Its all about ethics which we have forgotten: FAIRNESS BY DR NAZIR AHMAD GILKAR The language of business is accounting that enables to run the business operations effectively. Accountants are analytical people with reason and logic as their tools. Accounting does not measure quantum of money a company has, and instead it assesses the financial health of a business as an on-going concern. The unsettled nature of debits and credits mystified. Accounting seemed a most unromantic subject till yesteryears. Accounting in general as many people consider is the act of counting money in terms of income and expenditure. Accounting now compares favorably in its pursuit of truth with many more prestigious academic fields of study particularly in the social sciences. The different branches of accounting are financial accounting, corporate accounting, cost accounting, management accounting, tax accounting, contemporary issues in accounting, etc. Thus, accounting has now emerged as an independent academic discipline and a branch of knowledge. The three pillars on which the structure of accounting is based on are transparency, ethics, and accountability. The force behind transparency are values; whereas law governs disclosure. The former is a voluntary affair and the latter a mandatory one. Transparency has close proximity with or is the outcome of values and good practices. Corporate citizens need to evolve through education to such a level that every piece of information is shared willingly and voluntarily for the benefit of all stakeholders. The discipline of accounting insists on that transparency is achievable. Fairness has an important role in the practice of accounting. Accordingly it seems appropriate that philosophy as a relevant way of understanding truth and fairness in accounting is well considered. Some authors have already underlined the key role played by philosophy in accounting such as social justice, ethical conscience, economic entitlement etc. Thus concepts like fairness, justice, equity, and truth have a due place in accounting. The appropriate application of accounting standards is not always obvious. The guiding principle is that financial statements should enhance the visibility, rather than obscure the financial status of the firm. The philosophy of accounting is that the theoretical underpinning for the practice of preparation of accounts and financial statements includes the use of ethical standards and practices preferably best practices. It seeks to establish a good triangular connect in- the fair and true value of the object in question, the moral basis of disclosure and discretion (Accountants judgment ), the standards and laws required to satisfy the needs of stakeholders via :investors, employees, suppliers, customers, government, society etc. The financial statements record revenue, profits, and cash flow (in and out) of a corporate entity. Any of these measures can be manipulated to deceive investors or other stakeholders. When accounting is in news, it is often negative; such as the accounting scandals / frauds that bubbled to the surface. The social and ethical questions crop up in different domains of corporate functioning. Ethical deficit in accounting practices may lead to creative accounting related transactions that result in insider trading , financial market manipulations, tax evasion, stakeholder exploitation, higher compensation package (CE) etc. The fact of the matter is that much of philosophy is concerned with morals and ethics. Accounting is all about or should be all about – ethical accounting of business transactions. The current malaise in the financial markets shows that ethics have not been as prominent as these probably ought to have been in the minds of many people. Numerous scandals and corporate frauds in the late 1990s and 2000 seem to add credence to the criticism of corporate governance and accounting practices
Posted on: Tue, 13 Jan 2015 09:38:38 +0000
Recently Viewed Topics
© 2015