Professional Documents
Culture Documents
Ethics
Hannah McKay
SLCC
12/10/2017
ACCT. 1110
Introduction
Ethics can be defined broadly as a set of moral principles or values that govern a persons
following the rules and principles of the Code of Professional Conduct. The Professional
Conduct is split into two parts: the principles and the rules. The principles provide the overall
framework, but they are not enforceable. The rules govern the performance of professional
Just about every accountant will face a difficult situation or ethical dilemma at some
point in their life. A lot of the ethical dilemmas in the accounting world result from pressures
from management. One of the toughest scenarios an accountant can face is when the CEO or
other senior executive exerts pressures to suppress or change the results of an internal audit
financial statement findings because it reflects poorly on management or some other aspects of
the business (McCafferty). Studies have shown that these scenarios happen often.
An article from the internal audit foundation found that twenty five percent of the
internal accounting auditors surveyed at North American organizations said they have been
pressured to significantly modify or suppress a valid internal audit finding or report during their
career. Six percent indicated they would rather not answer the question. (McCafferty, Joseph)
In an ideal environment, accountants should always be able to present their findings to the
CEO or another person that is high up in the company without the threat of personal
recrimination(McCafferty). Sadly, this is not the case and accountants do not always operate in
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these types of environments. Accountants have faced different levels of pressure across
geographic regions across the globe. For example, East Asia & Pacific region reported that only
fifteen percent of internal auditor accountants were pressured to change or suppress the results of
the audit findings but nineteen percent from the same region declined to answer the question.
(McCafferty, Joseph) One interpretation of this is that when participants stated that they
preferred not to answer, that response often may have indicated that pressure existed not to
respond, either from an internal or external source. However, the average across all regions was
that twenty-three percent said they were faced with pressure to change findings at least one or
One thing to note is that the internal auditor accountants that were pressured to suppress
or modify audit findings reported that it happened on a regular basis. While only twenty four
percent indicated that it happened on occasional or frequent basis (McCafferty, Joseph). The
chief audit executives were the most likely to face the pressure to change the findings and
internal audit staff had a smaller percentage that were pressured to change their findings. It is
important to realize that pressure will never go away for internal accounting auditors because it
may exist because of legitimate disagreements about audit findings, or it may exist simply
because human nature is such that individuals do not like to see negative results in their findings.
The source of the pressure to suppress or change findings varied and depended on the rank of
the internal auditor reporting the pressure. Chief audit executives faced pressure most often from
the CEO, operations management, and the CFO. While staff internal auditors most often faced
pressure from operations management and from the internal audit department. The main reason
for the pressure to change results was that the operation audit would reflect badly on key
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operational management.
When internal auditors stood up to the pressure to suppress or change findings they often
faced consequences and they were excluded from meetings standing their ground on an audit
issue. Another percentage said they lost out on job opportunities, and a small percentage said
they faced budget cuts as a result of existing pressure, also in some rare instances internal
auditors said they faced job elimination, pay cuts, or hostile work conditions after resisting the
There are many things that accountants and managers can do in a business to prevent
unethical behavior. One thing that they can do is create a code of conduct for the business that
specifies all of the expectations that the business has for the company to be a success financial
and ethically. Another thing that managers can do is lead by example. Employees in a company
really look up to management. If a manager is being unethical then it may lead employees to
thinking that it is ok to be unethical because their boss is doing it. The next thing that a business
refer to the code of conduct and take necessary measures to warn or terminate that employee
(Brookins). Another thing they can do is welcome ethics speakers and do training for ethics in
the business. Finally, managers should show employees appreciation and encouragement for all
of their hard work. This will encourage the employees to do what is right.
Conclusion
In conclusion ethics is very important in today's world. Unethical behavior can lead to
damaging a companys reputation and to completely closing a company down. Accountants not
only need to have integrity, but they also need the courage to stand up to forces that could try to
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undermine that integrity. Accountants face significant pressures from CEOs, top management,
and other forces to act unethically. However, if they choose to act unethically they will have to
face the consequences when they don't resist these significant pressures.
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References:
https://www.aicpa.org/content/dam/aicpa/research/standards/codeofconduct/downloadabledocum
ents/2014december15contentasof2014june23codeofconduct.pdf
McCafferty, Joseph Nearly one-in-four internal auditors say theyve been pressured to suppress or
change valid audit findings. MIS|TI Training Institute 2 Nov. 2016 Web 13 Apr. 2017.
http://www.misti.com/internal-audit-insights/internal-auditors-under-pressure-to-alter-reports
Brookins, Miranda. Ways to Prevent Unethical Behavior in the Workplace. Chron. 2017.
http://smallbusiness.chron.com/ways-prevent-unethical-behavior-workplace-21344.html