I think it is very important that all professionals, not just accountants,
are required to take ethics courses. As accountants we are relied on
by consumers to report accurate financial statements. Consumers use
financial statements to invest in companies and they must feel
confident that those statements were prepared by someone with
high ethical standards. When consumers learn that a company’s
financial statements are not accurate, they feel violated, they lose
trust in accountants, businesses, and sometimes they will stop
investing. When companies violate consumers’ trust, it hurts the
economy because it then leads to consumers questioning other
companies’ finances. Once you have lost a consumer’s trust it can
take years to regain it, if ever.
In my Situational Ethics in Accounting class, I researched Kraft Heinz
Company because they had been fined by the SEC for $6 million to
settle charges that it created more than $200 million in bogus cost
savings to improve its standings with investors. After the news broke
that Kraft Heinz had misrepresented their financial statements for
several years their stock price dropped as consumers and investors
lost their trust with the company.
Trust is critical for businesses to succeed and for consumers to feel
confident in investing and purchasing a business’s services or goods.
Ethics in the financial domain is one of the biggest topics in the
business. Every business needs to uphold a high bar of ethics to
enforce the validity of their financial statements. Preventive
measures such as requiring all owners and employees to take ethic
courses to understand the rules that businesses need to adhere by is
a good way to keep those ethics in check. If it gets to the point where
ethics are breached with financials, that is when an auditor comes
into play. It's important for an auditor to examine all facets of the
financial statements to ensure that no fraud is committed and
everyone in the business is adhering to the rules.
Just this month, the SEC (Securities and Exchange Commission)
charged Wall Street Firms such as Wells Fargo with breaking such
rules. "The Securities and Exchange Commission today announced
charges against 10 firms in their capacity as broker-dealers and one
dually registered broker-dealer and investment adviser for
widespread and longstanding failures by the firms and their
employees to maintain and preserve electronic communications" The
firms admitted their fault and paid millions of dollars in penalties and
promised to reinforce their policies to avoid their breakdown in
communications.
References:
https://www.sec.gov/news/press-release/2023-149
Dangor, G. 03 September 2021. Kraft Heinz Fined $62 Million For
Phony Accounting. Forbes.com. Kraft Heinz Fined $62 Million For
Phony Accounting (forbes.com)
