Melbourne Institute of Technology Pty Ltd CRICOS Provider No: 01545C, 03245K NSW Assessment Details and Submission Guidelines Course Name: MPA Unit Code: MA619 Unit Title: Accounting Research...

Running Head: ETHICS IN ACCOUNTING        1
ETHICS IN ACCOUNTING        4
A STUDY EXPLORING THE ETHICS IN ACCOUNTING IN AUSTRALIAN FIRMS
(DISSERTATION)
Abstract
This research paper focuses on ethics in accounting in Australian firms. Ethics and accounting has been discussed in detail to ensure proper understanding of the topic. The aim of the research is to see the effect of ethics in accounting in Australian firms. One of the key objective of the research is to evaluate the importance of ethics and application of the same across various Australian firms. The managers of the companies can imbibe the ethical code of conduct in the organisation. The frauds can be avoided by ensuring that the professionals follow the relevant accounting standards and apply ethics in accounting. Training can be imparted to the accounting professionals to provide them sufficient knowledge about the application of ethics in accounting.
Acknowledgement
I would make use of this opportunity to thank my mentor and professor ___________________, who has been with me as a strong guiding strength throughout the completion of this dissertation. Besides, I would also want to thank my friends, who have been a great support to me. Besides, I would thank my parents for their love and encouragement. Last but not the least, I would show my gratitude towards the Almighty for His Blessings in my live.
Thanking you all.
_____________________
Table of Contents
Chapter 1: Introduction    7
1.0 Introduction    7
1.1 Background of the Research    7
1.2 Research Rationale    7
1.3 Research Aim    8
1.4 Research Objectives    8
1.5 Significance of Research    8
1.6 Structure of Dissertation    9
Chapter 2: Literature Review    10
2.0 Introduction    10
2.1 Concept of Ethics    10
2.2 Significance of Ethics in Business World    10
2.3 Factors Contributing towards Maintenance of Ethics and International Ethical Standards    10
2.4 Factors Contributing to Violation of Ethics    11
2.5 Theories related to Ethics    11
2.6 Ethics Decision-Making Model    11
2.7 Concept of Accounting    12
2.8 Significance of Accounting in Business    12
2.9 Ways of Implementing Accounting in Business    12
2.10 Factors Regulating Implementation of Accounting in Business    12
2.11 Basic Accounting Principles    13
2.12 Analytical Model of Ethics for Accounting    13
2.13 Applications of Ethics in Accounting    14
2.14 Importance and Role of Ethics in Accounting    14
2.15 Ethical Codes in Accounting    15
2.16 Ethical Dilemmas and Challenges    15
2.17 Major Accounting Scandals and Ethical Issues facing Accounting    15
2.18 Gaps in Literature    16
2.19 Conceptual Framework    16
2.20 Summary    16
Chapter 3: Research Methodology    17
3.0 Research Outline    17
3.1 Research Philosophy    17
3.2 Research Approach    17
3.3 Research Design    17
3.4 Research Type    18
3.5 Data Collection and Analysis    18
3.6 Ethical Considerations and Accessibility Issues    18
3.7 Timeline    18
3.8 Reliability and Validity    18
Chapter 4: Research Question    19
Chapter 5: Data Analysis    20
5.0 Introduction    20
5.1 Thematic Analysis    20
5.1.1 Accounting Regulation in Australia and Evolution of Ethical standards and the accounting practices    20
5.1.2 Inaccurate Documentation of Accounting Records    21
5.1.3 Misinterpretation of Accounting Records    21
5.1.4 Fraud Cases in Australia    21
5.1.5 Motive behind Ignoring Accounting Ethics    22
5.2 Summary    23
Chapter 6: Conclusion    24
6.0 Conclusion    24
6.1 Linking of Aims and Objectives of the Research Findings    24
6.2 Recommendations    24
6.3 Limitations of the Research    25
6.4 Future Scope of the Research    25
References    26
Appendix    29
Chapter 1: Introduction
1.0 Introduction
Ethics is of high importance in the modern business scenario. Managers try to implement ethics across all business function, including accounting. In the research work, the topic of the research is ‘Ethics in Accounting’. Ethic has been gaining due importance in the field of accounting and there is a requirement to discuss the same, keeping an eye on the increasing frauds in modern times. The topic tries to contribute towards the question that ethics is important in accounting or not. Rather than focusing on ethics as a whole, this research focuses on the importance, application and benefits of ethics in accounting.
