Question

I cannot find anything on the following questions: What is the manager’s responsibility regarding ethical financial reporting? What challenges might a manager face in ensuring ethical accounting and financial analysis practices? Can someone point me in the right direction?

Answer 1

What is the manager’s responsibility regarding ethical financial reporting?

Organizations place a considerable amount of trust in their management. From the CEO on down, managers have a responsibility in ensuring that both they and their subordinates behave ethically and in the best interest of both primary and secondary stakeholders.

As a manager, it is considered one of your primary responsibilities to both understand and practice ethical behavior in order to: meet the company's expectations for conduct, set an example of appropriate behavior for subordinates, and to minimize the ambiguity that often comes along with the practice of ethics.

Therefore, it is essential for managers to understand Codes of Conduct, Codes of Ethics, or any other official set of rules and to attain and keep records of related documentation laying out the expectations and guidelines for ethical behavior. Managers also have a responsibility to ensure that those who report to them understand these rules.

An ethical manager is also obligated to set the expectation that any and all ethically unsound practices are not acceptable. As such, anyone that either conducts or witnesses such an act has a responsibility to report it through the appropriate channels.

What challenges might a manager face in ensuring ethical accounting and financial analysis practices?

Accounting is a career field where high ethics and morals are important character traits for individuals or managers. Poor accounting ethics can lead companies into bankruptcy from improperly reported financial information

Fraud:Accountants with poor ethical standards may conduct fraudulent activities, such as overbilling clients or delaying vendor payments. Most fraud cases involve hiding cash for internal purposes and so the managers have to face this challenge in life.

Embezzlement:Accountants may embezzle from their employers when given too much responsibility and little oversight. These situations give managers more control than necessary and the ability to mislead their employers on financial information.

False Information:Some companies employ accountants/managers who have the ability to manipulate financial transactions into positive company results. These ethical situations were seen in the accounting departments of Enron and Worldcom.

Tax Evasion:Some accountants/Managers create illegal tax shelters to hide company income. Companies use these shelters to avoid paying government income tax.

Personal Loss:Poor accounting ethics can cause great personal damage in addition to business problems. Accountants/Managers found guilty of manipulating financial information are sent to jail, creating difficult situations.