Get premium membership and access questions with answers, video lessons as well as revision papers.
a) Neither of these two characteristics (truthfulness and accuracy) has ever been cited by accounting experts as key components of financial information. This is because accounting experts recognise that there is necessarily too much estimation or approximation in accounting information and measurements and too many areas of judgement. This means that accountants cannot justify such fairly absolute terms of certainty and virtue as “accurate” and “truthful”. It is important to understand that the apparent precision or preciseness of accounting does not of itself guarantee accuracy or truth, or indeed even other preciseness of accounting does not of itself guarantee accuracy or truth, or indeed even other less absolute characteristics such as comparability, relevance and reliability.
b) Accounting ethics is primarily a field of applied ethics, the study of moral values and judgments as they apply to accountancy. It is an example of professional ethics. Accounting ethics were first introduced by Luca Pacioli, and later expanded by government groups, professional organisations and independent companies.
Due to the diverse range of accounting services and recent corporate collapses, attention has been drawn to ethical standards accepted within the accounting profession. These collapses have resulted in a widespread disregard for the reputation of the accounting profession. To combat the criticism and prevent fraudulent accounting, organisations and governments have developed regulations and remedies for improved ethics among the accounting profession.
The nature of the work carried out by accountants and auditors requires a high level of ethics. Shareholders, potential shareholders and other users of the financial statements rely heavily on the yearly financial statements of a company as they can use this information to make an informed decision about investment. They rely on the opinion of the accountants who prepared the statements, as well as the auditors who verified it, to present a true and fair view of the company. Knowledge of ethics can help accountants and auditors overcome ethical dilemmas, allowing for the right choice that, although it may not benefit the company, will benefit the public who relies on the accountant/auditor’s reporting.
marto answered the question on February 13, 2019 at 08:05