The Accountant's Dilemma: Ethics at the Top

by Darryl Wee, ACCA, 12 April 2011

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topics:
Management

tags:
ACCA ethics leadership reputational damage

In these unstable times every dollar counts and a lot can be at stake when a company is struggling to survive. Sometimes the pressure gets too much.

Suppose you are asked to sail too close to the wind – to bend the rules so far that they break.

What would you do?

Suppose you know that the stock market ‘expects’ a profit of $x, that your credit lines are due for renewal, and that finance would be difficult to obtain if the share price falls.

What would you do?

Suppose again that someone in authority asks you to ‘massage’ the numbers and make inappropriate accounting adjustments to increase profit and reduce liabilities. This would allow the company to meet stock market expectations and more or less guarantee renewal of credit facilities.

What would you do?

Ethical Dilemma

We’ve all experienced ethical dilemmas in our business lives, maybe not as consequential as this one, but it’s the kind of situation that does happen. Who would suffer if you massage the figures to make sure the company survives? Possibly no one – but also possibly a great many.

Massaging the figures may mean that some people benefit, but there is a bigger picture. Confidence in accountants, in financial reporting and in business could be undermined, and certainly would be if everyone did it. This would be bad news for business as a whole and therefore bad for society too.

A business may be able to get by, even prosper, in the short term by abusing trust, and so can a person – or a profession. In the longer term, however, reputation and trust are what matters – a reputation built up over the years can be destroyed in an instant and that can destroy a business.

For a professional, such as an accountant, reputation is the most valuable asset. Achieving a truly professional business environment relies on all sorts of factors being in place, including the behaviour of the individual, and the workplace environment.

But perhaps most important of all is the quality of leadership and the ethical or moral tone set by those at the top of the organisation and by the professions.

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