Accounting Ethics Accounting Principles And Guidelines

Christine Lewis Intermediate Accounting Kim Hurt Ethics Paper Accounting Ethics In accounting, ethics are based on a commitment to honesty and objectivity. Financial reports are to be shown in the clearest and most accurate way possible. Investors, creditors, managers, employees, and even customers need to be confident that their accounting professional is honest and consistent with accounting standards, otherwise there is a loss of trust and an increasing chance of fraud. Pretty much every individual is in some way impacted by the decisions and actions of an accountant they’ll never meet. At the center of accounting ethics is the need to follow the generally accepted accounting principles (GAAP). GAAP is based on three†¦show more content†¦$3.8 billion in expenses were reported as capital investments and more than $3.3 billion was manipulated within the companies reserves. Reserves can be abused to create the accounting equivalent of a slush fund. If a company wanted to distort profits it could transfer the necessary sums from the reserve. The suspicion is that WorldCom deliberately increased its reserves to be able to dip into them to boost profits, to meet profit projections, and to hide the dire state of the company while lining the pockets of the company’s CEO. An internal auditor at Arthur Anderson LLP, the hired accounting firm, caught the discrepancies and she was told to ignore the issue. It was blamed on the Chief Financial Officer and the Controller at the time and nearly all who were involved were fined or sentenced to jail time. The company has since gone through bankruptcy and has been acquired by Verizon Communications. Six senior officers of Waste Management committed financial fraud from 1992 to 1997. The officers weren’t getting the revenues they wanted to see so they â€Å"cooked† the books, as they say, to reach predetermined earnings targets. They failed to record necessary expenses for costs of landfill development, avoided depreciation costs to their garbage trucks, assigned salvage values to equipment that didn’t previously have a salvage value, improperly capitalized some expenses, and increased the environmentalShow MoreRelatedEthics774 Words   |  4 PagesEthics Paper HCS/405 December 12, 2011 Professor Ethics Paper When we talk about financial planning we have to take step back, look at the whole picture, and understand how it begins. Financial Management is the key essential in an organization when you plan financially. Financial Management is the building blocks for all accounting records and business transactions that occur. 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