In any type of business, an accountant is needed. Creditors, investors and businesses use accounting information when making decisions. Accountants are responsible for "implementing and maintaining operational and fiduciary controls, providing analytical support for strategic planning and decision making, â€¦, and assisting management in setting the tone for ethical practices.", as confirmed by the International Federation of Accountants (IFAC) (2005, 3). An accounting professional needs to strictly comply with the ethics that have become a code in accounting, just like the professionals in the field of law or medicine. People using the services of professional accountants not only rely on their professional competency to take decisions but also rely on their professional honesty. Since accountants are so important for companies, the problem of accountants' lack of honesty is of great concerned to the community. There is no doubt that the ethical issues in the practice of accounting have become a topic that against the profession on almost a daily basis. Unethical accounting behavior has become a broader social issue that possibly threatens the accountants' professional reputation. Dr. Gordon Woodbine, research fellow and senior lecturer in Curtin University of Technology cites research of Australian accountants and auditors and shows that "accounting environments are primarily dominated by concerns about doing what is professional and legal." The significance of accounting ethics is to maintain the professional honesty. It is clear that the most important and necessary attribute of professional accountants in companies is honesty for three reasons: to provide accurate financial information for company decision making management and for shareholders or creditors, and to complement a company's core values.
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Opponents argue that the most essential attribute of professional accountants in companies is competence because it helps accountants to analyze financial data and to make decisions for the company's operation. Professional accountants need knowledge and skills to understand, to produce and to analyze the information revealed in an organization's financial statement. Therefore, accountants need to be very familiar with their work and be cautious when recording the data by using their professional knowledge. Professional accountants are facing increasing knowledge and skill expectations, which will continue throughout their careers. Therefore, the continuing development of professional competence is significant for professional accountants in order to meet those expectations. Moreover, it is demanded by their professional roles and the users of their services that professional accountants need to continue to develop and maintain their competence. However, while this is true to some extent, honesty is the most essential attribute that accountants should have. Firstly, a perfect financial statement of a company is not valid and useful unless it is accurate and evidence-based. 'Financial market transactions fail unless the financial worth of a traded entity is accurately reported' (Koehn 2005, 521). In addition, an accountant's professional skills can be trained after he or she enters a company, but a company should not admit dishonest employees such as someone who misappropriates the company's property as their own. For effective accounting practice, competence provides the necessary condition but not sufficient conditions. Recent scandals in financial markets and financial reporting have underscored importance of the needs for strong moral values for the accounting profession. For instance, there is no doubt that the accountants in Enron have qualified or even excellent professional skills to handle the financial information. However, failing to record financial data accurately, accountants' lack of honesty leads to Enron's bankruptcy.
The first reason for why honesty is the most important and necessary attribute of professional accountants in companies is that the financial information should be accurate and complete for decision makers. Financial statements are relied on by managers as an indicator of corporate economic performance because financial statements disclose the financial position and results of the operations of the enterprise. Balance sheets, income statements and cash flow statements are the three core parts of a financial statement which show a company's profit and loss, assets and liabilities, income and expense, and information of shareholders. Managers need accurate accounting information to make timely responses so the company can maintain routine operations and steady development. For instance, they will know of the company's losses or gains by reading income statements. They are able to know the inflow and outflow of each cent by reading cash flow statements. Therefore, if an accountant in a company is dishonest and gives distorted financial information to the managers, the original records will no longer be sound and complete due to the accountant's dishonesty. Therefore, the company might lose money because of wrong decisions made by managers based on incorrect information, or even worse, it might become bankrupt. As the WorldCom, Enron and other failures numerously show, financial statements must be usable and accurate to implement 'information-reliant decision-making' (Koehn 2005, 522). Therefore, accountants should objectively and concisely present the financial results and use applicable standards of disclosure and reporting clearly.
