Accounting and auditing in
What is the role of an accountant/auditor?
A person authorized to conduct financial examination and verify an organization’s accounts and accounting records.
Importance of audit systems to organizations
Minimizing cost of capital
Achieving the set objectives
Obtaining a reliable financial report
Preventing misappropriation of assets
Types of audits
a code of conduct or practice of behavior that discourages false or intentionally inaccurate accounting practices.
Financial data compiled by auditors are used to make important business decisions.
Eg, 1)used by gov’t to make laws
2)whether to make certain investments
Auditors must follow guidelines set for professional conduct.
What is Ethics?
Classification of ethical theories:
Adapted from: https://image.slidessharecdn.com/businessethics-ethicaltheory
Ethical theory cont’
It is the process of justifying an action, both reasons that support and are against the action must be reviewed in detail.
One way of basing the justification of the action is through asking questions (Duska,2011).
Questions that can be asked are:
Is the action valid?
What are the consequences of the action?
Is the action harmful?
Who will be affected by the action?(Duska, 2011)
The Basis of Ethical Theory
Pressure from management
Omission of accounting data and records
Effects of greed in business world
Adapted from: https://i2.wp.com/unitesiblings.org/wp-content/uploads/2014/03/ethics-morals-law-ivf.gif
Auditor as whistleblower
-they face ethical dilemma of whether to submit accounting violations or not to relevant authorities.
Primary Ethical Issues and Challenges
States that everyone ought to follow his/her own self-interest.
No one is obliged to pursue another person’s interest.
Egoism has two variants:
Ethical egoism falls under normative variant that promotes one’s self interests.
Ethical theories of Egoism
Based on a person’s ability to predict the outcomes of particular actions.
To a utilitarian, an ethically correct choice is the one with most benefits to most people.
Types of utilitarianism:
A lot of assumptions are made.
Ethical Theories of Utilitarianism
Emphasizes that individuals must stick to their duties and obligations whenever they engage in decision making that involves ethics.
Here, it involves following one’s obligation to another individual.
deontologists come up with very consistent resolutions.
Has several attributes and few flaws.
Assigning yourself to keep time always.
What is an imperative?
They command unconditionally.
Eg. Don’t default on loan repayment.
-even if you want to default and doing so serves your interest, you
may not default.
Connection between categorical imperatives and morality
-morality is based on categorical imperative
They determine the moral duties of an individual.
How categorical imperative work
The Categorical Imperative
Adapted from: https://owlcation.com/humanities/Immanuel-kant-and-the-catecorical-imperative
Categorical imperative continuation…
An individual is judged based on his/her character.
Factors considered when rating a person’s behavior:
Drawback: change in a person’s moral character is not considered.
Auditors must act responsibly and professionally whenever they offer their services.
Must offer professional services by presenting accurate and truthful assessment of the firm.
Characteristics of professional auditors
Independence and objectivity
Kass, H. D. (2007, june 26). Exploring agency as a basis for ethical theory in American public administration. International Journal of Public Administration, 12(6), 949-969.
Rachels, J. (2008). Ethical Egoism. In Reason & Responsibility: Readings in some Basic Problems of Philosophy, 532-540.
Ronald Duska, B. S. ( March 2011). Accounting Ethics (2nd ed.). Wiley-Blackwell.
Waller, B. (2005). Egoism. In Consider Ethics: Theory, Readings, and Contemporary Issues.
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Accounting and auditing in WeiserMazars.pptx