Enron, WorldCom, Lehman Brothers, Madoff Investment Securities, FTX—all famous names in business and all for the wrong reasons. To a greater or lesser extent, each of these businesses were failures due to some accounting and ethical component.
Ethics serves as the bedrock upon which every profession must be built. It’s the compass that guides individuals and organizations toward responsible and morally upright conduct. In any field, be it medicine, law, education, finance, or accounting, ethics ensures that practitioners prioritize the well-being of the profession and society over personal gain.
Ethical standards foster trust among professionals, clients, and the public, leading to healthier and more sustainable professional relationships. Further, they help maintain integrity, promote fairness, and prevent exploitation or harm. Without a solid ethical foundation, professions risk eroding their credibility and damaging individuals and society at large. In essence, ethics isn’t only the cornerstone of any profession but also a safeguard for the greater good while supporting sustainable business management.
The ethical foundations of accounting are rooted in principles that uphold transparency, integrity, and responsibility. At its core, accounting serves as a critical tool for financial reporting, guiding stakeholders’ decisions and fostering trust in the business world. Ethical accountants are guided by key principles such as honesty, objectivity, and professional competence. They must provide accurate, complete, and unbiased information, ensuring that financial statements fairly represent a company’s financial health.
All IMA® members are required to abide by the IMA Statement of Ethical Professional Practice. While specifically developed for IMA members to guide their conduct, the principles and standards outlined in the IMA Statement serve as a blueprint that all accountants can follow to maintain ethics in management accounting. IMA’s ethical standards compel members to uphold the standards of competence, confidentiality, integrity, and credibility. Greater adherence to these standards can mitigate the risk of—or even outright prevent—accounting scandals.
To ensure that ethics remains at the forefront of our profession, IMA will be celebrating Global Ethics Day 2023 on October 18. This is an annual moment to empower ethics through the actions of individuals and organizations. In the run-up to and on October 18, schools, businesses, institutions, nonprofits, individuals, and IMA members are encouraged to share plans and activities celebrating Global Ethics Day on social media using #GlobalEthicsDay and #EthicsEmpowered.
The accounting profession is underpinned by a commitment to ethics and integrity. Accounting scandals serve as powerful cautionary tales, reminding us of the devastating consequences of ethical lapses in accounting practices. Upholding ethical principles and standards is not only a moral imperative but also crucial for maintaining the trust of stakeholders and the stability of the global economy. Ultimately, the importance of ethics in the accounting profession can’t be overstated, as it serves as the foundation upon which financial trust and accountability rest.
Check out IMA’s continuing education courses on ethics.