http://www.aicpa.org/interestareas/tax/resources/standardsethics/pages/default.aspx
Ethical accounting is when the accounting firm makes a commitment to ethics. One of the ways to easily determine whether an accounting firm has this commitment is whether they have an ethicist on staff. An ethicist can help a business clarify their ethical standards.
Due to range of accounting services and recent corporate collapses, attention has been drawn to ethical standards accepted within the accounting profession. These collapses have resulted in a widespread disregard for the reputation of the accounting profession. To combat the criticism and prevent fraudulent accounting, various accounting organizations and governments have developed regulations and remedies for improved ethics among the accounting profession.
Businesses rely heavily on accounting ethics, whether they’re aware of it or not. Unless investors, creditors and managers can be reasonably confident that the financial recordkeeping practices of their accounting professionals are honest, straightforward and consistent with industry standards, it is unlikely they can trust their records’ accuracy. In addition, either investors or creditors may be exposed to the risk of fraud if accounting ethics and integrity standards are not upheld, which can also undermine trust in the larger markets.
The professional accounting organizations establish codes of ethics and integrity standards that their members must adhere to in their practice. The accounting boards in each state also lay out ethical standards for membership and state law usually requires accountants to certify with the state board in order to legally practice. States punish the violation of state-adopted ethics and integrity standards with penalties that can include the suspension of an accountant’s license.
At the core of accounting ethics is the strict adherence — as much as is possible — to generally accepted accounting principles (GAAP). These are the basic rules of accounting laid out by the Financial Accounting Standards Board, and their use ensures the reliability, comparability and integrity of financial statements. In some rare cases, business circumstances may require diversions from GAAP. In these situations, accounting ethics require that any departures are fully documented and clearly justified for investors or others reading the resulting financial statements.
In accounting, ethics and integrity standards are based on a broad commitment to honesty, impartiality and objectivity. Ethical standards also require that accountants present information in the clearest and most accurate way possible, with the expectation that the information constitutes an independent report of a business’ financial situation. In most cases, this requires not just observing professional rules but also recognizing the potential for harm, using reasoning and judgment to resolve ethical conflicts and displaying moral integrity and motivation to apply a resolution.
Most businesses have a Mission Statement, but few have considered ethical standards. A statement of ethical standards is the first step in implementing an inclusive ethical program throughout the entire business.
Ethical accounting is relevant. A business that hires an ethical accounting firm knows that they are scrupulously honest and can be confident that employees, customers and clients are in good hands.
Xitong He 