Summary CH 10 Ethics applied to the accounting PDF

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Name : Verell LerianClass : ACC 2 MorningStudent ID : 008201800048SUMMARY CHAPTER 10Ethics Applied to the Accounting FirmIn 1997, the Subcommittee on Reports, Accounting, and Managing of the United States Senate Committee on Governmental Affairs (the Metcalf Committee) released a report titled. The ...

Description

Name

: Verell Lerian

Class

: ACC 2 Morning

Student ID

: 008201800048

SUMMARY CHAPTER 10 Ethics Applied to the Accounting Firm In 1997, the Subcommittee on Reports, Accounting, and Managing of the United States Senate Committee on Governmental Affairs (the Metcalf Committee) released a report titled. The Accounting Establishment in which it expressed deep concern about improving the professionalism and independence of auditors. Whether the regulatory scrutiny worked during the 1970s to the 1990s is a matter for dispute. A series of high-profile corporate accounting frauds that auditors missed at companies including Cendant, Sunbeam and Livent occurred. Public shareholders lost hundreds of millions of dollars in these cases, and confidence in accountants was shaken. It is important to ask what brought about the accounting scandals, and whether or not those practices still exist in the profession. Critics of the direction that accounting is taking claim that it has ceased to be a profession and is driven by the profit motive. John C. Bogle, former CEO of the Vanguard Group and former member of the now defunct Independence Standards Board, contends that the accounting profession, rather than remaining an honorable profession where members look out for clients and the public, got involved in the enterprise of business, where its main concern is fidelity not to its various trusts but to the bottom line. Such critics insist that, just as commercialization is infecting professions like medicine, teaching, and law, profit - motivated business interests are interfering with accountant professional responsibilities and corrupting their behavior. This tension between the demands of professionalism and the demands of business has created an identity crisis in the industry today.

A. Accounting as a Business The old adage says that there is no such thing because of ethical values. A more complicated version of the saying goes that business ethics is a meaningless term like military intelligence. Sometimes, this economic empowerment program in our community does not feel most true to the business of academics or artists, who rarely get involved in the business. Ethics is a critique of businesses run by entrepreneurs only to rationalize unethical behavior of their own business. That most of their business affairs are unethical. Criticism also comes from individuals who realize that there are ethical behaviors in business starting from their competitors. Although under control it seems that the greed of Enron and similar cases is that ethics is very important for the business to run smoothly.

Good business ethics is generally good business. If he gets the good of ethics then it is not a good business situation but rarely then, business interests must capitulate with ethics. For example, in situations where ethics does things that will jeopardize profits, a businessman with integrity will delay the pursuit of profits to do what is right. B. The Social Responsibility of Business Contemporary business ideas such as social institutions are developed from the perception that the main concern is making a profit. The principal main purpose of producing business products and services is to raise money in accounting. This concept that the main function of business is making profits has roots from the 18thcentury property of others with the people of Adam Smith. Smith introduced a rational model of the maximizer of people concerned with self-improvement and utility as well as being strong in seeing as if motivated by self-interest. He noted, he was not great than the butcher, the brewer, or the chief baker, who we expected for our dinner, but from them is related to their own interests. C. Good Ethics is Good Business Ethical behavior how do we motivate? Current thinking, driven by ethical attention, is to try to conflate business goals and motives. Therefore, both ethics is good and maxim business. To start good ethics can have an impact on the good name of the company and build trust. That proves that trying to get the cheapest costs in the short term will only erode the company's reputation. This unreliable corporate accounting is meaningless because people have a great dependence on companies and individuals to provide them with accurate calculations. D. Ethical Responsibilities of Accounting Firms Enterprises, through their owners and managers, enter into relationships with individuals and groups, relationships involve responsibilities. These relationships form the basis of ethical obligations between the company and its stakeholders. Accounting firms must make some profits or increase the value of a business or partnership, but there are limits to profits. To be sure, accounting can never or vice versa survive in existence without attention, but accounting for corporate profits has been the responsibility. Accounting is a service industry that appears to benefit clients and the general public. Therefore, it is detrimental to the client or community by naming profits that violate explicit objectives. The accounting firm has specifically obtained a business license. Another way is to prove the accuracy of the information. Thus, a good accounting company must present as an image of the financial condition of an organization or prove the fairness of that picture. E. The Accounting Profession in Crisis Arthur Andersen or Enron, has failed to make it very clear that it is naive to think that corporate accounting is not manipulated by profit-making motives. There are problems in the profession and between companies.

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Adequacy of GAAP First of all, it is related to the generally accepted accounting principles, or GAAP. Accountants must examine the completeness and hidden assumptions of the total around them using principles. These principles have ethical implications concerning accountants' obligations to correctly and accurately draw.

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Earnings management The second thing that bogle identifies, revenue management, diplomatic representation for the possibility of damage to the book. Accountants are known to tell you that you can show whatever you want or use accounting principles. an accountant can manage the picture of job wages, Therefore, Bogle states that we live in a world of managed income, where stable income growth is from a minimum level of one 12 percent if possible. According to Bogle, if the stock market is to be the one that will end up with value, that is the best job if many regulated companies are accurate based on financial reports and focus on the long-term prospects of a Preferred company.

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Accounting for stock options Bogle examines accounting issues for stock choices. The office quoted the warren buffet as he said if the option was compensation. Bogle thinks the profession must be more aggressive in the fact that the financial statements place choices in a kind of "land" where options are not treated as compensation paid during the melt.

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Overly aggressive tax shelters Fourth, the address of Bogle's most recent issue which was already the one discussed at the previous work meeting was too aggressive and had the potential to become an illegal tax shelter. Bogle states that it must be clear that every company that has helped develop similar health programs in the future or Opines Validity is recognized they bring in with the clients involved, and will begin to run the risk of high blood pressure that could damage the reputation.

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Alternative Business Structure Fifth, the problem that Bogle raises is how accounting firms, now and in the future, will withstand a sense of conflict of interest generated by the newly evolved form of structure. Note, that the Bogle partnership is being replaced by an alternative business structure. For example, a smaller group proves that the company is getting its consolidation through the sale of non-audit practices to third parties (in a private or public offering) with such audits being maintained by partner practice....