Question

How do ethical standards affect financial accounting? What are the ethical similarities and differences between managerial and financial accounting?

Answer 1

Accountant and other professional have certain responsibility towards the society, public and organisation they serve. Therefore ethical standards are the need of the hour. These standards help the members to deal with certain conflict and issue in the manner provided. Competence, confidentiality, integreity, objectivity, resolution to conflict of interest are certain ethical standards.

Financial accounting and mangement accounting both should act in compliance with such standards and shall not commit act contrary to such standards. Ethics like Competence, confidentiality, integreity are common amoung both the fields.

Because of differences in the concept of financial and mangerial accounting the ethical pratices may differ depending upon the situation. In mangerial accounting, acountant is concerned with sharing information with in the organisation therefore suitable ethics are followed. In financial accounting, Concern is more towards informing shareholder outside the organisation therefore suitable relevant ethics are followed.