Homework Answers – Accounting Ethics and Sustainability

Homework Answers – Accounting Ethics and Sustainability

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Part A
Ethical issues essay
An ethical dilemma can be rightly identified as a situation which involves problem
solving and decision making whereby the ethics of a particular scenario has been
compromised in a critical manner (Bayou , Reinstein and Williams 2011 ). Here the particular
individual is essentially faced by two different scenarios and they are required to engage in a
right choice w hich will lead to a better situation for the enterprise and the stakeholders
involved. Hence, the primary focus of the given essay is to critically identify and understand
the way in which the accountants are essentially faced by two different ethical dilemmas and
the related parties which are affected in the situation. In line with this, the impact of such
issues on accounting and the key way in which they would compromise the fundamental
prin ciples of accounting would also be discussed. The threats to compliance would also be
listed critically.
Ethical dilemmas
According to Fleming (1996 ), the first ethical dilemma which is being highlighted in
the literature can be stated to be associated wi th the misstatement of facts. In this context, the
accountant would be pressurized by the senior management to engage in stating the incorrect
profits so that they would be able to benefit from the incentives which are largely based on
the profits. This is a very common practice which takes place in the domain of accounting
and business whereby the accountants are often pressurized to misstate the profits and make
them appear to be higher than they actually are. Once they are engaged in this, it generally
tends to affect several stakeholders and related parties.
Another common ethical dilemma issue which takes place in the domain of
accounting may be the conflicts of interest (Gaa and Thorne 2004 ). The conflicts of interest
may be identified to be a comple x situation whereby the enterprise or the accountant is
having a personal stake in the business and at the same time providing accounting services
for the same. In such a context, the accountants may be lured to keep the financial statements
perfect even w hen they are not in consideration with their stake.
Facts about ethical dilemma 1
Some of the key facts in relation to the first ethical dilemma may be stated that it
tends to involve several; stakeholders in the field. For instance, if the profits are mis stated
then the owners of the company, the stockholders, investors, government, public and the
employees are affected. According to the Stakeholders theory, all different stakeholders are
requi red to have the complete information about the financial transp arency and in this ethical
issue, the senior management is involved in manipulating the financial declaration for their
own incentives, is not being true to the other stakeholders (Jaijairam 2017 ).
This ethical issue also has the overall capability to impact the overall profession of
accounting as the accounting as a field is required to be involved in integrity and
transparency alongside objectivity towards all stakeholders involved and in a scenario they
are forced to manipulate the fig ures they might end up compromising on one of the given
principles of accounting. These ethical issues are also bound to impact the public interest in
consideration of the fact that they may not get a clear image about the performance of the
firm which ma y thereby misguide the different individuals as involved such as investors and
customers about the overall positioning of the enterprise at large.
If compliance is intended to be carried out with respect to the ethical principles such
as Integrity and obj ectivity, there may be threats associated with the poor incentive earning of
senior management which may thereby make them change the accounting services company
and the accounting enterprise may lose out on their business due to the particular reason.
Hen ce, these threats are self -interest and self -review (Klimek and Wenell 2011 ). However, to
avoid such an issue, considerations in the domain of ensuring that no manipulation takes
place and in case any such requests are placed, the accountant would be requ ired to complaint
to the board of ethics and comply by all regulations. Whistleblowing and involving
regulations is critical.
Facts about ethical issue 2
The parties as involved in the ethical consid erations related to the conflict of interest
may involve the investors as well as the public, government and all related customers and
employees. All investors and customers greatly expect that they would be provided with a
clear image about the overall performance of the enterprise which represents the actual
performance. However , if the accounting service provider has a stake in the performance, he
might not reflect on issues which are of critical importance and this may thereby influence
the overall accountability and integrity of the enterprise to a greater e xtent (McNair and
Milam 1993) .
For instance, there is a high risk involved in the particular business or the enterprise is
under debts, this may reflect on the overall performance in the stock market which would also
influence the earnings. In relation to this, if the accounting service provider also has a stake,
he may not want this information to be out and hence, this may not only affect the firm’s
image but the overall profession of accounting as well. In this context, it becomes evident to
note the fa ct that if such services are being provided by the accounting team, then they are not
abiding by the principles of accountancy (Onyebuchi 2011 ).
If the accountant abides by the principles of confidentiality, professional behaviour
and objectivity, then th ey may interfere with his personal stake in the firm. The threats may
be self -interest and advocacy. Hence, the enterprise must hire the accounting service with no
stake in the firm (Thomas 2012 ).
Hence the essay outlined the key way in which ethical issues affect the domain of
accounting and how it may lead to negative influences for the enterprise at large. In addition
to this, it is also relevant to understand that the accountancy needs to follow principles of
integrity and transparency for successful engagements.
Bayou, M.E., Reinstein, A. and Williams, P.F., 2011. To tell the truth: A discussion of issues
concerning truth and ethics in accounting. Accounting, organizations and society , 36 (2),
pp.109 -124.
Fleming, A.I., 1996. Ethics and accounting education in the UK — a professional
approach?. Accounting Education , 5(3), pp.207 -217.
Gaa, J.C. and Thorne, L., 2004. An introduction to the special issue on professionalism and
ethics in accounting education. Issues in Accounting Education , 19 (1), p.1.
Jaijairam, P., 2017. Ethics in Accounting. Journal of finance and accountancy , 23 , pp.1 -13.
