Even though this slokha was written thousands of years ago, it has not lost its importance
or relevance. Ethical behavior and ethical business philosophy have become important
aspects of contemporary business environment. This is a concept which modern
day entrepreneurs and the corporate world have abandoned in the quest for profits, success
and glory. Crises concerning questionable, ethical and illegal business practices by
organizations, societies and individuals have become a common feature and a regular news headlines.
The accounting controversies surrounding companies such as Enron, WorldCom, Martha
Steward and Income have spurred the watchful eyes of the public. These scandals have resulted in
an increased focus and concentration on ethics, especially in accounting other reporting practices.
In its broadest connotation, ethics provide the basic rules or parameters for conducting
any activity, in an acceptable manner. Henderson, Verne E, (1982) believes that business ethics
represent a set of principles prescribing a behavioral code that explains what is good and right or bad
and wrong. Ethics may in addition, outline moral duties and obligations. Thus, in general, we can
say that business ethics deal with the rights and wrongs of the organizational approach,
policy formulations, decision making and general behavior.
It relates to the study of moral choices and values and
is involved in choosing between right and wrong.
The term `accounting ethics' is related to all the
codes that govern and guide the professional approach
and conduct of the accountants. Pierce, Mike (2002)
believes that it is the process which helps the business and organizations to address issues of
accountability to stakeholders and improve the social, environmental and economic performance. There is
an interlinking of company's value to the development policies and performance targets and to
the assessment and communication of performance. The ethical accounting concept has emerged as
a prominent and crucial facet among the corporate world. The most decisive factor for its
genesis can be directly linked to a large number of frauds, scandals and other malpractices committed
by companies and corporate giants, especially in the western countries. The fraudulent practices
of Enron, WorldCom and Martha Steward shook the world. Of these scandals, the Enron
accounting scandal was the most infamous one. Its CEO Kenneth Lay, along with few other
employees, deceived the auditors by making the company appear healthy, when in reality it was in
serious financial trouble. There were similar allegations against the WorldCom company, whose
CEO, Bernard Ebbers, hid an expenditure of $11 bn, which led the company to bankruptcy. |
