Summary
The journal article “Ethics in finance and accounting: Editorial introduction” by Melé et al. (2017) provides highlights the ethical challenges that the financial and accounting department in business experience. It emphasizes the importance of integrating morals into the institutions to eliminate the numerous scandals that organizations may face. Moreover, the article illustrates that ethics is a combination of values, rules, and virtues, and the employees should demonstrate high levels of all the ethical components.
Ethics is crucial in the finance and accounting department since it promotes fairness and justice. Accounting and finance are vital sectors in an organization since they deal with cash flow in the business, and it requires high standards of ethical behavior. In most cases, finance and accounting are usually regarded as standard techniques used to balance the company’s financial resources, and it is never linked to any form of ethics (Melé et al., 2017). However, the two can never be effective without confidence, while trust is all about ethics. Ethics comprises people who either pose or lack virtues, foreseeable consequences, and actions engaged in human activities.
Ethics is critical for any organization’s development; however, it is condemned by many because it makes power and money relative. Moreover, it threatens the livelihoods of people since it is against manipulation and humiliation of a person (Melé et al., 2017). In areas where ethics is central to the actions taken, financial reforms are usually achieved. In other words, ethics promote the notion that money should serve as opposed to ruling the people. In many cases, the financial sector is used to rule persons since finance departments require people to only listen to their views; however, incorporation of high ethical standards confirms that benefits all individuals by funding investments as they are planned, and this will ensure that more job opportunities are created for the needy.
Over the past century, there have been numerous scandals experienced in many organizations, which have triggered the debate on the role of ethics in financial organizations. As a result, there is a need to analyze the consequences and causes of a business’s unethical and ethical behaviors in the financial departments. To curb the spread of dishonesty in industry, establishments should use the theory of the classical standard economic model, which requires that organizations should strive to satisfy their staff and customers’ needs while trying to preserve the interest of the stakeholders and ensuring that ethics is integrated into the decision-making process (Melé et al., 2017). Additionally, businesses are advised to encourage their employees to focus on unquantifiable goals. This is mainly because rewarding workers through incentives only motivates them to achieve the quantifiable rewards. Therefore, they can lose focus on the fundamental objectives that are usually unquantifiable, demonstrating high levels of unethical behaviors and unprofessionalism. For instance, Toshiba reported increased profits in 2014, and this action affected all its business departments across the globe (Melé et al., 2017). The management, however, denied any involvement in the malpractice. However, an internal audit revealed that the actions were not conducted by a single manager but by numerous officials who were under extreme pressure from the reward system. Therefore, the employees lied to gain an economic advantage, thus engaging in unethical malpractice, which damaged the company’s reputation.
There are several causes of financial and accounting malpractices, and the theory of the fraud triangle can identify them. The system is used to determine the probability of malpractice within an institution by looking into the availability of opportunities, attitudes, and incentives. However, this technique has been questioned because frauds are dynamic. It is difficult to determine the nature of a fraud that is likely to occur; therefore, it is difficult to fit it in a given framework (Melé et al., 2017). However, achieving honesty in a business setup requires employees to be self-disciplined and develop behavior consistency by establishing the right priorities. Additionally, ethics requires an individual to believe that it entails virtues, rules, and ethical values which are mutually independent.
Personal Opinion
The article illustrates that ethical behaviors are actions that a person expresses. I, therefore, concur with the writer since ethics encompasses morality. It requires an individual to be self-honest without being monitored. On many occasions, human beings need to be monitored to perform their duties diligently. As a result, numerous scandals across the globe often occur because there is inadequate supervision of the person tasked with overseeing an organization’s financial issues. Therefore, they misallocate the funds because they will never be identified. However, high ethical behaviors require an individual to accept within themselves that they have to conduct their work within the set rules regardless of whether they are being watched or not. Additionally, the numerous models used to determine the nature of fraud will never limit the number of frauds experienced in an organization. Instead, the employees should reform their behaviors and restrain from engaging in malpractices that can affect the business.
Therefore, the article relates to the topic in EDF 1005 in that it supports the illustration that ethical behaviors are inbuilt in an individual. Throughout the course, it was illustrated that ethical behavior requires high mortality levels, which motivates the employees to perform their duties diligently. Therefore, the article emphasizes the need for high ethical standards because unethical issues deprive the business of the needed growth. Additionally, most organizations have suffered financial crises as a result of unethical issues witnessed in the institutions Therefore, ethics is crucial in ensuring that the business realizes its real profits.
Reference
Melé, D., Rosanas, J. M., & Fontrodona, J. (2017). Ethics in finance and accounting: Editorial introduction. Journal of Business Ethics, 140(4), 609-613. Web.