1 / 28

INTRODUCTION

INTRODUCTION. Accountancy and auditing are complex and technical processes. Ethics, in contrast, might be considered relatively simple. Difficult part of ethics, it may be argued, is not knowing what we ought to do, but getting ourselves, and others, to do the right thing.

thor-slater
Télécharger la présentation

INTRODUCTION

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. INTRODUCTION • Accountancy and auditing are complex and technical processes. • Ethics, in contrast, might be considered relatively simple. • Difficult part of ethics, it may be argued, is not knowing what we ought to do, but getting ourselves, and others, to do the right thing. • unique to individual • one person might differently view a common sense of the others

  2. ETHICS • Plato to know good was to do good, that doing good was more useful and rational than doing bad, and that one who behaved immorally did so largely out of ignorance.  • Aristotle Was a purely logical outcome of human nature and it was useful because it was logical • Kant system-wide consistency was a logical requirement of ethics, stating that ethics begins with the rejection of non-universalizable principles, and that any adopted ethical principle must be a desirable universal law to be applied by everybody

  3. DEFINITIONS OF ETHICS • “is a branch of philosophy and is considered a normative science because it is concerned with the norms of human conduct, as distinguished from formal sciences such as mathematics and logic, physical sciences such as chemistry and physics, and empirical sciences such as economics and psychology”

  4. DEFINITIONS OF ETHICS • “Ethics is a body of principles or standards of human conduct that govern the behavior of individuals and groups” • “Ethics arise not from man’s law but from human nature itself making it a body of natural laws from which man’s laws follow” • “a set of moral principles especially those of a religion, school of thought or leader”

  5. ETHICS • Ethics is much more than just a collection of values.  • ethics is a science it creates new knowledge and applies this knowledge to support decisions. • Values tend to be under-defined, situational by nature, and subject to flawed human reasoning such that by themselves they cannot assure true ethical conduct. 

  6. HOW ETHICS COME • Ethics arise not simply from man's creation but from human nature itself making it a natural body of laws from which man's laws follow. 

  7. WHY ETHICS IMPORTANT • why I must expense my money to implement the code of conduct and program to increase the ethical culture because this would not increase the profit of our organization but will wasting a time and money

  8. WHY ETHICS IMPORTANT • Barbara Kipp - Global Ethics Leader What we’re talking about here isn’t complex, we’re talking about the very basic obligations and ways that we want to behave, conducting urselves with independence and objectivity, acting with integrity and honesty, respecting each other, being good corporate citizens, and the last and probably the most important is helping each other through difficult situations.

  9. WHY ETHICS IMPORTANT • Chanho - South Korea I think it’s very important for everyone to be committed to a high standard of ethics. I personally value honesty and I respect other people who value honesty as well.

  10. WHY ETHICS IMPORTANT • Samuel A DiPiazza Jnr. - Global CEO The Code of Conduct begins with me and it works itself through our entire organisation. Our senior leadership throughout the firm, at all levels, must live the principles of that Code of Conduct, but it must be something that you can feel throughout he organisation in everything we do, every day.

  11. WHY ETHICS IMPORTANT • Lipman, Senior executives should implement strong ethics programs within their companies but equally important, they must build the type of ethical culture that will really make a difference.  Ethics is not one employee in one department publishing a code of ethics.  It is a responsibility given to every employee in the company, but it must be led by top leadership.  An ethical culture is one where actions from the top down are met from the bottom up in an all-encompassing process.  Ethics then lives and breathes and moves with the organization itself.

  12. WHY ETHICS IMPORTANT • Ira A. Lipman, Chairman and President of Guardsmark Top corporate leaders must make ethics a very high and serious priority, not only within their own organizations but throughout the business world said

  13. WHY ETHICS IMPORTANT • enhance the good corporate citizens, whose helping each other through difficult situations • increase the respect of public to the profession • organizational performance and has a good name throughout the world • reduced the risks associated with blatant ethical failures such as large legal judgments, prison terms, anti-trust litigation, fines, lost sales, lost good will, etc. • not only to prevent unhealthy behavior but to inspire superior reasoning and performance

  14. WHY ETHICS IMPORTANT • positive effect on organizational activities and results. • For happiness of every person and assist people to gain happiness as expected • Serve the public and interested parties fairly and honestly • Ethical behavior would enhance firms value through efficient management of resources entrusted to the firms.

