Accountability in the financial arena means that an individual or department is held responsible for the performance of a specific function.
“Essentially, they are liable for correct execution of a particular task, even if they may not be the one performing the task. Other parties rely on the task to be completed, and the accountable party is the party whose head will roll if the action is not carried out,” Investopedia explains.
Accountability is a serious matter with major implications for accounting practitioners. An auditor reviewing a company’s financial statement, for example, is responsible and legally liable for any misstatements or instances of fraud. Those performing other duties are also ultimately responsible for their output. Accountants must be careful and knowledgeable in their practices because even negligence can get them into major professional trouble.
Closely tied to personal accountability is the idea of ethical practice. By the nature of their jobs, accountants have access to highly sensitive financial and personal information. Because their work often involves hard-to-interpret monetary methods and regulations, accountants must also make judgment calls about the correct way to handle and report financial matters.
Handling these accounting ethical issues and others requires an unshakeable commitment to ethical practice from anyone in the accounting field. Veering from this path can bring accountants right back into the realm of accountability and its attendant personal, professional and legal perils.
Because of these and other complex challenges facing the accounting field, employers are increasingly looking for candidates with advanced degrees, such as a Master’s Degree in Accounting (MAcc). The University of North Dakota’s Master’s in Accountancy online offers a convenient path to this degree, which can put candidates on the road to reaping the many career benefits of accounting.
Common Ethical Dilemmas
A 2017 study from the Swinburne University of Technology in Australia offers a glimpse of the most common ethical dilemmas facing accountants. According to the professionals surveyed, 40.88% had encountered misleading reporting; 13.87% had uncovered fraud or tax evasion; 11.68% had encountered lack of transparency in accounting decisions; and 7.3% had experienced misrepresentation of expertise or outright cheating. Smaller percentages of practitioners reported issues such as overcharging of fees, bribery, favoritism/bias, a cover-up of accounting errors, misuse of funds and insider trading.
According to this study, a main concern of accounting professionals was the fear of losing objectivity in their judgment due to pressures from clients, employers or other stakeholders. Accountants were worried, in other words, about being pressured into unethical actions. Such pressure took many forms. In smaller firms, for example, fear of losing work sometimes led to subtle pressure to please clients in any way necessary. Young accountants at the beginning of their careers were also considered a vulnerable group because they could be more easily influenced into unethical behavior due to a perceived lack of choice or power.
Organizations such as the American Institute of Certified Public Accountants (AICPA) have put guidelines in place to alleviate such concerns. The AICPA is the primary body regulating the accountancy industry. As part of its oversight duties, the AICPA maintains an extensive document that lists the responsibilities of accountants, including accountability and ethics. In its most recent update, the organization lays out six core principles of ethical responsibility for certified public accountants (CPAs).
- Responsibilities principle. In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.
- Public interest principle. Members should act in a way that will serve the public interest, honor the public trust and demonstrate a commitment to professionalism. CPAs may encounter conflicting pressures from the various groups they serve but must act with integrity in resolving these conflicts. They should never forget that by fulfilling their responsibility to the public, the interests of all groups would be best served.
- Integrity principle. Members should perform all duties with the highest sense of integrity. Inadvertent errors and honest differences of opinion are understandable, but deceit and ethical wavering are not. An accountant should test all decisions and deeds by asking: “Am I doing what a person of integrity would do? Have I retained my integrity?”
- Objectivity and independence principle. Accountants should remain objective and avoid conflicts of interest. This behavior should be obvious to the people and organizations with whom they work. Accountants should avoid relationships that might appear to compromise their objectivity.
- Due care principle. Accountants should perform their duties with competence and diligence, always striving for excellence and keeping in mind the best interest of those for whom the services are performed.
- Scope and nature of services principle. Accounts should consider all five of the previous principles when determining whether to provide specific services in individual circumstances. Ethical considerations may limit the scope and nature of services to be provided.
A Common Sense Approach
These guidelines, while thorough and helpful, can be complex. The Swinburne University of Technology study boils down the elements of personal accountability and ethics in accounting to a few bullet points:
- Exercise moral courage
- Seek advice from peers
- Report issues to management
- Exercise professional judgment
- Be aware of issues
- Document issues in writing
- Uphold the public interest principle
By understanding the challenges inherent in accounting and adhering to these basic rules of practice, accountants can ensure that they are not tripped up by any accounting ethical issues—and will not be held personally accountable for any financial irregularities as a result.
University of North Dakota’s Master of Accountancy online degree
University of North Dakota’s Master of Accountancy (M.Acc.) online program helps students master accounting principles as well as related skills necessary for a successful and ethical career in accounting at the highest levels.
UND is accredited by the Association to Advance Collegiate Schools of Business International, which only recognizes about 30 percent of business programs in the United States. The Master of Accountancy online program offers both practitioner and fundamentals tracks. Coursework is done online, which allows busy professionals to study accountancy and earn their degree without disrupting their work or personal lives. For more information, contact UND today.
Accountability definition – Investopedia
Ethical practice – Investopedia
Common ethical dilemmas – International Federation of Accountants
Ethical responsibilities – American Institute of Certified Public Accountants
Bullet points – International Federation of Accountants