Ethical and Sustainability Challenges in Accounting Assignment Sample

• Subject Name : Accounting and Finance

Ethical Dilemmas and Sustainability

Executive Summary to Ethical Dilemmas and Sustainability

Considering along all ethical dilemmas and sustainability issues being faced around by the Accountants, the report has been designed to address the same by the students. It also puts quite an impact over how the decision-making is being impacted and the ethical principles used to solve such in case of situations which are dilemma-filled. It was also seen how the authority and varied bodies work towards ensuring a proper code of conduct to be put in the profession to ensure the maintenance of integrity and confidentiality in there.

Further, the second part of the report discusses the sustainability issues which Accountants face while working through in this highly dynamic environment of today improvements were also suggested to ensure that these dilemmas received proper solutions. With the implementation of same, the threat can be considered as an and converted into the opportunity which the Accountants might get through the advancement, in and around their profession.

Part A. Discovering Embezzlement by Accountant of Olympia LLP

Ben Marker, worked at Olympia LLP as an Accountant. While reconciling accounts, he noticed many invoices of vendors, unrecognized. After the conduct of the proper inquiry, he gets to know that these invoices were being created by someone and the proceeds of the same were directed to Josef Weber account (a controlling shareholder@ Olympia). Such transactions were conducted back from many months and with time, has increased. Confiding on the CFO of Olympia, Alyssa Franco, Ben gets to know about her familiarity with such evidence of money embezzlement and she warns him for Josef social relationship and close business with the CEO, who for sure covered for his past wrongdoings. A warning was also given that Josef had as a stake in BOD control and taking the issue to Board will be futile. No action was taken by Ben even after seeing such invoices continuously further too(Catherine R. Allen & Mair, 2020).

Now, considering in here, the 3 dilemma and the reasons for same, which Ben faced are:

1. Being ethical and reporting the case (whistleblower mechanism) to either the board or the State law enforcement authority or should allow the fraud to continue. It was unethical to see the fraud go on as the shareholder's money was stolen and the company was also cheated further.

2. As per his Self-Review("Ethical Issues Facing the Accounting Profession", 2019), he fears for losing his employment therein. Of course, this becomes an issue because if Ben was working in New Jersey, the state’s CEPA law would have protected him, while in New York the same was not possible and everyone fears losing employment.

3. Whether he must discuss the issue with any further parties as words spread faster and if it reached to the board, he risked the job.

Herein this case, the affected parties where the-

1. Shareholders, whose money was being stolen from them.

2. Ben, as he had to face such an ethical dilemma.

3. CFO, Alyssa Franco, as she believed the information to be true and not reporting it could have affected her(Catherine R. Allen & Mair, 2020).

4. If the inquiry conducted, one who made such invoices for embezzlement was also at risk of losing a job.

5. The CEO, who covered all such situations for Josef Weber due to intimidation and

6. Josef Weber, in the account of whom such amount was being transferred for self-interest.

The ethical issues mentioned above was not meant to bring a good reputation to the accounting profession as once that stain comes in, it is hard for one to remove. There have been many cases where all the accountants were blamed and strict action like policy change etc was made because of the same. People would, after all, find it difficult to trust the accountants on whom they rely for their safety of money.

Further, this was also going to affect public interest as the shareholders were losing their share of the dividend because of low income being shown by the company. The false invoices might always require 2-3 parties and generally, suppliers are involved in the same for signing it, so kind of they was at risk too. By all means, this wasn’t right for the society as they would further find it hard to trust the accountants work or might even withdraw their money from shares.

Considering the ethical issues above, the solutions which seemed feasible are:

1. Reporting using the whistleblower was the right choice for Ben to make as in here no name for the complaint maker is disclosed. Using it one covers the professional behaviour principle.

2. Employments are available but playing with ones’ ethics make them confide in the fraud or embezzlement conducted. If Ben raises his voice for sure he will maintain integrity, objectivity and professional ethics.

3. Ben should confirm from Alyssa and talk to the trustworthy member on the board or the government as this will be right as per the professional competence and due care principle.

The threats associated with complying with the fundamental principles of ethics by the International Ethics Standards Board for Accountants (IESBA) are("Section 110: THE FUNDAMENTAL PRINCIPLES | IESBA Code of Ethics for Professional Accountants", 2019):

1. Integrity is to be maintained by the Accountant while he checks through the account. It is done not just to maintain the integrity of accounts but helps maintain Stakeholders belief over the financial statements.

2. Considering the Objectivity, the Accountant should remain focused and independent while performing any tasks. It will help avoid the chance of getting unbiased and will help maintain faithfulness.

3. Professional competence and due care should always be maintained no matter which profession one is in and in case of Accounting when so many stakes are at a stand, it is necessary to be more cautious and ensure the best effort.

4. Confidentiality concerns with no disclosing of material information and the same mistake are never to be made as it can cause huge loss to the company and also raise a voice against the Accounting profession.

5. Professional behaviour is to be maintained by complying with all the duly stated regulations and laws. One need not be a part of any activity which would impair any of the above-mentioned principles.

Safeguards are always there which can ensure the elimination or reduction of threats in such cases, like the availability of principle application in situations and rules-based approach which will identify the ethical issues which arise in the professional career of an Accountant. Further principles like Whistle Blower, etc also ensure the safety of the accountants. So, either way, these safeguards are either by the legislations (education and training provided and work experience also comes within for acquiring membership at such professional bodies, etc) or as per the work environment (company’s code of ethics, ethical leadership by senior management, audit rotation, better internal control, the applicability of policies and procedures for quality work maintenance, etc). One must ensure to look for same as it will help comply with the fundamental principles and maintain the work quality and professional trust("Unaccountable: The Role of Accountancy Firms in International Financial Scandals « Global Financial Integrity", 2020).

