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Responsibility and Burden of an Accountant Research Paper

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Updated: Sep 15th, 2021

Various scandals spanning nations have made the stakeholders conscious of the unethical business practices being followed by large Corporates. The accounting anomalies have led to the downfall of several empires which places the responsibility on the accountants. The accounting profession has experienced the deepest crisis in recent years. Accounting scandals like Enron and WorldCom have shaken the corporate sector as these have taken place due to significant accounting irregularities in financial statements and fraudulent financial reporting. Scandals like these result in the loss of billions of dollars and loss of jobs. It tarnishes the images of corporate managers and auditors (Comunale, Sexton & Gara, 2006). The long-term effects of these events lead to uncertainty of the accounting profession and corporate leadership. Series of accounting scandals finally led to the passage of the Sarbanes-Oxley Act of 2002. Nevertheless, it is argued that while the accountant alone cannot be held responsible for the unethical practices or the anomalies that have affected the companies, without their connivance the firms cannot engage in unethical practices.

The role of the accountant is perceived differently by different economists and researchers. According to economist Friedman, the business of businesses is to make profits and hence the accountants cannot be held responsible for any other practices that go on within (cited by Joyce, 2005). The accountant has to work in the best interest of the stockholders and they want financial returns. Joyce, however, contends that if accountants are held responsible for anomalies it helps to avoid illegal and unethical activities like discrimination, sexual harassment, pollution, and tax evasion.

In the case of Enron, Arthur Anderson, one of the big five auditing firms was charged to have colluded with the management to misappropriate funds and project a picture different from the reality. Income was inflated and then all concerned papers were destroyed. The world’s largest energy trader at one time, Enron had to file bankruptcy under Chapter 11 when about 5000 workers lost their job (Bhattacharya, 2004). However, the accounting firm alone could not be held responsible for the unethical practices. CEOs use their power and ego to chase wealth for personal gains without any concern for the stakeholders or the shareholders. The leadership at Enron was concerned with maximizing shareholder value and hence they hid debts and overemphasized profits (Gardner, 2006). They blinded themselves to ethics and limited their capabilities to recognize ethical and moral issues.

The leadership did not see any harm in their actions and they believed there were no ethical issues involved. One senior Enron executive, Sherron Watkins did apprise the CEO of the accounting irregularities in 2001 and stated that this could pose a threat to the company (Williams, 2002). This was ignored and so were the concerns of another employee Baxter. Employees are expected to bring with them certain values. As good communicators, they are expected to create, defend and promote the best image of the employer, and implementation of these does not pose serious ethical dilemmas. Most organizations have a code of conduct but Enron suspended the Code of Ethics. While the CEOs are chiefly responsible for the anomalies, without the collusion of the accountants they would not have been able to take such drastic steps and withdraw funds.

At WorldCom too the auditing and accounting failed to detect the irregularities or to guide the firms. Over ambitiousness of the CEO to acquire several companies with the stocks of WorldCom led him to boost the company’s profits artificially by as much as $3.9 billion (Bhattacharya, 2004). Costs were considered as a capital investment that helped the company to sustain its apparently smooth and rapid earnings growth. They even claimed depreciation of the ‘capital investments. The CEO utilized the company loan of $400 million to buy ranches and other personal properties, which is unethical. He used the services of the CFO to ensure rising stock prices so that his personal stake would provide the security for the loan. They hid the information from the external auditor. The audit committee did not have a financial expert. Besides, they had the sole authority to appoint, retain, compensate, evaluate and terminate the company’s independent auditors (Petra, 2006). All these incidents lead one to believe that there was hidden complicity between the accounting firm and the CEO but the behavior of the CEO and the CFO were the driving forces behind the unethical conduct.

Tyco traced a remarkable growth over four decades and diversified into a range of products until the CEO became greedy. Due to a lack of seriousness in financial management and by the pursuit of financial indiscipline, he indirectly encouraged impropriety by using the corporate funds for his personal use (Bhattacharya, 2004). They were charged for following a practice of large acquisition-related charges in their financial statements. They used pooling accounting of adding the balance sheets of their companies. The CEO was charged for stealing $600 million of the company’s money. All these financial irregularities could not have taken place without the connivance of the accountants but then the point is that the accountants alone would not be engaged in such acts. It is the CEO’s interest that pushes the accountants into fabricating financial irregularities and hence they are equally responsible.

Profits at the cost of ethics may pay rich dividends today but these are more often than not short-lived. Executives may be under pressure to achieve targets and find no discomfort in either engaging child labor to cut costs or conceal product information. The cost to a company for being unethical stretches beyond the monetary sums and damages in many areas. The cost of corruption can be much higher than people can perceive and it takes different forms (Vogl, 2007). The scandals weaken the public confidence in the company. They do not give credence to information released by the executives of the company. As scarce resources are wasted and stolen economic growth of the company suffers a setback.

It can thus be concluded that accountants have a responsibility towards all of the stakeholders and not just the stockholders or the owners of the company. It is also evident from the cases studied above that without the connivance of the accountants it is not possible to alter the financial statements or adjust the earnings. It is also amply demonstrated that the accountants alone cannot be held responsible because the main interest is that of the CEOs in each case. Application of ethics in the workplace is thus a responsibility of the CEOs but without the support of the accountants, the owners create irregularities. Thus the accountants should primarily not only warn the Board members and other stakeholders but bring the anomalies to light instantly. Their responsibility stretches beyond the financial gains of the company. They can help reduce the risk and thereby demonstrate their responsibility towards all the stakeholders.


Bhattacharya, S., (2006), STREAM: Critical Accounting and Challenges to Notions of Progress, Issues in Corporate Governance, Web.

Comunale, C. L., Sexton, T. R., & Gara, S. C., (2006), Professional ethical crises A case study of accounting majors, Managerial Auditing Journal Vol. 21 No. 6, 2006 pp. 636-656.

Gardner, N., (2006), Profit-driven corporations can make management blind to ethics, study says, Web.

Joyce, W. B., (2005), ACCOUNTING AND SOCIAL RESPONSIBILITY, Journal of Accounting and Finance Research Vol. 13, No. 3. pp. 1-8.

Petra, S. T., (2006), Corporate governance reforms: fact or fiction? Corporate Governance, VOL. 6 NO. 2 2006, pp. 107-115.

Vogl, F., (2007), Global Corruption: Applying Experience and Research to Meet a Mounting Crisis, Business and Society Review 112:2 171–190.

Williams, D., (2002), Blurred standards: when corporate ethics fall by the wayside, so does the public’s trust – Brief Article, Web.

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