Unethical Behavior by Professional Accountants in an Organization Essay (Article Review)

Exclusively available on Available only on IvyPanda® Made by Human No AI

In accounting, unethical behaviors refer to behaviors that do not comply with applicable laws and regulations of accounting practices. Accounting aids managers in their effort to improve the economic performance of the company. Unfortunately, some managers have overemphasized the economic dimensions and have engaged in unethical and illegal actions. Over the past few years, unethical practices have led to several bankruptcies. This article provides a brief analysis of unethical behaviors in accounting practices.

Situations that might lead to unethical practices and behavior in accounting

Accountants who demonstrate unethical behavior do not abide by the laws and regulations of accounting practices. An article by Oseni Abubakar (2001, p. 3) identified various situations that might lead to unethical behavior in accounting. These situations may include misuse of funds, securities fraud, exaggeration of the value of company assets, and intentional provision of incorrect information in regards to assets and liabilities of a firm.

Other situation that might lead to unethical behavior in accounting includes exploitation of financial markets, bribery, greed, and failure to perform a detailed analysis when preparing financial reports. In his article, Oseni Abubakar (2001, p. 4) argues that most accountants in profit-making institutions often indulge in unethical practices for personal gain. Oseni (2001, p. 4) also acknowledges that Unethical actions can have adverse consequences far beyond the institutions that commit them.

Different companies in the United States have demonstrated unethical behavior in their financial practices. A good example of a company that demonstrated unethical practices was Enron, in 2002. Enron was brought down by the unethical practices of its top executives. Different studies show that Enron Company was involved in one of the biggest scandals in accounting history, which saw its top executives come under fire because of misleading accounting practices that lead to overstated profits.

The effect of the Sarbanes-Oxley Act of 2002 on financial statements

After the Enron blowup in 2002, Congress passed the Sarbanes-Oxley Act, which required companies to improve their internal auditing standards. The Sarbanes-Oxley Act also required financial officers to certify that their financial statements were properly prepared by professional accountants.

Several types of research document an increase in public firms’ accounting and audit costs since the enactment of the Sarbanes-Oxley Act in 2002. In the United States, an analysis of the financial statements of 1,000 firms indicates that there was a 2.3 million average increase in fees associated with Sarbanes-Oxley costs from 2002 to 2004. Abubakar (2001, p. 7) found that Sarbanes-Oxley costs increased in assets, assets growth, the effectiveness of internal control, and 2003 and 2004 audit fees.

Since its enactment in 2002, many firms, particularly small firms, have reported accurate financial statements. Different studies indicate that Sarbanes-Oxley has been beneficial to small firms since their limited personnel, as well as their limited exposure to public scrutiny, make their financial statements prone to inaccuracies.

The sarbanes-Oxley act also lead to the incorporation of audit committees of independent directors in all firms listed in national stock. Although audit committees had been required long before the enactment Sarbanes-Oxley Act, the composition and duties of these independent committees had been mostly unregulated. The inclusion of an independent audit committee has enabled executives to prevent and detect fraud in their financial statements.

Reference

Oseni, A. (2011). Research journals of finance and Accounting, 2(2), 3-15. Web.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2022, May 9). Unethical Behavior by Professional Accountants in an Organization. https://ivypanda.com/essays/unethical-behavior-by-professional-accountants-by-oseni/

Work Cited

"Unethical Behavior by Professional Accountants in an Organization." IvyPanda, 9 May 2022, ivypanda.com/essays/unethical-behavior-by-professional-accountants-by-oseni/.

References

IvyPanda. (2022) 'Unethical Behavior by Professional Accountants in an Organization'. 9 May.

References

IvyPanda. 2022. "Unethical Behavior by Professional Accountants in an Organization." May 9, 2022. https://ivypanda.com/essays/unethical-behavior-by-professional-accountants-by-oseni/.

1. IvyPanda. "Unethical Behavior by Professional Accountants in an Organization." May 9, 2022. https://ivypanda.com/essays/unethical-behavior-by-professional-accountants-by-oseni/.


Bibliography


IvyPanda. "Unethical Behavior by Professional Accountants in an Organization." May 9, 2022. https://ivypanda.com/essays/unethical-behavior-by-professional-accountants-by-oseni/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1