Ethics in Accounting.

Essay by ldybg08University, Master'sA+, December 2005

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The purpose of accounting reports is to provide management and investors with accurate and timely information on the financial status of their company. Sometimes, management uses accounting to hide problems. This approach not only violates accounting standards but also hides the true problem from investigation. It does not solve the base cause of the problem. It allows the problem to increase, often times to a point where the subsistence of the company is in jeopardy. Unfortunately the people that normally have to face the consequences of deceptive financial reports are the investors.

Many people feel that ethics is a built in quality that cannot be taught. However, some would argue that studies should link the moral perception and judgment with actual real-life behavior. Expectations of the profession's ethics should also be considered. Accounting students should be provided with reasoning skills that they can employ to make better reasoned decisions when confronted with moral choices.

Ethics play a huge role in the field of accounting. It is important that the methods of accounting used, and the information reported is correct and true. There are several agencies set up to make sure that the guidelines and rules set forth are followed, and that the accounting field is kept ethical. These agencies are the FASB, SEC, and PCAOB.

Accounting standards are important in a competent market, as information must be unmistakable, acceptable, and discernable. The FASB (Financial Accounting Standards Board) tries to improve accounting practices by strengthening guidelines set out for accounting reports, identifying and resolving issues in a timely manner, and creating a uniform standard across the financial markets. (www.investopedia.com)

The SEC (Securities and Exchange Commission) is a government commission created by Congress to control the securities markets and protect investors. It also regulates the corporate takeovers in the United...