to answer ethical dilemma interview questions? ›
When answering questions about ethical dilemmas, it is important to acknowledge both points of view. However, be sure to decisively choose one point of view that you support and explain why you chose that path. This is another way problem solving abilities and decision making skills can be incorporated into an answer.
What are the five ethics of accounting? ›
The revised Code establishes a conceptual framework for all professional accountants to ensure compliance with the five fundamental principles of ethics:
- Integrity.
- Objectivity.
- Professional Competence and Due Care.
- Confidentiality.
- Professional Behavior.
The fundamental principles within the Code – integrity, objectivity, professional competence and due care, confidentiality and professional behavior – establish the standard of behavior expected of a professional accountant (PA) and it reflects the profession's recognition of its public interest responsibility.
What are 3 examples of ethical issues? ›
ETHICAL AND SOCIAL ISSUES
- Privacy and Confidentiality. Privacy has many dimensions. ...
- Socially Vulnerable Populations. ...
- Health Insurance Discrimination. ...
- Employment Discrimination. ...
- Individual Responsibility. ...
- Race and Ethnicity. ...
- Implementation Issues.
This framework approaches ethical issues in the context of four moral principles: respect for autonomy, beneficence, nonmaleficence, and justice (see table 1). This framework has been influential because the values it espouses seem to align with our moral norms.
What is an example of an ethical dilemma for a job interview? ›
Several types of ethical dilemma interview questions you can prepare for in advance include: What would you do if an employer asked you to misrepresent information? What would you do if a manager or supervisor asked you to do something against your own ethics?
What is an example of when you faced an ethical dilemma at work? ›
An ethical dilemma at work might involve a conflict of interest. For example, if you discover that a colleague is engaged in unethical behavior that could harm the company, you face the dilemma of whether to report them, potentially jeopardizing their career.
How does ethics play a role in accounting? ›
Ethics are important because they promote accuracy, openness, responsibility, and professionalism. When it comes to accounting, companies that put ethics first are more likely to build trust with their stakeholders, avoid financial losses, and be successful in the long run.
Accounting ethics is the collective standards and guidelines that accounting professionals must follow to prevent fraudulent practices and maintain public confidence in their profession. Ethics in accounting aren't new.
What is the code of ethics for a professional accountant? ›
A professional accountant in public practice shall not knowingly engage in any business, occupation, or activity that impairs or might impair integrity, objectivity or the good reputation of the profession and as a result would be incompatible with the fundamental principles.
What are the 6 essential elements of accounting ethics? ›
The essential aspects of ethics in accounting include integrity, objectivity, confidentiality, professional competence and due care, professional behaviour, and honesty.
What are the ethical principles that an accountant must adhere to? ›
Accountants should always act with integrity, honesty, and objectivity. They should avoid conflicts of interest, disclose any potential conflicts, and act in the best interests of clients. Objectivity. Accountants should be impartial and unbiased in their professional judgments.
What do all accounting codes of ethics have in common? ›
Integrity is one of the fundamental principles of accounting ethics. Accountants must prioritize honesty, fairness, and ethical conduct in all aspects of their work. They should act in the best interest of their clients and the public, ensuring that financial information is accurate, transparent, and reliable.
What are 5 common types of ethical issues in business? ›
Unethical accounting, harassment, health and safety, technology, privacy, social media, and discrimination are the five primary types of ethical issues in the workplace. Resolving an ethical issue may necessitate dismissing an employee, warning an employee, or sending an employee for more training.
What are some ethical issues in finance? ›
What are ethical issues in finance?
- Financial fraud and corruption.
- Employee theft or embezzlement.
- Insider trading.
- Conflicts of interest in investment decisions.
- Market and wealth manipulation.
- Accounting and transactions fraud.
- Misrepresentation of financial statements.
- Tax evasion and avoidance.
The most common ethical dilemmas in financial reporting include “cooking numbers” (cosmetic accounting, creative accounting, or income smoothing), disclosure violations, misappropriation of assets, fraudulent financial reporting, tax evasion, concealment of financial information, misrepresenting expertise, overcharging ...
What are the ethics of finance and accounting? ›
The code of ethics in finance is as follows: Upholding honesty and transparency in all financial dealings and providing accurate information to clients and stakeholders. Recognizing the societal impact of financial decisions, integrating socially responsible practices, and supporting community development.
