Ethics and Moral Attitude in Accounting

Introduction

American Institute of Certified Public Accounts or AICPA has developed five different ethical practices (Pinheiro & Costa, 2020). This practice will increase the morality of the accountant. It will help the nation to reduce the fraud activity. Thus, many account curriculums have included these practices. It will help the future accountants to maintain a proactive and reactive attitude to unethical situations. Here, the researcher shall discuss the same thing.

The accountant missed the problem statements

There are many variables associated with the job of an accountant. Norm, these factors affect the process of work. It is quite obvious that Norm was confused due to the malpractice of some accountant. However, those accountants may have nothing to do with the malpractices.

For example, in the first case, the S&L Crisis considered several actions which violate the GAAP. The organization was under $200 million than its market valuation. The organization decided to lend money at a fixed rate while the interest rate in 1993 was rising. If the interest rate increases then the lending rate should be lowered (Mintz, 2016). They follow an inversely proportional relationship. However, the S&L crisis accountant missed this basic calculation and the company went under a negative debt. It is true that the accountants of this organization are solely responsible for the fall.

Norm must understand that in this world there are several accountants working for several firms. Some of these people had a desire for the job while the rest just took it as a job. For the first category, it worked like a responsibility while the others enjoyed it as a source of income.

It is not true that the accountants of the S&L crisis missed these factors. In fact, these people plotted it. So that a fake financial plot can be depicted. The write off of loss loans and bankruptcy were the most heinous crime that an accountant can do (Arfaoui et al. 2016). In this case, the accountants are to be blamed as they created this blunder.

In the second case, the accountants cannot be blamed for their actions. The role of the accountants is developing and analysing financial records. If these people are adding things up in financial records then they can be blamed. However, in the second case, Norm mentioned that over 80% of the patient care costs were associated with tobacco substance. The economist or management of the organization should be responsible for it. The accountants were always there. They pointed out in the balance sheet that a large amount of money is mistreated. Their role permits them to this far only. Now, the higher authority should take steps on the matter. The accountant never missed this fraud rather than that they pointed out the fraud route. Therefore, the incident came out in public.

Another fact is bank frauds are now not new in this world. Malpractice with letter of undertaking and Non-Performing Assets (NPAs) are the modern approach of bank fraud (Mulhearn et al. 2017). Here, the accountants can be involved or not. But it is not that they are to blame in every matter. But the accountant can cream off these malpractices. Loans and LoUs are permitted by the managers while the documentations are made by the clerks. Hence, if malpractice is going on then the accountant has no intention. The accountant can figure it out by going through the annual statement. Hence, if the matter comes into public then it is the credibility of accountants who did their jobs. Reactive behaviour is the only action that the accountant can do (Tormo-Carbó, Seguí-Mas & Oltra, 2016). Beyond that nothing lies in their hand. The accountants are not the decision-maker of an organization. But they are the financial assessor of the organization.

Advice for Norm

Based on the mental state of Norm, the author shall recommend seven advice statements to Norm. These are mentioned below.

1. Maintaining moral courage

In life working as an accountant can be tough. The management can blackmail Norm to misconduct the financial recordings. However, the accountant is a very strong character in the organization. So, the government will allow an autonomous attitude to an accountant (Swisher, 2018). Thus, Norm should maintain moral courage in his professional life as an accountant. No matter what pressure comes from the authority, Norm must stick to his morals only.

2. Discussion with peers

In some cases, critical situations can occur. Jones & Dosanjh-Zucker (2018) mentioned that the accountant faces critical situations at every stage in life. Some critical situations can be handled by personal knowledge. However, some of these situations cannot have a direct solution. Such situations can be assessed by consulting with peers. For example, Norm gets a job at a health care centre and finds that a bulk amount of money is drained for tobacco. Now, Norm should ask the seniors and peers. However, the ultimate decision shall be taken on the basis of moral selection.

3. Reporting the issue to the management

The story of Bank of Credit & Commerce International can be avoided in future. The accountant is great to play with here. If the managers and the clerks deal with fraud, then the accountant can identify that by reviewing the LoUs and Cr and Dr statements (Nguyen & Dellaportas, 2020). In such cases, the management has no clue whatsoever. Hence, the role of the accountant, in this case, is to inform the higher authority about the misconduct and avoid an enormous NPA in future. If the accountant finds that the management bodies are involved, then the government bodies will be informed about the matter.

