Unethical Behavior In The Workplace
There is absolutely no room for unethical behavior in the professional world. This statement is exceptionally important for publicly traded companies and their accounting practices. From financial officers to accountants to auditors, and so on, there is no greater impact on stakeholders when these persons perform unethically.
Unfortunately, there are multiple reasons for which one might consider acting unethically when preparing financial information. The most obvious reason may be quite simply, for self-interest-greed.
An accountant may embezzle funds from his or her employer for financial gain. Or perhaps the CFO of a publicly traded corporation may prepare financial statements to appear as though the company is performing much better than it actually is, because he or she wants their stock portfolio to increase.
Another example for why unethical behavior might exist is from corporate pressure. An accountant may feel pressured from his or her client to report false information. Or maybe a CFO is experiencing demand for improvements from the board of directors, the company’s president, owners, or stockholders; or he or she may be in fear of losing their job.
An accountant may decide to work for a company even though a conflict of interest may exist. If the accountant is owed money or has a significant stake in a firm, he or she may not be the ideal individual to prepare certain companies’ financial statements.
Finally, and perhaps the most common form of unethical behavior, is the failure for an accountant to conduct an in-depth analysis when preparing and revising financial information. There are many individuals who prefer to take short-cuts in life; and frankly, this simply is not acceptable when expected to perform in a professional manor.
There have been many laws enacted, on both state and national levels, intended on preventing one from conducting unethical accounting practices. In addition to these laws, have been many recommendations to implement changes geared towards the improvement of professional ethics.
Two such individuals, who have spent much time working on this topic, are: Jane B. Romal and Arlene M. Hibschweiler. According to the June 2004 CPA Journal, Romal and Hibschweiler recommended that “states should be encouraged to mandate ethics training as part of CPE requirements”.
This notion forced the Texas State Board of Public Accountancy (TSBPA) to begin a more intense training regimen for accounting educators, CPAs, and accounting students. This included having every licensee taking four-hour ethics courses on the board’s Rules of Professional Conduct every two years. The Arizona State Board of Accountancy requires every Arizona CPA to take an ethics class for licensing renewal.
In addition to state level mandates, is the Sarbanes-Oxley Act. Section 406 of the Sarbanes-Oxley Act requires that publicly traded companies disclose their code of ethics for senior financial officers. The Act was designed to promote honest and ethical conduct; full and accurate disclosure in periodic reports; and compliance with applicable government rules and regulations.
Even with the actions of Romal and Hibschweiler, the TSBPA, and the Sarbanes-Oxley Act; no one can regulate another’s integrity. Some individuals, regardless of their profession, will always look for some form of personal gain, even if it means conducting themselves in an unethical manner. This article is designed to help educate people on unethical accounting practices, why they occur, and how we as a nation can promote ethical behavior.
