Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICSabout flourishing and successful life. In all that a person does, thereare good reasons to take other people’s interests into consideration,otherwise, they will retaliate. A guiding principle appears to be thatone should be fair and seek to uphold the common good of the communityto which one belongs, in the spirit of duty of care to one’s neighbours.Also called moral philosophy, it involves systematizing, defending andrecommending concepts of right and wrong behaviour. As a branch ofphilosophy, is a systematic attempt to understand the nature andfoundations of morality and its effect on our conduct. It is a systematicstudy of the principles of good behaviour. Ethics is the reflectiveconsideration and evaluation of our moral beliefs and practices. It isconsidered a normative science, because it is concerned with norms ofhuman conduct, as distinguished from the formal sciences, such asmathematics and logic, and the empirical sciences, such as chemistryand physics.Finally it considers the question of justification, such as, what are thefoundations of morality? How do we know them to be true, or good, orright? It also involves questions of motivation, such as why should weobey the demands of morality? Or, what motivates us to behaveethically? It is concerned with norms and standards of conduct. Itsprimary focus is with what ought to be the case rather than merelywhat is the case. Thus, ethics is normative: it is concerned with how weought to act and what we ought to try to bring about6.2 THE NATURE OF ETHICS AND ITS FRAMEWORK FOR PROFESSIONALACCOUNTANTSANTSEthics, as a branch of philosophy, tries to address moral issues. Accountingethics is a subspecies or sub-set of business ethics. All disciplines or professionshave their moral codes, rules of conduct and standards of behaviour. In view ofthe moral obligation of social responsibilities of companies, majororganisations now demand business ethics consultants and indeed set up ethicscommittees in the quest for “acting decently while pursuing economicobjectives.”However, W. Michael Hoffman puts the moral dilemma of companies in thisway, “clearly, the ethical thing to do is not always in the best interests of thefirm.” If a company has its way, it will rather declare small figure of profit, soas to remit minimal or no tax and pay mere pittance to employees. How arethe professionals, indeed accountants, manage moral conflicts which confrontthem time and again? How are they to retain their integrity? In trying to answerthe questions raised, one consolation is available. Pursuing ethics in accountingis likely to bring about clearer and logical reasoning, leading to actingintelligently. Complete rationality demands that a thoroughbred professional116