Ethical Considerations
Overview
Accounting only works if people believe the numbers. A bank lends against financial statements, an investor buys shares on the strength of reported profit, a tax authority assesses what is owed: every one of these decisions assumes the accountant has been honest and careful. That trust is fragile, and once broken it is very hard to rebuild, which is why the profession takes ethics so seriously.
In this lesson you will learn why accounting needs an agreed ethical framework, and you will meet the five fundamental principles that framework is built on: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. You will see what each one looks like in practice, what it forbids, and why it matters so much to the stakeholders and to society who rely on accountants to do the right thing even when no one is watching.
Objectives
- the need for an ethical framework in accounting.
- the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
- the significance to stakeholders and society of applying an ethical framework.
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Ethical Considerations. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- An accountant is asked to record sales that have not yet happened to make profit look higher. Which fundamental principle would be breached? A. Confidentiality B. Integrity C. Professional behaviour D. Objectivity Answer: B
- An accountant tells a friend confidential information about a client so the friend can profit from it. Which principle has been broken? A. Objectivity B. Professional competence and due care C. Confidentiality D. Integrity Answer: C
- Which principle requires an accountant to keep their knowledge and skills up to date and to work carefully? A. Integrity B. Professional competence and due care C. Objectivity D. Confidentiality Answer: B
- An accountant lets friendship with a relative influence how an expense claim is approved. Which principle is threatened? A. Objectivity B. Confidentiality C. Professional behaviour D. Integrity Answer: A
- Why does the accounting profession rely on an ethical framework rather than rules alone? A. Rules are always cheaper to follow B. Principles apply even to situations the rules did not foresee C. It removes the need for any laws D. It allows accountants to choose their own standards Answer: B
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