Observing Ethical Practices In Accounting
Adherence to a rigorous set of ethical guidelines is a crucial trait of a professional, and when one drifts away from practising the ethical standards, then their credibility and judgement are questionable. The accounting profession and accounting services in Singapore are guided by the Accounting and Corporate Regulatory Authority (ACRA). They are registered by the Institute of Singapore Chartered Accountants which also doubles up to issue guidelines in ethics. Accountants are entrusted by the public to record and accurately report organisations’ financials as well as maintain a high ethical standard. Therefore they need to be ethical. Here’s more on why accountants need to be ethical and what happens if they are not.
Independence and Objectivity
Independence and objectivity are fundamental traits of accounting. One critical element of an accountant should be able to make unbiased observations and recommendations to benefit the organisation. Where an accountant compromises and their independence it could lead to biased views and skewed financial advice. The same happens when an accountant allows their observations and responses be subject to external influences.
Accountants are entrusted with public funds such as pension schemes as well as various confidential information relating to their clients. Accounting ethics demand that accountants must be straightforward and honest as they conduct accounting services in Singapore in all their business and professional relationships. This means not generating or associating with falsehoods. Failure to keep with ethics would compromise the client’s confidentiality and possibly lead to harm.
The accounting profession is dynamic. Technology, regulation and standards of practice are ever-changing, and a chartered accountant must remain up to date and keep abreast of developments to exercise sound judgement. In this respect, accountants must practice due care and consult where they are not sure. Ethics make way for collaborations which enable chartered accountants to sharpen their knowledge and skills.
What Happens When Accountants Don’t Observe Ethics?
Unfortunately, there must be bad apples in a tree, and on some occasions, there are reports of unethical accountants. These violations of ethics cut through the core of accounting services and the accounting profession stripping the party of both public and private trust. Whenever there’s poor ethics or non-observance of ethics in the accounting practice, their first impact is felt in the business; there’s a lag in business since customers are repulsed by reports of unethical behaviour. Also, poor ethics could lead to serious legal ramifications, remember accounting services in Singapore are guided by an act of law whose breach results in prosecution.
Finally, poor ethics lead to loss of investor confidence and de-listing from public listings (or suspensions) for listed firms. Cases are often discovered, and the effects are often debilitating. For instance, the case where the finance manager of Asia Pacific Breweries, listed in the Singapore stock exchange, fraudulently obtained loans amounting to $117.1 million, sent shockwaves throughout the accounting fraternity and resulted in massive job losses, prosecution as well as delisting of the firm from the course.
In conclusion, ethics are essential in any profession. Accountants need to be ethical to uphold independence and objectivity, integrity and exemplify professional competence. Failure to uphold ethics can be catastrophic for the public and people providing accounting services.