Code of Ethics Essay
Code of Ethics
Almost every organization, institution and profession has a set of code of ethics which are generally expected to guide their stakeholders on how to handle particular issues within that fall within their place of work. Basically, such code of ethics are instituted and adopted in organizations as well as professions as a way of ensuring that relevant stakeholders are in a position to draw a clear distinction about on what is wrong or right.
Understanding the ethical codes of a particular environment, be it an organization or a profession has been found to be instrumental in helping the stakeholders make right decisions in decision situations and this fact has therefore awarded code of ethics great importance across professions. Ethics vary from one profession to another as well as from an organization to another depending on the type of operations carried out, also, the environment within which an organization functions. It becomes an obligation to all stakeholders in a profession, organization or even an institution to understand the laid down code of ethics available as such since violating such qualifies to be termed as a professional misconduct and punishable under the law.
There is generally a rich history about code of ethics and again, the history varies from one profession to another and also across organizations. This paper will seek to offer a detailed analysis of the code of ethics that are available in accounting profession, its history of development, the sources from where these ethics were developed amongst other valuable issues about code of ethics in general. It will explore the major players in the profession, who are basically certified accountants, what expectations are at least expectable from an accountant in his work to their clients, as well as the bodies across the globe that has been awarded the mandate of setting the standards or simply developing the code of ethics for accountants. Accounting has grown to become one of the oldest and also one of the most important services that business world cannot stay without.
In the business world, there is the inherent need for the business owners and other stakeholders to have perfect knowledge of the state of affairs of the business institution in which they have committed their resources, of course for expected returns. To gain this kind of knowledge, an individual who can truthfully and honestly reflect the true financial position within which a business is at any particular time is needed and this can only be a person who have relevant analysis skills.
If such information is made available to the investors, customers, governments and suppliers among others, then it becomes likely that such individuals will be in a position to know whether a business is making profits or otherwise. If there have been steady profits in a particular business and over a couple of the previous years, such a business will remain as worthwhile investment opportunities to investors, a good source of government tax to the government, a good determinant of how much profits to go to each shareholder and would also assure suppliers that their creditor is solvent enough.
In case of loss, not very many profit oriented individuals will want any association with such a business as losses are one of the signs of insolvency. Basically, accounting information is of very important use in decision making and for this reason, such information must be truthful and objective. Incorrect accounting information has the potential to result into decisions that are wasteful in nature and this is a situation which is not acceptable in the business world where resources are always limited.
Provision of such accounting information has therefore come under very strict scrutiny by bodies which are globally recognized and mandated to give guidelines which every certified accountant must adhere to while undertaking their accounting duties. Failure of adherence by accountants has been qualified to become a professional misconduct and in such a case, the accountant in question becomes liable for his irresponsibility. The ethical requirements for professional accountants are established by the International Federation of Accountants (I.F.A) which also enforces that all the guidelines are adhered to throughout the profession of accounting reporting (Reamer, 1998). Statement of Values
Integrity is one of the four values that make up the code of ethics in accounting field as a profession. An accountant whose services have been hired by a business entity has to demonstrate a high level of integrity in conducting their duties failure to which they can be held liable for any loss suffered, if such losses are proven to have been occasioned by lack of integrity on the side of the accountant.
Integrity implies that an account under duty has to demonstrate that he is straightforward as well as honest with issues that touch on the financial performance of the entity to which he is offering accounting services. It also implies that there has to be fair dealings as well as truthfulness throughout the service dispensation period. This consequently requires that accountant must not have any association with accounting information in which they believe there are material errors or are misleading. Objectivity
This is another principle in the accounting field that requires accountants not to allow any compromise on their business or professional judgment. It states that a professional accountant must be free from bias, conflict of interest and also undue influence while making a business judgment. Impaired objectivity amounts to a gross professional misconduct and relevant bodies like the I.F.A ensures that such values are upheld throughout the profession. Diligence
This means that a professional accountant is bound by the ethical code to dispense their services with due acre and competence. They are required to maintain an acceptable level of professional knowledge and skills in services delivery so that their clients will be better positioned to have truthful reports about the affairs of a business at any particular time. Informed decisions are likely to be made as a result of data obtained through diligent services and would not cost the decision maker for unexpected outcomes. Confidentiality
This is the requirement that a professional accountant must not disclose any information he has come across during his service time, in part or wholly to a third party or for extra financial gains. Parties whom may stand to gain upon acquiring such information are the competitors to the client and this may turn out to be disastrous to the client. Professional accountants are therefore bound by this value to only use such information for the benefit of their current client failure to which would be looked at as a violation of one of the golden rules. The above are values that have been formulated by I.F.A and generally accepted across the globe by the help of the nations that recognizes this body. Training and Communication
In every organization training is a vital component. Training equips employees with necessary skills, knowledge, and become competence in their accounting work. Employees do participate in ethical training of the company and attain development and eventually improve their morale on the performance of the company. Ethical training provides innovative quality solutions to support the company to operate in an ethical environment and realize their full potential of investors. Training should take place in area of law compliance and ways to treat various differing interest, profits and safety. Communication on the other hand acts as an enhancement to training where issues are discussed openly.