Klimek, J. and Wenell, K., 2011. Ethics in accounting: an indispensable course?. Academy of
Edu cational Leadership Journal , 15 (4), p.107.
McNair, F. and Milam, E.E., 1993. Ethics in accounting education: What is really being
done. Journal of Business Ethics , 12 (10), pp.797 -809.
Onyebuchi, V.N., 2011. Ethics in accounting. International Journal of Bu siness and Social
Science , 2(10).
Thomas, S., 2012. Ethics and accounting education. Issues in Accounting Education , 27 (2),
pp.399 -418.
Part B
Sustainability issues essay
Sustainability can be identified to be a critical concern of business which is largely
involved in conservation of capacities and resources to bring about the best results for the
enterprise at large. It is important that the business is being able to carry out sustainable
operational efficiency in all fields and more so in the field of accounting (Burritt and
Schaltegger 2010 ). This is because, the field of accounting is largely crucial for the business
and ensures that the stakeholders can be given a complete idea about the firm’s positioning.
Hence, the given essay will outline the two main sustainability issues which affect the
business with special respect to the field of accounting and underline how resolving these
issues is of critical importance.
Sustainability issues
Issue 1
Wage inequality
There exists a consider ate level of wage inequality in the society. This means that the
different regular employees as involved in the workplace are often concerned about the
difference in wages being paid to them and being paid to the CEO’s and CFOs is great.
Hence, the different employees as involved are greatly concerned with the wages being paid
to them and hence, might not be satisfied with the large scale inequality which may exist
within the enterprise (Gray 2010 ). Millennials and Generation Z as involved in the
workplace are generally required to be concerned with the overall sustainability and ethical
considerations of a firm and hence, when they are paid less, they tend to object to this issue.
Sustainabil ity involves the practice of measuring, analysing and reporting the firm’s social
and environmental impacts and in this regard, it is evident to understand and identify that the
employees formulate the social aspect of the firm and their consideration must be engaged in
a crucial manner to ensure that all related aspects and engagements are being abided by
(Hopwood and Unerman 2010 ). Recently, it was discovered that Woolworths in Australia
had been underpaying the different employees for years and has eng aged in large scale
inequality with respect to the enterprise’s pay scale. Hence, this has not been considered valid
from sustainability point of view.
The key solution to the given problem may be identified as equalising pay scales and
paying as per the workload and experience. Several low level employees although more
experienced and engaging in higher work quality and quantity need to be paid as per th e
value which they are generating in the context of the workplace (Ivan 2009 ). In this concern,
it is evident to consider the fact that when such employees are paid less as per the market
standards and new CEOs with less experience and no contribution are being paid very high
may lead to high scale dissatisfaction within the contex t of the enterprise. This may also
affect talent acquisition in the case of the enterprise and the firm might not be able to hire the
right kind of employees due to this gap (Kraten 2014 ). Hence, all wages paid to the different
employees must be regulated and reviewed on a regular basis so as to ensure that the best
solution is available for the different employees as present in the firm.
Issue 2
Environmental accounting
The second issue which is being faced in the context of sustainability in the domain o f
accounting may be identified to be associated with environmental accounting. In this context,
it is evident to outline that the environmental accounting may be identified as a field of
accounting which is largely involved in ensuring better results for t he enterprise by narrating
the environmental activities which are being carried out by the enterprise at large (Jasch and
Lavicka 2006 ). Here it is critical to outline that all accountants would now be required to
work on the environmental impact of the company in terms of energy used, carbon emissions
and related engagements which they undertake on a regular basis. This can largely be
categorized as an issue pertaining to the fact that it is oft en difficult to quantify such issues
and it may lead to misstatements and errors (Maas, Schaltegger and Crutzen 2016 ).
However, mitigation of the same may thereby lead to several issues in terms of sustainability
and environmental laws.
As a sol ution to this, the enterprises would be required to ensure that they engage in
suitable accounting whereby the resource use, measures and costs of the impact on the
environment is being communicated to the public. Hiring an environmental accountant here
mi ght be useful as they might have a complete idea on how to manage the environmental
costs as related to the business and how to follow the Environmental protection Agency laws
well (Thomson 2014 ). This will not only mitigate any issues being strongly assoc iated with
the communication but at the same time, is bound to bring about better opportunities in
relation to the sustainable development.
Therefore, the essay has outlined the key sustainability related issues which may
essentially be faced by an enterprise during their regular course of operations. The issues
have been discussed in detail and alongside, the solutions for the issues have also been
Burritt, R.L. and Schaltegger, S., 2010. Sustainability accounting and reporting: fad or
trend?. Accounting, Auditing & Accountability Journal .
Gray, R., 2010. Is accounting for sustainability actually accounting for sustainability… and
how would we know? An exploration of narratives of organisations and the
planet. Accountin g, organizations and society , 35 (1), pp.47 -62.
Hopwood, A.G. and Unerman, J. eds., 2010. Accounting for sustainability: Practical insights .
Ivan, O.R., 2009. Sustainability in accounting -basis: A conceptual framework. Annales
Universitatis Apule nsis: Series Oeconomica , 11 (1), p.106.
Jasch, C. and Lavicka, A., 2006. Pilot project on sustainability management accounting with
the Styrian automobile cluster. Journal of Cleaner production , 14 (14), pp.1214 -1227.
Kraten, M., 2014. Sustainability -The Acc ounting Perspective. Your industry. One source .
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability
assessment, management accounting, control, and reporting. Journal of Cleaner
Production , 136 , pp.237 -248.
Thomson, I., 20 14. Mapping the terrain of sustainability and accounting for sustainability.
In Sustainability accounting and accountability (pp. 15 -29). Routledge.

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