Q27. Explain the reasons for unethical behavior among finance and accounting professionals.
Ans. The reasons which lead to unethical behavior are as follows:
- Emphasize on short term results: This is one of the primary reasons which has led to downfall essay of many companies like Enron and world com.
- Ignoring small and unethical issues: It is known fact that most of the compromises we make are small but however they lead us into committing large infractions and ignoring minor lapses, lead to better and more huge mistakes.
- Economics Cycles: In Good times, companies are relaxed in their accounting procedures or disclosures, as there is a pervasive feeling good effect. But when times of hardships follow, then the hit taken by them is almost fatal, as was proved in the Enron case. So companies need to watch out for economic cycles scan and be vigilant in good times as well as bad.
- Accounting Rules: In the era of globalization and massive cross border flow of capital, accounting rules are changing faster than ever before. The rules have become more Complex and it is difficult to identify deviations from these complex set of requirements. The complexity of these principles and rules and the difficulties associated with identifying abuse are reasons which may promote unethical behavior.