Investors raise views as they become participants and share it out with others of anything they do not understand. Some of communications tools used are company newsletters, article in magazines, internet website and videos. There should effective communication to investors characterized by the following features: honesty which emphasis on free flow of important investment information, confidentiality that protect employees regarding their rights and their professional while abiding to legal act about disclosing information which affects welfare of others and free speech to give support for open competition.
Communication should also promote mutual understanding between the investor and the facilitator of business opportunity. Companies should develop, enforce and put down in writing codes of corporate. A code of ethic should foster a stronger ethical climate and open various channel of communication to help protects against fraudulent financial reporting. Both corporate ethics training and communication is very important to employees individually by developing ethical decision–making skills and to ensure all staff understands and complies with company regulations and policies. Code of Ethics Implementation Plan
The success lies on the corporation commitment on developing code and their contribution (Messikomer and Cirka, 2010). Company needs to implement code of ethics through informal methods noticeable to the context through proper communication and agreement. The implementation plan sound to ensure investment advisors adhere to code of ethics regarding business matters, protect customers and inhibit any inappropriate action. The advisors are responsible for consumers saving and their security regarding their financial status. Customers understanding on code of ethics determine whether their representatives are acting accordance to law and guidelines, as well as representing them appropriately.
Prior to the implementation of code of ethics there are rules: where all employees receive compensation of loss regardless of the amount, employees will perform their discharged duties diligently and competence, and finally, organization will consult the public to get feedback and suggestions regarding on the efficiency and effective delivery of services. Implementation composes organizational changes where employees should conform to these changes: identification of moral leaders who are moral mature and finally, leaders should regularly communicate code of ethics to improve perceptions of trust and leadership credibility. This imperative normalizes ethicality by providing routine communication on moral behavior which reminds employees on their ethics matters. Corporate Social Issues
It is most essential in every organization that it promotes its vision of accountable business to various stakeholders apart from investors and shareholders. There are various areas of major concerns: environmental conservation, well status of employees, community and community at large. Company do largely benefit through adopting a policy of social responsibility through improvement of financial performance, lowering its operation cost, increasing it sales and enhancing customers loyalty. The company consequently attracts many consumers/investors as well as to retain the potential ones to help change the company’s identity and to greatly improve productivity and quality.
There are drivers pushing business towards social responsibility such as the government, which imposes legislation and regulation to deliver social and environmental objectives in the area of business. Secondly, the need for corporate disclosure from investor and stake holders, also, investors are changing its way of accessing companies performance based on criteria of social responsibility.
Management training plays a major role in implementation of corporate social responsibility. There is increased demand for corporate social responsibility in every organization to promote good governance between the organization, investors, society at larger and government. Laws and Regulations Impacting on Corporations
The recent past has witnessed several pieces of legislation that eventually come to force and impact both positively and negatively to corporation. Examples of such laws are the ones concerning environmental conservation that have required corporate bodies to do their business with little to no environmental degradation. This has to a greater extent dealt manufacturing corporations big blows as they have to emit waste product into the environment as they do manufacturing. These set of laws have therefore required that there are amounts of part of the corporation’s revenue set aside to attempt to get rid of the waste materials they emit from the environment.