1.1 Background of the Research
As stated by Gunz and Throne (2018), in the modern times, ethics has gained huge importance in the corporate sector. All the companies portray a healthy image of them to gain the trust of the stakeholders. In order to guide individuals during ethical dilemmas, the regulatory bodies to have framed various code of ethics. Ethics in accounting has been gaining due importance after the increasing number of frauds. The frauds related to manipulation of the books of account to increase the profits of the company. The corporate arena is moving from profitability approach to stakeholder’s approach. The same requires ethics to be imbibed in the core value of business.
The Australian corporate sector has witnessed number of frauds, aimed at satisfying the personal greed of few individuals, especially the senior-most officials of the company. According to the opinion of Christy and Dinah (2018), due efforts are being made by various accounting professional to develop a system to prevent such frauds. In order to ensure that the financial statements of the organisation present a true and fair view of the entity, the regulatory body has mandated audit by third party. Various accounting standards have been farmed to enable the professional in co
ect accounting. The accounting standards followed in Australia align with the requirements of the International Financial Reporting Standards.
1.2 Research Rationale
As noted by Stephenson (2017), in the modern times, ethics is at the forefront of all business activities. Management are trying to imbibe ethics in the culture of the organisation. A lot of money is spent towards training the employees to be ethical. The regulatory bodies to ensure ethics in business activities have framed rules and regulations. The companies are focusing on ethics, but the number of frauds related to accounting has increase in the modern times.
Profit is the core aim of any business. However, ethics is being sidelined by the managers as the focus is only on profit. Ensuring ethics in the organisation culture is the only way of success in the future times. The companies are implementing ethics just for the sake of implementation. The motive of the managers is still to increase profit anyhow. The Australian accounting standards have been developed to help the managers in preparing and presentation of accurate accounts of the business.
According to the opinion of Feil, Diehl and Schuck (2017), even after growing importance of ethics, the number of frauds are increasing, which is an alarming signal for the industry. Frauds not only affect a single company, but the whole industry and the economy. The trust of the investors is shattered, due to which the whole industry seems to suffer. Most of times, the manipulation is done with the discretion of the senior management. The same is done to avoid the decreasing profitability of the business or other similar issues.
This research would shed light of the prevalence of ethics in the companies of Australia. The Australian accounting standards have been developed to help the managers in accurate accounting. The regulatory body has mandated following the accounting standards. Abiding by the ethical code of conduct will enable the companies to build a strong image in the eyes of the investors, which will help the company in the end.
1.3 Research Aim
The aim of the research is to understand the concept of ethics and its importance in the modern times along with critical evaluation of the importance and application of ethics in accounting and suggesting measures for ensuring co
ect application of ethics in the domain of accounting.
1.4 Research Objectives
· To understand the concept of ethics and its importance in the modern times
· To evaluate critically the importance and application of ethics in accounting across various Australian firms
· To suggest suitable measure to ensure the application of ethics in accounting in the right manne
1.5 Significance of Research
The cu
ent research would ensure a detailed discussion of the requirement of ethics in accounting in the modern business. Due attention will be paid towards both the positive and negative side of the topic. This research work would also enable the further researchers to gain information about the topic for further research. Discussion of the research topic will make it easy for the readers to understand the topic and use the data in an apt manner. The study would enable the readers to understand the ethical principles, models in detail along with application of the same in accounting.
1.6 Structure of Dissertation
Figure 1: Structure of Dissertation
(Source: Researcher)
Chapter 2: Literature Review
2.0 Introduction
This chapter of the research deals with the concept of ethics and accounting. The application of ethics in accounting and the ethical dilemmas have also been discussed in the later part of the chapter. The major accounting scandals along with the analytical model for ethics in accounting profession have also been discussed.
2.1 Concept of Ethics
Ethics can be refe
ed to as the moral principle that guides an individual in deciding what is right or wrong. According to Fe
ell and Fraedrich (2015), in the modern times, huge importance is given to ethics as it enables the individual in deciding the right course of action just by thinking what is right or wrong as per the situation. Honesty, integrity and similar values are the main pillars of ethics. In the business, ethics is given due importance to ensure that the image of firm. This enables the firm to meet the expectations of the stakeholders and increase the value of all stakeholders.
2.2 Significance of Ethics in Business World
Ethics play an integral role in driving the internal and external parts of the business. Organisation following ethical practices faces les legal issues and is prefe
ed by the customer. According to Kolk (2016), ethics enables an organisation to build and retain a positive image of the organisation in the market. Abiding by ethical norms enables the organisation to meet its commitments to the customer, which increase the satisfaction level of the customer. There is a positive working environment for the employees, which helps them in attracting and retaining talented professionals. It also attracts the investors, which enables the firm in keeping the price of its share high in the stock market.