Part B. Sustainability – Challenges and Solutions

Sustainability is a notion to deal with change, ensure better information for decision-making and ensure that the business world sustainability together with the business world supported by it. However, when thinking as per the Accounting perspective, we can see the application of Artificial/ Augmented Intelligence in the communication for business, the blockchain tech and alike which would help to improve information transparency and flow revolutionization and decision making too. Anything which can connect with the data analytics (any kind) allowing users for making a decision and think of most important aspects of the businesses, operations or employment can be connected in here. Undoubtedly, the professionals will have a great say in same and a critical role to play as businesses think only of profitability (short/mid-term). At times they lack to take care of the multi-shareholder approach which the accountant needs to ensure as they are on whom the world relies on situation of no-control over the inner businesses finance.

Considering all the factors of Sustainability challenges that the Accountants might face while fulfilling their role are:

1. Cybersecurity, which on today’s date is one of the biggest priorities around. As per the estimates and research conducted, an amount exceeding $124 billion worldwide will be exceeded considering the information security in the year 2019. It is known around that on today’s date all the Accounting information connecting to clients like credit card information, bank account number and passwords, etc. have been high on risks. They are the biggest target for the hackers as they are always of high-value. So, here, in this case, accounting professionals always have the responsibility for protecting the data and maintain it within the walls of the company’s they account for(Barry C. Melancon, 2017). It is a necessity and must be concerned with all the data which are maintained over the system, the client's details, the employee's private information files and also about the service providers therein. It is hard to accept but on one hand, where digitalization has improved living, it has also proved out to be a risk for the Accountants.

2. Further, there has been decreased accounting duties and the traditional means to work as there has been automation around the Artificial intelligence adoption makes it another important factor for sustainability challenges. Even though there is nothing to fear of for now but the complex accounting duties are handled now by the AI which is proving to be more capable in performing duties like transaction collection or even the compilation of the financial statements and also the filing of tax returns. It is a ratio of 40 and 25000. Yes, for a team of 40 employees team and the automated process is meant to save of 25,000 hours which are associated with the reworks around. It will also free up a lot more time for the analysis and better forecasting of reduction in staff turnover while it is tried to increase the engagement. Automation no matter takes off the work (tedious), it is still a part of sustainability challenge for the profession of accounting, causing huge risks of being replaced (not on larger term but due to reduction in need of more accountants or the articles working within)

Considering the above 2 challenges faced by the Accounting profession, the only way to ensure better improvements over the same are:

1. One can consider it to be an opportunity to grow rather being worried about it as a challenge as automation of repeatable tasks like the preparation of the tax forms and the payrolls, gets reduced. Although double-checking will be required but still, automation is considered to be fruitful will deliver the best results. It will also provide the accounting professionals to engage in playing advisory roles, which would further ensure better growth of business and the implementation of the newly adopted and updated accounting automation technology (with it getting capable and complex at a time). Further, taking it positively, we must know technology though the competition is still human-made and that it will help in performing the job more specific and efficient and focus over strategic tasks like the analysis or the financial planning or even the financial risk management which will help the company or the business by varied means(Barry C. Melancon, 2017).

2. For keeping the data secure by the accounting professionals, one must follow the guidelines like- updating of the software or getting themselves updated with timely notification over the work and updates too. Making sure with updates ensures better control over the work and working within the guidelines changed, as the same keeps on getting updated as a measure of previous corrections or better policies, norms and policies too. It will help ensure no security vulnerability and will also help in adding features to the same. The Accountants can also restrict the data access which is specific(Conrad, 2019). They can even reduce system access and allow it to only for those who are authorized. Any tax return which is old or of 5 years back or which is no longer needed by the client, is to be removed as this will ensure the information safety. Further, the Accountants can also make sure to update over the cloud all the data. Even though counterintuitive, but is the right choice for data safety as the cloud is better than any other data centres (traditional).

If all these functions mentioned above are taken care of clearly, it will ensure not just the proper safety and reduction of challenges but will also improve the efficiency and will promote a better working environment around the organization which will have a perfect system of accounting with no concern of attracting government control or legal issues.

References for Ethical Dilemmas and Sustainability

Barry C. Melancon, C. (2017). The Accounting Profession and Sustainability - The CPA Journal. Retrieved 4 May 2020, from https://www.cpajournal.com/2017/07/18/accounting-profession-sustainability/

Catherine R. Allen, C., & Mair, D. (2020). ICYMI | Disclosure of Noncompliance with Laws and Regulations - The CPA Journal. Retrieved 4 May 2020, from https://www.cpajournal.com/2020/04/09/icymi-disclosure-of-noncompliance-with-laws-and-regulations/

Conrad, A. (2019). The Biggest Challenges Facing the Accounting Profession Today. Retrieved 4 May 2020, from https://blog.capterra.com/biggest-challenges-facing-accounting-profession-today/

Ethical Issues Facing the Accounting Profession. (2019). Retrieved 4 May 2020, from https://smallbusiness.chron.com/ethical-issues-facing-accounting-profession-18307.html

Section 110: THE FUNDAMENTAL PRINCIPLES | IESBA Code of Ethics for Professional Accountants. (2019). Retrieved 4 May 2020, from https://www.iesbaecode.org/part/1/110

Unaccountable: The Role of Accountancy Firms in International Financial Scandals « Global Financial Integrity. (2020). Retrieved 4 May 2020, from https://gfintegrity.org/unaccountable-the-role-of-accountancy-firms-in-international-financial-scandals/

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