This has become an extra cost to most corporations since conducting an environmental cleanup exercise has in many circumstances gone into the tune of millions of shillings. Basically, among other effects that recent laws and regulations have imposed on the environment have been extra costs especially meant for cleaning up the waste they emit into environment or compensating individuals who are fallen victims in one way or another of this kind of wastes. Consequently, the revenues have considerably diminished with some of such corporations opted the walk of operations. Monitoring and Enforcement Plan
Monitoring and enforcing adherence to code of ethics is of paramount importance and several benefits have been associated to it. Monitoring is in most cases done by organizational management teams, senior officers in an institution or even bodies which are mandated to safeguard such codes of ethics. Monitoring and enforcing helps keep those who are bound by such codes committed to satisfying the values as stipulated in the code of ethics. As a result, professionals in whatever field are in a position to effectively prevent, detect and report appropriately as well as address any allegation of professional misconduct. A code of ethics can be effectively enforced when there exist individuals responsible for its implementation.
Enforcing and safeguarding a code of ethics from rampant violation would require a clear explanation of the consequences that are to befell the violators. Such consequences must seem harsh so as to discourage those bound by the code from acting against it but instead assist in implementing it fully. Establishing an agreement that is binding between the parties to a code of ethics is also a step in the right direction of enforcing it. Lastly, to successfully monitor and enforce a code of ethics, there needs to be a consistent manner of monitoring behavior as well as rewarding individuals who duly comply with the laid down code of ethics. Ethics Audit
Professionals in any field are needed to continually keep in touch with the practices within their professions that have an ethics relation in light of the ever increasing demand from the social world. To achieve this, the professionals have to engage in rigorous process of auditing ethics and such audits should be hinged on establishing that which is being considered essential in social work. This will in turn help the professionals make an identification of an ethical issue which is pertinent in their practice setting. Furthermore, it will be helpful to professionals in reviewing as well as assessing how adequate their current practice is. Lastly, auditing ethical codes will become helpful in assisting professionals to design a strategy which is practical to tune current practices as desired in the social work. Working Internationally
Securing a professional job internationally is in most circumstances fancied by many if not by all professions across several fields. Such opportunities come with lots of hope to succeed in one’s career and of course earn fortunes out of the opportunity. In the real sense, there are very few professionals if any, who will turn such a chance down. Ethically, before a professional takes on an international duty, he has to consider issues like whether his code of ethics conform with the general ethics upheld in a foreign nation and whether such bodies are concerned with the code of ethics of his/her profession is acknowledged in that foreign nation in which he/she is intending to work.
This is so, because a case of conflicting ethical values may arise and this may cause a crisis that could have been avoided if such issues were put into account prior to taking up of international duties. Like for instance, in accounting profession, there still exist some nations that have not subscribed to the guidelines offered by major accounting bodies in the world like the I.F.A or the Generally Accepted Accounting Principles (G.A.A.P). As a result, such nations have their own ways of dealing with some accounting treatments which in many circumstances contrast what such bodies provide in respect of those treatments. Therefore, having an accountant who has been trained and practiced in a country where such guidelines from these bodies are adhered to work in such a foreign country may yield a crisis which in another perspective may be termed as professional misconduct in that foreign country. Conclusion
In conclusion, this paper discusses and identifies the statement of values to include the source and foundation of ethical values and principles; why these principles are non-negotiable, how they have evolved over time, and what moral philosophy or social issues affects the approach to ethics. It also presented and given a training and communication plan, implementation plan, plan for the role of leadership, resolution to corporate social issues, discussed the recent laws and regulations impacting the corporation, how to monitor and enforce the plan; ethics auditing plan and considerations for working internationally. As you can see, code of ethics is needed in every organization to avoid conflict of interest and to deal with issues in a fair and just manner.
Baker, R. (1999). The American medical ethics revolution: how the AMA’s code of ethics has transformed physicians’ relationships to patients, professionals, and society. Baltimore: Johns Hopkins University Press. Code of international ethics. (1953). Westminster, Md.: Newman Press. Code of medical ethics: current opinions with annotations (2004-2005 ed.). (2004). Chicago, Ill.: AMA Press. Reamer, F. G. (1998). Ethical standards in social work: a review of the NASW code of ethics. Washington, DC: NASW Press. Watson, D. (1985). A Code of ethics for social work: the second step. London: Routledge & Kegan Paul.