2.3 Factors Contributing towards Maintenance of Ethics and International Ethical Standards
A number of factors contribute towards maintenance of ethics in business such as personal code of ethics of managers and employees, ethical codes of the company and government rules and regulation. As stated by Chell, Spence, Pe
ini and Ha
is (2016), the personal code of ethics of managers and employees is the result of the complex environment, which influences the life of an individual. If the leaders behave ethically at workplace, there is an ethical environment at workplace.
The ethical codes of the company enable the employees in deciding the right course of action, which help in development of ethical culture. As noted by Rhodes (2016), the policies of the company also affect the ethical culture. If there is high focus on profits only, then the ethical culture is negatively affected. The ethical climate of the country influences the competition in the industry and the chances of the companies going bankrupt. Organisation operating in countries such as Japan and other seem to be ethical.
2.4 Factors Contributing to Violation of Ethics
Factors that contribute towards violation of ethics are no code of ethics, impact of peer influence, unethical behaviour of leaders, fear of reprisal and others. If there is no code of ethics in the organisation, then there seem to be no guiding principle for the employee. In addition to that, it is believed that what everyone is doing is right. Therefore, as commented by Pullen and Rhodes (2015), if everyone is involved in unethical practices, then it seems to be very normal, which leads to unethical behaviour. If the leaders are involved in unethical behaviour, it imbibes such behaviour in employees also. The employees tend to follow leaders, so unethical behaviour on the part of leader leads to unethical behaviour at workplace. Fear of reprisal also leads to adoption of unethical behaviour. For example, people do not report unethical behaviour with the fear of reprisal or losing job. Such an act supports unethical behaviour at the workplace.
2.5 Theories related to Ethics
The theories of ethics are as follows:
Deontology: The deontological class of ethical theories states that an individual should adhere to his duties and obligations when engaged in decision making when ethics are in play. As stated by Rhodes (2016), upholding one’s duty is ethically co
ect therefore, one should act as per his duties and responsibilities.
Utilitarianism: This theory states that the course of action that leads to greatest benefits of most of the people should be chosen. The action that provides benefits to the largest number of people is the most ethical action as per this theory (Chell, Spence, Pe
ini & Ha
is, 2016).
Rights: As per this theory, the actions, which are right as per the society, is the most ethical action. It is believed that the views of the society should be protected and should be given the highest priority.
Virtue: Pullen and Rhodes (2015), the virtue theory judges an individual by his character as the action can be changed for a particular period, which can deceive the other individual. The reputation, image and other factors are considered while judging the actions of an individual.
2.6 Ethics Decision-Making Model
As analysed by Ling and Hauck (2017), the ethics decision making model can be described as:
E- Evaluation of the dilemma: It is the most critical aspect of the ethical model. It provides the justification and framework for application of the model.
T- Thinking ahead: It requires identifying the various option available as per the situation.
H- Helping others: It is important to receive the help from others such as consultants, seniors, peers or others
I- Information based decision-making: It involves knowledge of laws, literature and regulation.
C- Calculation of risk: It involves the computation of risk with each option available.
S- Selection of the right course of action: This is the final step, which involves taking a decision based on information and risk criteria.
2.7 Concept of Accounting
Accounting is the process of identify, classifying, recording and analysing the financial events related to an organisation. Accounting is of prime importance in any organisation, i
espective of the industry, in which it operates. According to Staneva (2018), in the modern time, double entry system of bookkeeping is followed by organisations across the globe. It is on the basics of any business and the process can be undertaken by any professional having relevant knowledge of accounting and the related accounting standards. Accounting can further be divided into cost accounting and management accounting. The final output of the accounting process is the income statement, balance sheet, cash flow statement and the notes to accounts.
2.8 Significance of Accounting in Business
Accounting is one of the vital activities of an organisation. It helps in evaluating the performance of the business along with effective management of cash flow. As commented by Schaltegger and Bu
itt (2017), it helps in gaining information about the cash flow of a business, the profitability and the position of business on a particular day. It helps in meeting the statuary compliance along with budgeting and future projections. It helps in filing the financial statement with the stock exchanges, regulatory and other bodies. It helps in generation of reports such as receivables report and others, which help in effective usage of funds as well as management of operations of the entity.
2.9 Ways of Implementing Accounting in Business
In the modern times, accounting is very important for a business. Effective implementation of the same is also vital. As noted by Gao, Yang, Yang and Liu (2016), the accounting system can be manual or computerised depending on the requirement of the business. The accounting system can also be single entry or double entry system of accounting. Implementing of an accounting system requires selection of the system as per the requirements of the business. The next step is to identifying a professional to gain insights about how to use to system.
According to Lang, Macfadyen, Slade, Prinsloo and Sclater (2018), creation of a budget and timeline is also essential for implementing the chosen accounting system, along with testing the accounting system in the business for a while. If the same suits the needs of the business, there is a...