The Sarbanes-Oxley Act, passed in congress in 2002 is designed to protect investors from the potential of fraudulent corporate accounting activities. This act strictly mandates reform, aimed directly to prevent fraud and improve corporate financial disclosures (INVESTOPEDIA, 2012).…
Crime and corruption is unfortunately a reality and financial management is not an exception. Unfortunately there are people out there that do not adhere to the general accepted accounting principles or ethical standards. When not following the standards theft, embezzlement, and fraud occur. Financial managers of an organization need to follow the four basic elements of financial management in order to prevent unethical behavior from occurring as well as making sure the organization reaches maximum financial success.…
Managers use the code of ethics as a guide to help them lead by example. As employees, we look to our managers for guidance in determining what direction the company wants to take. When employees act in an unethical manner, we look to see how they respond. It is just as important to see how the manager acts. When employees break the rules, they should face consequences. If a manager looks the other way when one of their employees behaves unethically, employees will lose respect for that person’s ability to lead. It sends a signal to the rest of us that this type of behavior is acceptable (Kraft,…
Within organizations, internal controls are essential features that safeguard its assets and enhance the accuracy and reliability of the organizations accounting records. In addition, Congress forces companies to adhere and implement The Sarbanes-Oxley Act of 2002 (SOX). In this discussion, four questions will be addressed in regards to Ethics Case BYP8-6 and followed with ethical answers pertaining to the accounting industry. Who will suffer negative effects if you do not comply with Gena Schmitt’s instructions? Who will suffer if you do comply? What are the ethical considerations in this case? What alternatives do you have? As a result, accountants use internal controls to safeguard assets and maintain accurate accounting records.…
| The most significant influence on ethical behavior in the organization is the opportunity to engage in unethical behavior.…
There are certain circumstances that can lead people to perform unethical accounting practices. If a person is dealing with financial strains in his/her personal life, has the ability and knowledge, it is possible to manipulate financial information of a corporation, this could lead to temptation. Mere greed is another motivator in unethical behavior. In any case, a person, or persons, convinces themselves that what they are doing is okay and they deserve it.…
This is because each person 's "moral compass" is different, and there is not a worldwide set of ethical standards (Wheelen & Hunger, 2010). What may be ethical to one person may raise questions for another. There are many ways to prevent unethical behavior. Three examples that would be beneficial in the case of McDonalds are creating a code of ethics, ethics training, and upper management leading by example. The code of ethics is useful to McDonalds because it is a complete explanation of what is expected from all employees, and how he or she should behave. This is an effective way to promote ethical behavior, and could prevent certain problems in the future (Wheelen & Hunger, 2010). Ethics training in an organization such as McDonalds’s would be an excellent preventative measure because it is an unbiased third party coming in to teach correct behavior. This ethics training is beneficial to McDonald’s because some of the senior management may be used to their unfair ways, and this will allow them to change. The third way to prevent unethical behavior is for the upper management to lead by example. Some employees that are not in management are unhappy with his and her circumstances, and they will look to his or her leaders for guidance. This is an excellent way to teach others how to act internally. There is such an uneven amount of power at McDonald’s that if a team environment was…
Unethical behavior has multiple definitions. Jones defined unethical behavior as “either illegal or morally unacceptable to the larger community” (as cited in Gino & Bazerman, n.d., p. 709). Although some individuals report observed unethical behavior, others may become…
One of the major challenges companies face when it comes to ethical issues is the self-control of its employees. Whether it's an ethical issue that is monetary in nature or one that revolves around devotion to company policy, the reason this is a difficult issue for many companies is because it is out of management's hands. While a company can give its employees rules, policies and other directions, it cannot guarantee that employees will exercise self-control when it comes to ethical decisions. We all can relate to many employees being unethical in many situations.…
In any professional field, there are codes of conduct put in place that are meant to discourage unethical behavior. These rules are commonly retaught or reinforced so people within a field are continuously aware of what society expects of them. Usually people get tired of being reminded of these rules as some of them seem like basic curtesy or something anyone with decent parent was taught during youth, but that attitude is what lead to one of America’s biggest financial scandal, Enron. Enron is a perfect case of what happens if you ignore the ethics of accounting and just do anything for profit. This scandal is full of examples of disobeying the basic ethical standards set up by the American Institute of CPAs or better known as the AICPA code.…
There are several reasons why a company might consider acting unethically when preparing financial information. First reason that comes to mind is for self-interest. The greatest predictor of unethical behaviour is an employee’s emphasis on self-gain. It refers to the tendency to use interpersonal relationships opportunistically and have less concern about consequences for others. Greediness leads to unethical behaviour. The overemphasis on short term monetary gain can also be a reason leading to unethical behaviour in a company.…
First let’s understand what may lead to unethical practices. A few situations that may lead to unethical practices would be misleading financial analysis for personal gain, misuse of funds, overstating revenue, and understating expenses, overstating the value of corporate assets or understating the existence of liabilities, sometimes with the cooperation of officials in other corporations or affiliates. There are several reasons for someone or a company to consider preforming unethical behavior, such as for self-interest—greed, an accountant may embezzle funds from his or her employer for financial gain, the Chief Financial Officer 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…
Furthermore, several researches and analysis are used to demonstrate that the pressure from risk-management policy is the factor most likely to cause employees to do unethical behavior, that business leaders have to play an active role in managing organizational culture and its ethical dimension, and that teaching business ethics must happen inside workplaces. Organizations must take their responsibilities and create safe places where the discussion of ethical challenges is encouraged, supported, and rewarded to avoid corporate shortcomings resulted from unethical behavior and unhealthy organizational culture.…
There really isn’t one way or another to be able to ensure ethical behavior in any business all the time. There are things that can be done to help encourage and increase the likely hood of a business acting ethically all the time. The two strongest influences for ethical behavior in the professional world are the regulations that are set by the government and committees like the SEC (Securities and Exchange Commission), and to have good ethical behavior being modeled from top management (lead by example). The federal laws for social responsibilities for business represent the minimum standards of social responsibility that businesses must adhere too. If a company is acting socially responsible then more than likely they are acting ethically. It is currently up to each business leader to decide how far beyond the minimum standards they go when performing in their business. There really isn’t room for unethical behavior in the professional world; there is no greater impact on stakeholders than a company/business performs unethically.…
The governing of any firm depends upon code of conducts and ethical conduct followed in the organization. If the work environment is unethical, it can lead to demotivatation and reduced level job satisfaction among employees.…