RUNNING HEAD: ETHICS ARTICLE REVIEW
Ethics in Accounting
Ethics in accounting has faced increased scrutiny since the collapse of the Enron Corporation. In December 2001, the Enron Corporation shocked the world when its accounting firm, Arthur Andersen, was accused of failing to abide by the Generally Accepted Accounting Principles (GAAP); a widely accepted set of rules, conventions, standards, and procedures for reporting financial information, as established by the Financial Accounting Standards Board (FASB). In other words, the accounting firm of Arthur Andersen utilized unethical accounting practices to hide company debt. Senior officers within the Enron Corporation were allowed to cash out stock options while employees' 401(k) accounts were frozen. Employees of the Enron Corporation were assured of financial stability, yet Enron declared bankruptcy shortly there after (Baset, 2002). Arthur Anderson accountants and officials within the Enron Corporation decided to waive a code of ethics because of the potential interference with making a profit. As we have seen with many corporations such as Enron, Tyco, and WorldCom, good ethics does not always account for good business.
Ethics as related to businesses is used as a guide to direct individuals to follow a code of conduct to assist in increasing and maintaining public confidence in their products and services (Baset, 2002). Ethics also serves as a foundation on how to function, live and work within society. Those who chose to practice accounting and financial management are obligated to maintain the highest standards of ethical conduct. However, individuals involved in accounting, auditing, and financial management, are faced with ethical dilemmas, due to being unclear as to ethical standard ...