Ethical Issues in Accountancy Essay Example | Topics and Well Written Essays - 2500 words

Ethical Issues in Accountancy - Essay Example The growth of corporate visibility and influence has led to their owning ethical and moral responsibility for their products and actions and consequences thereof on society and individuals. Corporations have been accused of accounting fraud, insider trading, executive over-pay, declining pension funds or in general of corporate 'greed' and 'irresponsibility'. The 1998 OECD guidelines for multinationals lay down responsibility towards human rights, the environment and elimination of child and forced labour. OECD code 2000 is 'the reflection in management practice of various legal, regulatory and social pressures that motivate the company to prevent abuses of market power and to redress other sorts of market failure' (OECD, 2001) Business is faced with a challenge to improve creation of wealth for its shareholders and at the same time to meet requirements of the changed perceptions of social and ethical responsibilities, which in the short-run perspective, might not be compatible. However, with the change in stockholder awareness and scepticism, the company is also being tasked to meet its social and ethical obligations. A specific instance is the negative impact of a company's product on the community and how far is the responsibility to be laid at the doors of management when the cause of the impact might have been due to a product marketed decades back and especially when scientific awareness of the negative impact was not known. ... d examine the different issues involved in the above circumstances, especially in light of the behaviour of James Hardie Industries who were involved in a case based on the negative affect of the use of asbestos in its products, and how these impact the ethical issues in accountancy. Literature Survey Literature survey in this research is targeted at the impact of new requirements of ethics and social responsibility accounting on the basic principles of accountancy and audit functions as well as the literature available on the John Hardie Industries case. These are given as Sections I and II respectively below: Section I Changing expectations and skepticism of the stakeholder, places pressure on companies to accept moral responsibility for the negative impact of their products on the community even though the claims may arise from operations many decades ago. Society is increasingly suspicious about the moves by corporations to avoid their responsibilities, which eventually leads them to bowing to pressure from a society skeptical of their protests of innocence and pretence of compassion for those who have suffered from their activities. The question therefore arises as to how far management is responsible for the negative impact of their products on the consumer and society. "Having a corporate conscience means that a company takes responsibility for its actions just as any conscientious individual would be expected to do. In corporate terms, this means that a company is accountable to the public for its behaviour not only in the complex organisational environment but in the natural physical environment as well. A company is thus responsible for its products and for its effects on the public". (Guerrette, 1986, p 410) It is thus essential that companies disclose