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The second reason why honesty is more important than other attributes for a professional accountant is that the financial information should be accurate and complete for shareholders and creditors. The profitability of a company is usually reflected in the company's financial statement. For example, creditors can recognize whether a company has the ability to pay off debts by reading the company's financial statements. If the company states a loss and the accountants of this company fabricate the related data, the creditors and shareholders of this company may assess the company's solvency and competitiveness incorrectly. Thus, the creditors' interests cannot be guaranteed. Another example in HIH in Australia, accountants in this insurance company use illegal way to create false accounts to conceal the truth about huge losses. As a result, there has been a great blow for investors because they believe they do not get information that they should know during the stock transaction. When accountants in a company are told to distort numbers in order to produce expected results, not only the creditors or shareholders but also the company may lose money and the company may also lose public trust. In recent years, only 8.4% of the individual investors believe that the accounting information of listed companies is credible; the vast majority of institutional investors are not considered credible or not fully credible (Flanagan and Clarke 2007, 491). Moreover, such as WorldCom, accounting scandals are well known reasons for its bankruptcy. In order to restore interest from Wall Street and investors, WorldCom decided to take the risk to report false profits. From then on, 'WorldCom' has become a synonymous of 'scandal' even now it has been converted to 'MCI'.
The third reason why a professional accountant's most vital attribute is honesty is that lack of honesty, one of a company's core values, may influence the company's competitiveness. According to Langdon (1998, 29), "values are the foundation for attitudes and are influenced by, and in turn influence, perceptions." In other words, values will influence a person's performance. For example, if all the employees in a company, including accountants, are honest and responsible for their job, the company may actively develop. This can also be called rationalization. Once an accountant know that everyone cheat a little bit on their taxes, he or she might also cheat. If dishonesty in accounting profession is a common situation, no one will be surprised by accounting scandals. As one of the company's core values, honesty is like a guideline that directs employees' behavior. Francis (1994, 122) states that for accountants "observance of accepted norms of honesty and integrity must underlie all their professional decisions and actions" in the section of fundamental principles of professional conduct in his book. Enterprises need employees to be such kind of "professional". Furthermore, Felton, Dimnik and Bay (2008, 217) state that 'since the Arthur Andersen scandal, accountants have been especially concerned that the unethical behavior of a few individuals might negatively impact the image of the entire profession.' Accordingly, accountants' dishonesty also threatens the professional reputation of accountants. As a result, the relationship between employers and employees may be built on distrust and uncooperative and this might affect the company's competitiveness. In addition, accountants' lack of honesty could also lead to a company's loss of stock. Once if shareholders and creditors know that accountants in the company are untruthful, consider to their own interest, it is possible for shareholders to withdraw from the company and creditors may ask the company to repay the loan and stop loan to the company. As a result, the company loses capital and therefore its operation might be affected. This may weaken the company's competitiveness.
In conclusion, it is clear that honesty is the most important attribute for a professional accountant compare to all others. To make sure a company's routine operation, managers need accurate financial information to rational decisions and this requires honest accountants. In addition, Shareholders and creditors' interests could be guaranteed if accountants in the company provide real information for them to know the situation of company's operation. Finally, to strengthen a company's competitiveness, honesty of accountants plays a key role in it. Not only can accountants' honesty influence a company's competitiveness as one of its core values, but it can affect the company's competitiveness by shaking the confidence of shareholders and creditors in the company as well. Actually, both government and community have highly concerned with accounting ethical issues in recent years. For example, the mission statement of the Canadian Institute of Chartered Accountants (CICA) proclaims that, "As trusted financial leaders... we act with integrity" (Felton, Dimnik and Bay (2008, 217). Similarly, the International Federation of Accountants (IFAC) has also set up an International Ethics Standard Board. However, Woodbine cited research that shows ethical policies for organization did not actually play a part in companies. Fortunately, professional ethics are concerned by education especially in accounting. In 2008, 54 students in the University of New England participated in a survey of business students' attitudes to ethics. Most of the participants were experienced accounting professionals who had worked in their current field for a significant period of time. The survey shows that students' understanding of professional ethics grew significantly over the teaching period, and they also had a "heightened awareness of society's expectations of professionals." Therefore, business schools should all provide courses of ethical practice for students in accounting curricula. The problem may not be solved over time through education but can at least reduce the rate of accounting scandals.
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