Ethics in Accounting
Ethics in the accounting industry refers to a set of principles and rules of conduct that accountants must follow. Ethical standards include honesty, fairness, and responsibility in delivering reliable financial services. Clients, investors, and stakeholders rely on these ethical practices for fair and accurate financial reporting.
Key Standards of Ethics in Accounting
Integrity: Accountants with integrity maintain high ethical standards by being honest and truthful in their work ensuring all financial reporting is accurate as well as resisting pressures to manipulate figures or misrepresent financial data.
Transparency: Transparency means being open, straightforward, and honest. It implies the practice of openly sharing a company’s financial information with stakeholders, investors, and regulators so that all parties have access to clear, timely, and meaningful financial statements, balance sheets, and other data.
Accountability: Accountability is the responsibility that accountants have for their actions, decisions, and the resulting outcomes. Accountability mandates that an accountant must answer to the financial information they provide and their decisions.
Professional Standards in Maintaining Ethics
Professional standards in accounting are guidelines established by governing organizations, such as the American Institute of Certified Public Accountants (AICPA) and the International Federation of Accountants (IFAC) to ensure accountants maintain the highest level of professional conduct and trustworthiness.
Professional standards play a vital role in upholding ethics in accounting and certain organizations monitor certain aspects of ethics. For example, the AICPA oversees principles like integrity, objectivity, and confidentiality, while the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) set rules for transparency, fairness, and accurate reporting.
If accountants violate these professional standards, not only do they compromise their professional reputation and career, but they may be required to pay legal penalties.
Ways to Ensure Professional Standards Are Being Applied
Use Reliable Software: A cloud-based accounting system with robust controls can address accounting challenges and improve the integrity of accounting data by applying accounting methods more efficiently than manual accounting.
Implement Checks and Balances: A system of checks and balances where some employees handle receipt and deposit functions while others record and reconcile accounts is an effective way to make sure professional standards are being met.
Positive Company Culture
Establishing a company culture that emphasizes honesty and transparency can create an atmosphere where people feel positive peer pressure to do the right thing in their professional environment.
JTS Associates Prides on Professionalism
JTS Associates CPAs takes ethics and all professional standards in maintaining ethics very seriously. We operate on a side of honesty, transparency, and accountability with all clients and stakeholders. We pride ourselves on being professional which has served us throughout the decades that we’ve been in business.
As always, JTS Associates CPAs is here to help with all your accounting needs. Contact us at (516) 877-5900.
