Core Ethical Issues Of External Accounting

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The core ethical issue of external accounting is that there is a vested interest on the part of companies to misrepresent their financial position in order to attract or maintain investment and lure the short-term profitability of the company. The principle ethical issue in auditing is a business interest on the part of auditors to collude with the auditee who is the source of the fees from which they obtain their income. Companies need the rules that are designed to counter the willingness of companies and their auditors to depart from or manipulate accounting and auditing standards in their own unlawful financial interests. With respect to auditing, these rules are designed to promote what is called ‘auditor independence’. That is, to promote…show more content…
These rules are designed to ensure the trustworthiness of the process in itself, so that it is not contaminated by extraneous factors. Thus, in accordance with professional norms and legal requirements, no one may audit the financial reports of an organization in which they have a financial interest. Clearly audit firms are subject to the same ethical duties as practicing auditors with respect to the observance of the accounting rules and standards that serve to make audits useful to their end-users. The provision of subordination of maximizing profit to the maintenance of auditing standards, the creation of a culture that supports auditor integrity and the adequate resources and training are amongst the particular responsibilities of auditing firms. Lacking that leadership, employee auditors and junior partners cannot be expected to sustain ethical conduct in the…show more content…
This is particularly the case with members of a group or profession which is publicly committed to following certain values that overcome their own self-interest and the normal obligations that apply to all efficient human beings. In such circumstances, there is something like a collective obligation to maintaib these professional values that includes a commitment to follow the rules of the profession in a way that show the values of the profession, and a duty to resist and if necessary fail to keep the rules that the individual member believes to be morally wrong in the context of those values, even when they carry the first of higher authority. It show that, while all accountants and auditors have moral reasons to follow to the norms of perform accepted as authoritative in their profession, nevertheless all accountants and auditors, even those with limited experience and seniority, have an obligation to take a critical attitude to their own and their colleagues conduct and to the rules and procedures that define and govern their professional practice. The appropriate ethical attitude for rank and file members of a profession towards rules of practice may appear quite straightforward, but this is not the
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