  15. Auditor Independence • Auditor Rotation suggested 3-5 years partner rotation • Management Consultancy Service report 20-30% of total revenue taxation, due diligence • Audit Commitees at least 2 person non independent director 1 of the member accounting background

  16. Auditor Independence (con) • Size of audit fees express less confidence in auditor independence audit fees not exceed 15% total fees • Disclosure of Nonaudit Fees in Published Account no mondatary requirement for separate disclosure of non audit fees

  17. Creative Accounting • Involve accountants in making accounting policy choices or manipulating transactions in such a way as to give impression in the accounts that they prefer. It may arise : 1)exercise of choice between permitted alternative actg policies 2)applying bias in making accounting estimates 3)structuring transaction in a way to manipulate the account 4)timing genuine transaction to manipulate account

  18. Barcelona Football Club Case • Difference in audit report between joint auditor (KPMG & PWC) and 2 local audit firms and a local consulting firm for supporter club (Elefant Blau) • Joint auditor showed profit but local firm recorded loss. It is due to 3 difference in actg policies : 1) costs of extending or renewing players contracts 2) tax penalty 3) recognition of income in transfer fees • It showed contrasting view can emerge favorable & unfavorable view of entity’s performance which resulted in impact on decision making.

  19. SOME FACTS ABOUT UNETHICAL BEHAVIOUR Based on a list of the indicted, the convicted, the overturned, the settlements and those who have pleaded guilty since the Enron scandal erupted in December 2001

  20. UNETHICAL BEHAVIOUR • David Duncan, Arthur Andersen LLP's former top Enron accountant pleaded guilty in April 2002 to obstruction of justice, admitting to participating in destruction of Enron-related documents. • Paula Rieker, former No. 2 executive in investor relations. Pleaded guilty to insider trading for selling shares in mid-2001 upon learning that Enron's broadband unit lost more money than publicly disclosed.

  21. FRAUD • Former CEO Jeffrey Skilling faces 35 counts, including fraud connected to various schemes to fool investors into believing Enron was financially healthy so they could pocket millions from sales of inflated stock.

  22. FRAUD • Enron founder Kenneth Lay faces 7 counts of fraud and conspiracy on 2001 • In a separate case, Lay is charged with 1 count of bank fraud. • Lay is accused of misleading banks of his intention to use $75 million in personal loans to buy Enron stock on margin.

  23. CREATIVE ACCOUNTING • Canadian Imperial Bank of Commerce accepting responsibility for crimes committed by employees who knowingly participated in complicated transactions that wrongly moved assets off of Enron's balance sheet so the energy company could inflate earnings.

  24. FINANCIAL ENGINEERING • Ben Glisan Jr., former Enron treasurer, pleaded guilty to conspiracy. Admitted to helping design financial deals that enriched him and illegally kept investment losses off or manipulated Enron's books.

  25. MANIPULATING OF ACCOUNTING NUMBERS • Raymond Bowen Jr., who was finance chief at Enron did not deny or admit SEC allegations that he knew or should have known some assets were grossly overvalued to falsely inflate profits.

  26. EARNING MANAGEMENT • J.P. Morgan Chase and Citigroup paid nearly $300 million to settle allegations from the Securities and Exchange Commission, New York state and New York City that they helped Enron manipulate its financial statements and mislead investors.

  27. INCOME SMOOTHING • Wesley Colwell, former chief accounting officer for Enron's trading unit, manipulating earnings by using trading profits to offset massive losses in Enron's retail energy unit.

  28. ETHICS MANAGEMENT • When the company is in trouble, what are the critical actions the new CEO must take to clean up the ethics mess • Clean house • Set the ethics bar high • Find the bottom • Preach patience • communicate

More Related