An Assessment of Ethical Thoughts in Accounting and Effects on Accounting Practice
Chapter One
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To ascertain the significant relationship between Integrity and accounting practice
- To ascertain the significant effect of objectivity on accounting practice
- To ascertain a significant relationship between confidentiality and accounting practice
- To ascertain the significant effect of independence on accounting practice
- To ascertain the significant relationship between professional competence and accounting practice.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
According to Nwagboso (2008), ethics is concerned with norms, principles or conducts of behavior and practices carried out by a group of people, community or profession. A profession is a calling or a job that needs special education and training. It is an obligation to act in a way to serve the interest of the public. This is what makes a profession different from a vocation. For example, a motor mechanic who encounters a break-down vehicle on the high way has no ethical obligation to fix the vehicle. But a medical doctor that encounters an accident victim who is unconscious and badly in need of immediate medical attention has an ethical obligation to stop and render medical care to the victim. A professional accountant is expected to act in the best interest of the public, hence the need for accounting professional ethics. Camerer (1996) posited that professional ethics sets out the ideas and responsibility of the profession, provides guidelines on acceptable conduct, improves the profile of the profession, protects both clients and the professionals, improves quality and consistency, and motivates and inspire the professionals. A review of existing literature such as Akenbor and Onuoha (2013), IFAC (2006), Robert (2005), Obadan (2001), and Herbert (2001), revealed that the accounting professional ethics centred on independence, integrity, objectivity, competence, fairness, confidentiality, fidelity, responsibilities to other members, etc. Independence refers to the degree of freedom with which the professional accountant (auditor) is allowed or able to examine the client’s records and express an opinion on the said records without any undue influence from any party connected with the organization. Madsen and Safritzi (1999) asserted that if the auditor’s report is to lend credibility to financial statements, users of the accounting information must perceive the auditor as being fair and impartial. In Nigeria, the companies and Allied Matters Act of 1990, in a bid to promote the independence of the auditor, stipulates that any person who is a partner, or in the employment of an officer or a servant of the firm cannot serve as its auditor. Professional accountants must not knowingly misrepresent facts. Williams (2005) stated that facts may be represented even if the facts themselves are correctly reported: For example, facts may be represented if the accounting document does not contain adequate information necessary for the proper interpretation of those facts. This means that professional accountant must uphold the integrity and objectivity of the profession. They must remain steadfast and report issues with uncompromising adherence to a code of moral value. To help maintain integrity and objectivity, it has been suggested that professional accountants should avoid receiving gifts and undue hospitality from their clients. However, a professional accountant must be fair, honest and transparent to his clients whose interests he must endeavour to protect and serve to the best of his professional ability. A professional accountant must be technically competent and qualified. He must be thoroughly grounded in all matters concerning accounting and auditing principles and standards. He must possess a level of competence necessary to perform the services and his knowledge, skills and experience will be applied in the performance of his duties. Since the professional accountant is empowered to obtain all necessary information for the purpose of rendering accounting, taxation and auditing services, he is therefore expected to respect to confidentiality of such information acquired without any undue disclosure unless there is a legal requirement or professional duty or right to disclose such (Nwagboso, 2008). Professional accountants in employment own certain legal duties to their employers. Indeed, they have a duty of fidelity which requires them to be fully committed to furthering the legitimate interest of their employer. Aquack and Lipe (2010) stated that while the duty of fidelity continues throughout the period of working for an organization, it also applies when members wish to change employment. This duty prevents an employee from using the skills acquired while working for a former employer in undertaking a new role with a different organization. More so, a professional accountant is expected to conduct himself in a manner that promotes good relationship with other professional members. He must avoid undue publicity and advertisement, accord co-operation to incoming auditors, and seek arbitration with relevant institute when he feels that a colleague has treated him unfairly (Camerer, 1996). It is no news to say that the entire globe is witnessing serious erosion in ethical values. Even more honest persons as Pastors, Imams, and other religious faithful, may find it difficult to act in an ethical manner in some situations. Professional accountants face some challenges that make them behave unethically. Nwagboso (2008) claimed that the society’s propensity for materialism is the root cause of unethical conducts in public sector and financial institutions in Nigeria.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to an assessment of ethical thought in accounting and effects on accounting practice
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on an assessment of ethical thought in accounting and effects on accounting practice. 200 staff of International Ethical Standards Board for Accountants, Abuja was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain an assessment of ethical thoughts in accounting and effects on accounting practice
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of an assessment of ethical thoughts in accounting and effects on accounting practice
Summary
This study was on an assessment of ethical thoughts in accounting and effects on accounting practice. Five objectives were raised which included: To ascertain the significant relationship between Integrity and accounting practice, to ascertain the significant effect of objectivity on accounting practice, to ascertain significant relationship between confidentiality and accounting practice, to ascertain the significant effect of independence on accounting practice, to ascertain the significant relationship between professional competence and accounting practice. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of International Ethical Standards Board for Accountants, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up accounting clerks, accounting analysts, accounting assistants and accounting managers was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The information requirements and environments under which financial reporting is made is both very complex and challenging. It is complex to the extent that there is the likelihood that a conflict of interest might arise due to the multiplicity of end users of accounting information. Consequently, the continuum of interested parties; Management, shareholders, creditors, employees amongst others puts the financial statement and its preparers in a complex environment. Thus, against the background, the need for the enforcement of ethical practices has come to the fore and the role of ethics in accounting practice is becoming more inevitable in the attempts to ensure that information reported is in accordance with the set of professional ethical standards that make it reliable for users. Therefore, the accountant and the accounting practice in general plays a very crucial role in ensuring that there is corporate integrity in the operations of business and even non-profit making organizations. The accountant must be well positioned to mitigate the tendencies for unethical practices and inaccurate financial and nonfinancial reporting. Our emphasis on the role of accounting practice in restoring systemic confidence in financial estimates is borne out of the fact that the statutory roles of the accounting professional either as a company staff, internal auditor or external auditor positions the accountant as an interface between the reports of corporate entities and the confidence of users of such information. This is because the presence of the accounting function is an indication that proper financial records and documentation are been kept until when proven otherwise. Thus, there is a need for ethical standards in accounting practice to extend beyond mere documentation and articulation to effective enforcement of these standards and the concerted efforts by all stakeholders ranging from the accounting professionals, top management of companies, regulatory bodies, government and indeed all users of accounting services is essential in ensuring the sustenance of the campaign for ethicality in accounting practice.
Recommendation
- That extended audit tenure should be discouraged by corporate organization and regulatory bodies in Nigeria
- The composition of the Board of Directors and Audit Committees should be made up of people with corporate experience, proven integrity and financial expertise for member of audit committees especially the chairman.
- There should be more rigorous quality control measures by different audit firms and emphasize should be placed on quality monitoring by the professional accounting bodies in Nigeria.
- Accounting professional bodies should recommend that a harder punishment should be enforced on erring auditors in Nigeria as in other countries.
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