4. Professional judgements

Source: Jones & Dosanjh-Zucker, 2018

As per Jones & Dosanjh-Zucker (2018), several professional issues can generate during ethical practice. Misleading reporting has ranked top on this list. Even in the first example of the case study, it was mentioned that some loans and credits were written off intentionally to create a fake capital growth of the S&L crisis. Thus, Norm should never consider this type of practice in professional life. Some professionals create tax fraud routes. Besides, bribery and insider trading can take place with the green signal from the accountant. Hence, Norm must avoid such actions and maintain a negative attitude toward it.

5. Staying away from the issue

Pinheiro & Costa (2020) mentioned that in a large scam, the offender hunts like a spider. It plans for every action and its consequences. Most of the employees and leaders get involved in it. The accountant has no proper authority in such cases. The government officials are also a prime suspect in such scenarios. The role of Norm in such cases should be avoiding it completely. Norm must resign from the post and search for a suitable job. For example, in 2003 an Indian airline hired an American accountant. In 2005, the accountant found huge money was drained from the account and bad debts were written off. Corrupted Indian system was also involved in it. Thus, the American accountant resigned from the post before the scam went public.

6. Issue in writing

Most of the major errors are not always intentional. These unintentional errors create a bewildering situation. Fraudsters take advantage of these errors. 'Norm' should never make such errors. These errors can be avoided by reviewing the statement multiple times. The auditing shall be done appropriately.

7. Public interest

The last advice for Norm is maintaining a better public interest. The accountants deal with money. Money is the exchange bill of resources (Nguyen & Dellaportas, 2020). If the money is laundered then the public resource is laundered. The poor are deprived of their belongings. Norm will have a long career as an accountant. Working for 25 years with the same morality is the challenge for the person. Thus, public interest shall be the motivation behind this job. If any malpractice occurs and Norm is influenced with it, then Norm must remind that public interest is getting affected.

In the end, the last advice to Norm. Norm must opt for his career as an accountant. He is honest. He has morale in knowledge and ethics. Thus, he can make a change in the concept of "Where are the accounts?". In fact, these people will make the critics say that "Here are the accountants who changed the course". So, avoiding a career is not the choice.

Conclusion

In this discussion, the author acted as a consultant advisor of Norm who was confused on the career path. Norm believed that corruption and fraud activity has declined the reputation of accountants around the world. Therefore, he decided on a different career. However, the author mentioned that not always an accountant is involved in the matter. In some cases, the accountant has no authority or power or control on the fraud activity. In some cases, errors of the accountants are scopes for the fraudsters. Other than this, some fraud accountants are responsible for such events. Therefore, the author has recommended solutions for each case. In the end, the author concluded that Norm must select his career as an accountant and diminish these fraud activities with his honesty and ethics.

References

Arfaoui, F., Damak-Ayadi, S., Ghram, R., & Bouchekoua, A. (2016). Ethics education and accounting students' level of moral development: Experimental design in Tunisian audit context. Journal of business ethics, 138(1), 161-173.

Jones, C. G., & Dosanjh-Zucker, K. (2018). Using a forensic accounting novel to increase student engagement with accounting ethics and the profession. Journal of Forensic & Investigative Accounting, 10(2), 250-257.

Mintz, S. (2016). Giving voice to values: A new approach to accounting ethics education. Global Perspectives on Accounting Education, 13(1), 37-50.

Mulhearn, T. J., Steele, L. M., Watts, L. L., Medeiros, K. E., Mumford, M. D., & Connelly, S. (2017). Review of instructional approaches in ethics education. Science and Engineering Ethics, 23(3), 883-912.

Nguyen, L. A., & Dellaportas, S. (2020). Accounting Ethics Education Research: A Historical Review of the Literature. Accounting Ethics Education, 44-80.

Pinheiro, M. M., & Costa, A. J. (Eds.). (2020). Accounting Ethics Education: Teaching Virtues and Values. Routledge.

Swisher, K. (2018). Accounting Students Ethics Education and Ethical Behavior in the Workplace: A Case Study (Doctoral dissertation, Northcentral University).

Tormo-Carbó, G., Seguí-Mas, E., & Oltra, V. (2016). Accounting ethics in unfriendly environments: The educational challenge. Journal of business ethics, 135(1), 161-175.