Ethical and Unethical Events in Accounting, Essay Example

Accounting just like any other discipline has its ethics. Some of the ethical practices include spending cash appropriately, transparency, and proper book keeping. On the other hand, unethical practices in accounting include, fraud, bribery, inside trading and misuse of company’s funds.

Unethical Events in Accounting

One example of unethical event that occurred recently as reported by Locust, in Wal-Mart stores an American company, whereby the vice chairman Mr. Thomas Coughlin was involved in embezzlement and misuse of the company’s funds (para 53). Mr. Thomas Coughlin was a top executive who coerced Wal-Mart’s accountants to include his personal expenses in the company’s expenditure account. Thomas bought a pen house and alligator boots worth almost half a million and asked the accountants to include of the expenses incurred into Wal-Marts accounts. The fact that Thomas knew that he was an executive in the company; he could get away with all the frauds he committed during his reign. The company was also against the unionization of workers and Thomas asked for funds to stop the unions from forming. He used the funds to buy personal properties and the accountant included the funds taken out of the company as those used to benefit the whole company. The accountant did not report Thomas because he feared he might get fired because of reporting an executive. This made the accountant unethical because he knew very well that it is an offence to embezzle and also misuse the company’s funds and he allowed his fear to overshadow his conscience of doing the right thing. According to the ethics of accountancy, misuse of funds and also funds embezzlement is a great offence and a person carrying out that offense should be treated as a criminal. Even though the accountant later notified the company’s CEO about the illegal acts of Thomas, he did not follow the ethics of his company because for many years he participated in encouraging fraud and misuse of Wal-Mart’s funds. The accountant was later fired for not reporting Thomas immediately he knew he was misusing funds and letting the company pay for his personal expenditure. Thomas was later charged with misuse and embezzlement of funds but he pleaded innocent. Locust suggested that the accountant should have reported Thomas the first time he asked for his assistance in misusing funds (pg 9).

Ethical Events in Accounting

Berkowitz reported that ethical events in accountancy today have positive effects in the society (pg 6). Great accountants help people to calculate their taxes and revenues in the correct manner using the right methods. An example is where an accountant helps a businessman manage his records. The accountant will record the inputs and the outputs and later calculate the profit or loss a business makes. The accountant will advise his client on how to be financially independent in the sense that, if the expenses are more than the income, the businessman should find ways to reduce the expenses and focus on how to make more profit and reduce his debts. A businessman is advised on how to make profits without necessarily carrying out illegal businesses. Berkowitz also suggested that an accountant will help a businessman calculate the amount of money needed for the business to expand so as to make more profits and also how to motivate the work force by giving the work unit benefits (pg 8).

The ethical accountant is one that tries to help his client reach his financial goals while the unethical accountant helps himself alone putting his own interests first.

Works Cited

Arthur L. Berkowitz. Enron: A Professional’s Guide to the Events, Ethical Issues, and Proposed Reform. California: CCH, Inc. 2005.

Locust. Accounting & Ethical Problems. New York: Academic Press, 2004.