#Issues of ethics, regulation & compliance

You've probably heard of Enron, a classic case study in falsifying financial statements. What caused this incident? I can't say for sure, but I can be sure it's a serious lack of morality. In this blog post, I will discuss the principles and ethical conventions for those who want to use accounting effectively.

Accounting also incorporates concerns of ethics, regulation, and compliance, which, if not addressed appropriately, can impose limits or risks on the firm. The moral ideas and ideals that drive the conduct and decisions of accountants and other stakeholders are referred to as ethics. Accounting standards, auditing standards, codes of conduct, and legislation are examples of regulations that control the accounting profession and practice. Compliance refers to the organization's and its accountants' adherence to certain regulations and standards. Accounting ethics, regulation, and compliance are critical for maintaining the quality, dependability, and integrity of accounting information while also safeguarding the interests of various accounting information consumers such as investors, creditors, regulators, managers, and workers. (Blake et al., 2005)

#Problem

Cost: Adhering to accounting ethics, regulations, and compliance may incur significant costs for the organization in the form of fees for external auditors, consultants, and attorneys; accountants and other staff members' training and education; the implementation and upkeep of internal controls and systems; and penalties and fines for non-compliance or violations.

Complexity: They can differ across various jurisdictions, sectors, and situations and can alter over time as a result of new innovations or reforms. Because of this, it may be challenging for the business to maintain compliance with evolving accounting regulations, ethics, and standards.

Conflict: conflicts of interest or pressure for the organization, such as those between shareholders and managers, profit maximization and social responsibility, independence and advocacy, and confidentiality and transparency. These conflicts can jeopardize the accuracy and impartiality of accounting data or lead to unethical behavior.

(Villiers, 2018)

#Solution

The organization should take a proactive stance toward accounting ethics, regulation, and compliance by establishing a distinct vision, mission, and values that reflect its ethical commitment and responsibility; creating a thorough framework of policies, procedures, and guidelines that adheres to the necessary rules and standards of accounting ethics, regulation, and compliance; and encouraging an ethically aware and conscientious work environment among its accountants and other employees.

References:

Blake, J. et al. (2005) Ethical issues in accounting. Hoboken: Taylor and Francis.

Villiers, A. (2018) Ethical issues for accounting roles, Selection Criteria. Available at: https://www.selectioncriteria.com.au/job-applications/ethical-issues-for-accounting-roles/