Essay Example on Ethics refer to rules and principles that govern what is considered Right

Ethics refer to rules and principles that govern what is considered right and wrong in regard to one's conduct Business ethics is a type of professional ethics which examines ethical principles and problems which arise in a business environment Business ethics should take into consideration the following factors 1 The business should deal fairly with everyone dealing with it 2 Ethics should be fixed for everyone working in the organisation and its implementation should be linked with reward punishment system 3 Remedial measures in case of violation of ethics should be taken at the earliest 4 The ethics should be based on the perception of what is right Further importance of business ethics can be discussed as follows 1 To stop business malpractices Some dishonest businessmen do business malpractices by indulging in unfair trade practices which are harmful to consumers Business ethics help to stop such practices 2 Credibility in the public Ethical values of an organisation create credibility in the public Ethics are needed to improve consumers confidence 3 Protect employees shareholders Business ethics are required to protect the interests of employees shareholders dealers suppliers etc It protects them from exploitation through unfair trade practices 4 Consumer satisfaction Today consumer is the king of market 

So the main aim of the business should be consumer satisfaction Consumer would be satisfied only if the business follows all the business ethics 5 Healthy competition The business must use ethics while dealing with its competitors They must give small scale businesses equal opportunity and should avoid monopoly The IESBA International Ethics Standards Board for Accountants the ethics committee issued a revised code of ethics for professional accountants It establishes a conceptual framework for all professional accountants to ensure compliance with the five fundamental principles of ethics 1 INTEGRITY In simple words integrity means honesty A financial accounting professional should be straightforward and honest in all professional and business relationships 2 OBJECTIVITY A professional accountant should not be biased and should express his opinion independently without any biasness He should not allow conflict of interest or undue influence of others 3 PROFESSIONAL COMPETENCE AND DUE CARE The accountant should maintain professional knowledge and skill from time to time He should act diligently and in accordance with professional standards when providing professional services 4 CONFIDENTIALITY The accountant should respect the confidentiality of information and should not disclose such information to third parties unless there is a legal or professional duty to disclose Further it should not be used for the personal advantage of the accountant or any third party 5 PROFESSIONAL BEHAVIOUR This requires the accounting professionals to comply with relevant laws and regulations and they should avoid any such actions which may result in discrediting the profession 

There are potential threats which may lead to conflict of interest and lack of independence These can be discussed as follows 1 Self interest threats It may occur as a result of financial or other interests of a finance and accounting professional or of an immediate or close family member For instance there is an accountant holding shares in a client company This could possibly affect of his ethical behaviour A conflict could arise between wanting a dividend from the shareholding and reporting the financial results of the company correctly He may want to hide the liabilities or overstate assets to improve dividends 2 Self review threats These types of threats may occur when a previous judgement needs to be re evaluated by the finance and accounting professionals responsible for the judgement For example there is an assurance partner who is serving as an officer on the board of an assurance client One of the possible effect on his ethical behaviour could be that the partner would have a conflict between the producing information for audit and then reporting on that information The partner may miss decide to ignore the errors identified to avoid having to admit to the mistakes being made 3 Advocacy threats These arise when a professional is given his opinion on a client such that his objectivity may be compromised 4 Familiarity threats Familiarity threats arise when a finance accounting professional has close relationships in the work environment and such relationships impair his selfless attitude towards work Let us take an example A close family member is a director of a client company This could lead to a potential conflict because an assurance partner would not want to qualify the audit report and create bad feeling between the partner and the director Therefore the audit report may not be qualified when it should be 1 Intimidation threats These types of threats arise when a professional is threatened not to perform his duties A suitable example of intimidation threat could be fee due from a client is old and the assurance firm is concerned about the payment of the fee The possible effect on ethical behaviour could be the client may threaten to default on the payment unless more work is carried out by the assurance firm