When we are dealing with other people's money as their accountants, we need the highest level of ethics in our accounting. These people trust us to manage and protect their assets that provide their family with a living.
Point being, if the accounting ethics are not present in the accounting relationship, the chances of your business being fruitful goes down dramatically. Integrity and honesty go a long way in the success of your business.
In 1494, the "Father of Modern Day Accounting", Luca Pacioli, wrote about accounting ethics in his first book published where he developed a framework of rules to raise the level of integrity in the accounting profession.
Since then, ethical standards have been developed by various groups to ensure the implementation of and compliance to the code of conduct. These groups are government, professional, and independent in nature.
In the U.S., there are accounting associations such as the American Institute of Certified Public Accountants, National Association of Accountants, Association of Government Accountants, and Institute of Internal Auditors that, as members, the accountants need to abide by the code of ethics and become a true professional at their craft.
Simply put, accounting ethics are the laws and rules surrounding accounting that have been developed by these sub groups to create trust in the numbers given in any type of accounting record.
As a business owner, to bring your own comfortability into focus, your accountant should be able to grasp the laws of your organization, comprehend standard accounting rules, and understand the basic accounting principles before you can trust this person with such a important part of your business, and life.
As an accountant, I must adhere to a code of ethics set out by these different subgroups. But more importantly, I am here to serve my client and that means that these ethics should be no brainers.
Accounting Ethics
These different associations have developed accounting ethical principles that only differ based on the type of accounting that is being done, but are founded in standards that are pretty hard to argue with.
Public Interest
For any type of accounting work, all activity should be in line with the public's best interest. An accountant is the ultimate last line of defense against fraud and major errors in the accounting which can affect the public at large.
Integrity
All work should be done with an honest thought process in order to give a fair and accurate assessment of the accounting information. In other words, there should be no playing favorite or demonizing a company...the accounting simply needs to be correct.
Objectivity
All accountants will be objective to allow for independence in their assessment of the entity they service. There should be no conflicts of interest and attack the accounting work with an impartial approach.
Confidentiality
Accountants are trusted with very private information which has the power to damage a client. At all times, any information pertaining to the client, financial or non-financial, needs to be kept completely confidential.
Professional Competence and Behavior
Accounting capability is the cornerstone of all financial data. If the accountant is not competent in their profession, how can someone rely on the financial statements?
Secondly, the behavior of the accountant should exude professionalism in behavior and appearance. Something as simple as what you wear can break trust with a client.
Notice how the 5 points above all lead to one thing, trust. Your client's trust will only expand when they are able to witness these characteristics in the accountant.
Trust in the fact that the accountant knows what they are doing and will act accordingly. Trust that an honest person is safeguarding the assets of the company and can maintain a sense of objectivity over the financial information. Trust that the client's information isn't going to be spread all around town putting them at risk. And trust that accountants are looking out for people in general.
Accounting ethics are important to the success of your business because it's the bedrock of the information you are using to make financial decisions.
If you are looking for an accountant to entrust your business to, please make sure to do as much due diligence as possible to make sure this person is who they say they are and have done what they say they have done. Take the time to really interview the individual and see where their accounting ethics are.
Selecting an accountant with, not only talents, but strong ethics included, can really help transcend the business success that you may have thought unattainable before.
Blue Collar CFO