Essay about Review of Ethics Revision 3

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Review of Accounting Ethics
Kendra P. Scott

Financial Accounting 557

Dr. Bryan Womack

Strayer University

July 27, 2014

Ethical Behavior
When principles and standards are typically set in place for ethical behavior policies can be created from these standards. All companies and organizations have an ethics code or policy which is updated when the company deems it necessary. Ethics are a system of moral principles which exist in culture and the work environment consisting of the rules of conduct recognized in respect to a particular class of human actions. Just as there are those individuals that violate the rules of ethics, companies can also be guilty of such actions. Enron destroyed their ethical policy by committing illegal practices and falsifying documents pertaining to their profit growth. By deceiving their own employees, the workers lost everything. After the downfall of Enron a lot of companies underwent an ethical scrutiny. There was a huge outcry for companies to reveal their true earnings and net growth. New regulations were put in place. For the first time in many years companies were forced to be honest with their employees, stockholders, and consumes. Morals are very important, morals from the top to the bottom of the company is a must and needs to be practiced at all times. The ethics policy needs to be explained in training and revisited once a year so if changes are made the employees would be made aware at that time. There should be literature available for employees and an open door policy in place for employees to discuss things with management and or the Human Resources Department. No one wants to be labeled a whistle blower, but understanding the policies and knowing where to seek help makes a huge difference. When people know better they do better. It is best to have independent accountant firms that are not affiliated with a company to keep the books. The firm is then able to do their jobs properly and not feel pressured by the company to have them add or remove things in the book keeping procedures. Changing codes and monetary amounts are unethical in accounting. There are some firms that are guilty of those practices, however if they are caught the penalty is steep and prices are paid. In the end they find out that it was not worth losing their licensure, their jobs or their potential future.
“Ernst &Young’s partner breaches ethics”
Guilty as charged was the verdict in September 2010 for the Gordon Fulton, the New Zealand partner of Ernst & Young, a global assurance, tax, transactions and advisory services firm, they were found guilty of disciplinary tribunal of the New Zealand Institute of Chartered Accountants for breaching an accounting industry code of ethics. Mr. Fulton signed off a review of the 2005 six-month accounts of a failed carpet maker “Feltex”, one of the largest manufacturers of residential and commercial carpets in Australasia. The New Zealand Institute of Chartered Accountants did not impose a penalty. The Sydney Morning Herald; (September 2010)
The Securities Commission had earlier said it did not consider the work done by Ernst & Young and the responsible partner, Mr. Fulton, in their review of the accounts to December 31, 2005, met the required standards of a review engagement. It referred the matter to the institute. Feltex went into receivership in September 2006 and then into liquidation, leaving 8000 shareholders who had invested $NZ254 million ($194.57 million U.S.) in its public float just two years earlier holding worthless shares.
Feltex was placed in charge of the Melbourne, FL, office. The tribunal accepted that Mr. Fulton was entitled to place considerable reliance on Mr. Painter and Ernst & Young Australia. The tribunal further stated that the level of inquiry made by Mr. Fulton fell short of standards required by the institute. Mr. Fulton was "on notice" of possible breaches of banking covenants with the Australian and