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Summary Ethical Obligations and Decision making in Accounting
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Summary of all chapters (except chapter 6) of Ethical Obligations and Decision making in Accounting (4th edition).
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Summary Accounting & Business EthicsChapter 1- Ethical reasoning: Implications for accounting
Economics is viewed as the sum of actions, and interaction, based on egoistic behavior “ that
aims to obtain as much economic gain for the individual as possible”, while…
Ethics can be defined as being composed (samenstelling van) of generous actions that aim at
the good for everyone and the common good for the community.
Is economics unethical? No, it is a matter of person. Businesses are run by people, for people.
Impact of Business on Society. Business ethics (stakeholder engagement) has experienced a rapid
growth as a topic of research during last decades. Every firm is interconnected in the society and there
are people in that society, indirectly and directly. Stakeholders consist of all the groups of interests
(customers, suppliers, shareholders, government, regulators etcetera).
One has to act with integrity when making personal decisions in order to be best equipped to act with
integrity on a professional level. We learn how to be ethical by practicing and exercise those virtues
(deugdzaamheid) that enables us to lead a life of excellence.
In accounting, internal accountants and auditors may be pressured by superiors to manipulate
financial results. They have to deal with pressures imposed on them by clients to put the best face on
the financial statements. It is the ethical value of integrity that provides the moral courage (moed) to
resist the temptation (de verleiding te weerstaan) to stand by silently while a company misstates its
financial statements.
LO 1-1- Explain how integrity enables CPA to withstand pressures and avoid subordination of
judgement
Mintz (1995)- Integrity is a fundamental trait of
character that enables a CPA to withstand client
pressures that might otherwise lead to subordination
of judgement. So the accountant will do what is right
even if it means the loss of a job or client. The public
interest (creditors and investors) always must be
placed ahead of one’s own self-interest or the
interest of others including a supervisor or a client.
Integrity means that a person acts on a principle
(conviction that there is a right way to act when faced
with an ethical dilemma). A professional must never
let loyalty to a client cloud (overschaduwen) good
judgement and ethical decision making.
In general sense, ethics (or moral philosophy) addresses fundamental questions such as “how should
I live my life”?
Religious and philosophical foundations of ethics
All the world’s greatest religious texts contain the Golden Rule: “Do unto others as you would wish
them to do unto you”. So treat others the way how we would want to be treated. Integrity is the key to
carrying out the golden rule. A integer person acts with truthfulness, courage, sincerity and honesty.
You have the courage to stand by your principles even in the face of pressure to bow to the demands
of others. Integrity is particularly important for CPA’s (certified public accountants). They have to
adhere to the ethics of the accounting profession and not subordinate professional judgement to the
judgement of others.
The origin of Western philosophy trace bac to the ancient Greeks. The greek saw the attainment of a
good life as the telos the end or the goal of human existence (happiness). Modern philosophies have
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