Ethics in Accounting BAT4M PDF

Ethics in Accounting BAT4M  Curriculum Expectations Let’s turn the following boring curriculum expectations into exciting Learning Goals. ⦿ Describe the impact of ethical issues on accounting practices; ⦿ Demonstrate the relationship between GAAP and...

Ethics in Accounting BAT4M  Curriculum Expectations Let’s turn the following boring curriculum expectations into exciting Learning Goals. ⦿ Describe the impact of ethical issues on accounting practices; ⦿ Demonstrate the relationship between GAAP and accounting practices ⦿ Describe the roles of various agencies and their effects on accounting practices Ethics in Accounting BAT4M  Success Criteria I will be successful when I can……… ⦿ Define ethics and relate its importance to the accounting profession ⦿ Use an ethical framework to help make ethical decisions  Business Ethics ⦿ Ethics - moral principles; rules of conduct in a particular group/culture; values relating to human conduct; right, wrong, good, bad. ⦿ Ethical behaviour - legal behaviour with implications from a variety of variables including the individual, social, and corporate priorities. ⦿ Ethical dilemmas - situations faced by managers every day; choice between alternatives in a situation that may result in personal/organizational benefit or may minimize losses to “save face”  Why should accountants act ethically?.  Why should accountants behave ethically? ⦿ It is required by the accounting governing bodies, and practicing professionals could lose their license if they behave unethically; ⦿ New societal push for corporate responsibility in this information age; ⦿ Improved public image;  Why should accountants behave ethically? ⦿ Government and professional regulation will not need to increase; ⦿ Employee/community pride will increase (less employee turnover); ⦿ Finally and perhaps most importantly, as humans we should have respect for each other and treat others as we would want to be treated.  Ethical Decision-Making Model Below is a model for ethical decision-making. ⦿ Define the dilemma or problem. ⦿ List the facts Important information Stakeholders affected. ⦿ List and Evaluate your options. Is it legal? Does it violate GAAP Does it conform to the CPA code of conduct Is it right? ⦿ Make a Decision: What if others close to me find out about my decision? What will the Institute of Chartered Accountants do if they find out about my decision? If uncomfortable with your decision, then your moral conscience is talking to you. You need to go back and select another option  Example ⦿ Candice Crown, CPA, is considering a Help me request to audit the accounts of a local registered charity. It is Candy’s policy BAT4M, not to charge an audit fee to any local I’m so charities. Candy has found this policy confused. to be good in obtaining new clients; the cost is not significant, as there are few charities in this small community. In addition, she is considering an arrangement with the charity; she will donate $250 for each new client that the charity members refer to her practice.  Define the Dilemma or Problem: ⦿ Should Candice provide “free” auditing to charity clients as well as donate $250 for each referral?  Facts and Stakeholders Stakeholders include; Candice, Candice’s Clients, The Charity, Club Members, Other local accountants. No audit fee requested but Candice is looking for new clients. Is she doing this out of charity or to obtain new clients? There is very little cost for Candice to complete these audits. She lives in a small community. Will word of mouth about the referral impact on her business and her image? It is implied that Candice has been doing the audits for a few years Referral donation of $250 is something new.  Options A. Implement the donation referral. B. Discontinue doing the charity audits. C. Continue to do charity audits but without the motive of obtaining new clients.  Evaluate and Test Options: Option A Implement the donation referral. ⦿ The donations referral is legal but is it ethical? ⦿ Clear violation of RULE 216.2 which states ⦿ Word of mouth in the town may spread that Candice is doing the audits to benefit her business and not out of a charity.  Evaluate and Test Options Option B Discontinue doing the charity audits. ⦿ Discontinuing the charity audits may negatively impact on her business since the community may feel she is selfish. As members of a community we are called to help those less fortunate.  Evaluate Options: Option C : Continue to complete audits for free without a donation referral. ⦿ This option would not impact the stakeholders since she has been doing this for some time. ⦿ Candice’s motive is not profit-driven. ⦿ This option requires that Candice complete the audits out of compassion and community stewardship. It may also require her to turn down work that has come from her charitable audits due to conflict of interest.  Make a Decision Option C: ⦿ She should continue to offer the audits without offering the referral donation or accepting clients as a result of the charitable audits. ⦿ This would maintain her standing in the community and continue to serve locally in a responsible way.  Success Criteria I will be successful when I can……… ⦿ Define ethics and relate its importance to the accounting profession ⦿ Use an ethical framework to help make ethical decisions