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Open Collection of Student Writing (OCSW)

Ethics in Accounting

Ethics are an important part of our day to day lives. Everyone has a set of ethics that they have developed since childhood. Those ethics become the basis for frameworks that we use to make decisions in our daily lives. Often, personal ethics become so ingrained in one’s psyche that decisions relating to these ethics don’t even make it to the conscious level. That is, we come to believe in our own ethical guidelines so deeply that our decisions and reactions are made subconsciously, rather than being deeply considered on a decision-by-decision basis. Ethics are important in business. A business itself cannot have ethics – it is the ethics of the people making decisions and taking actions that are important. A person’s actions can have far-reaching consequences for a business, and ethics are one of the factors that drive a person’s decision making.

The development of personal ethics begins in childhood. Children watch what their parents and other authority figures do, they look at the world around them, and they begin to construct a set of personal ethics. Those ethics are employed in the making of decisions – consciously at first, and eventually, almost habitually. Every part of a child’s rearing has some impact on that child’s ethical development. Religions often have an ethical component to them, as they try to teach what is right and wrong from a dogmatic perspective. Ethics derived from religion can have a rigid feel to them, as they’re usually dictated, rather than considered. Sometimes, religious ethics set out one set of behaviors that are acceptable with group members, and another set of behaviors that are acceptable for those who are not part of the group. Indeed, this happens in many situations – families can have a similar in-group/out-of-group ethical breakdown, as can environments like neighborhoods or societies.

Speaking of families and environments, these also have a great impact on a person’s ethical development. If survival is a very real question in a given environment, ethics will develop around the idea that survival is the most important thing, and all other considerations become secondary. However, if one is safe, healthy, and well-fed, ethical considerations can take on a lot more nuance. Family plays a large part in one’s ethical development as well. Perhaps someone is born into a family where the overriding belief is in winning at all costs – in that case, there may be no ethical dilemma when it comes to stealing, or lying, or what have you. If one’s parents are criminals, and they share that mindset with their children, that can certainly influence one’s ethical framework. To the contrary, if one’s parents are good, moral, ethical people, it is most likely that one’s own ethics will develop to mirror those behaviors.

Personal ethics are sometimes the last thing standing between someone making a decision that is detrimental to a company. If I have motive and opportunity, all that’s left is for me to rationalize a poor decision before I’m actively engaging in fraudulent activity. For example, imagine that I’m an accountant at a small business, and the owner of the company also allows me to cut checks. There may come a point where I’m desperate for money – maybe my child is injured, or my mother is deeply in debt – and I see that I have the ability to write a check to myself, and the ability to cover it up with a fraudulent entry in the ledger. At this point, the only thing preventing me from doing so is my own personal set of ethics. As this essay has discussed, there are so many things that go into the development of a person’s ethics that it seems to be remarkably difficult to screen for ethics when interviewing or hiring someone. The “is it okay to steal?” questions on certain applications seem to be testing how well one knows societal norms, rather than what one’s ethics truly are.

With all of that in mind, it becomes clear just how important ethics are to business, and just how important a solid set of internal controls are. With a good set of internal controls in place, a business is not forced to rely on its employees’ ethics alone. Ideally, employees aren’t put into situations where they could make an unethical decision, but if they are, the controls are there to check that and stop them.

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