Question

Question 2.
Ethic education became more pronounced after the 2007/2008 financial crisis as a very important process in the development of the auditing profession. Discuss Ethic education in detail using practical examples.

Answer 1

Ethics in Auditing Proffession:

Most accountants are professionals who in order to remain as members, must agree to uphold the ethical standards, and will be removed from the organization if they fail to do so. This is because moral principles and standards of conduct are a traditional social measurement of bad or good behaviour. In addition, there is a strong relationship between individual ethics and social environment . In 2001, the largest corporate bankruptcy of Enron was revealed when it was discovered that the crimes occurred against some well-planned regulatory activities, such as accounting fraud and corruption. In addition, today, Enron is often seen as a good example of companies that are bad . Therefore, the auditing profession has started to focus more on ethics due to corporate scandals, both locally in any country as well as internationally in bodies of international accounting. Such scandals have resulted in the auditors’ trustworthiness and objectiveness being questioned by many financial statement users . In addition, the auditors’ professional conduct has played a fundamental role in increasing the confidence of financial statement users, to confirm the integrity of the financial statements. However, in the face of an increasing number of legal issues among international auditing companies as a consequence of their involvement in the moral and professional issues for several consecutive years leading to the failure some of the international companies such as Enron Energy and World Com, the reliability of auditors has taken a strong beating. This is followed by the failure of the greatest auditing company under scrutiny in the world, "Arthur Anderson" because of its contribution in those international companies. As well as Auditors are frequently faced with moral dilemmas in their exercise of professional judgment, these moral dilemmas are complex, unpredictable and not amenable to resolution through the application code of conduct . Moreover, auditor independence (the most powerful thing to engage auditors' ethical judgement) will be lost if the auditors have a personal relationship with their clients, as this may influence their mental attitude and opinion