Topic Objectives and Overview:

Like all decisions, the choice of accounting policies to be used in financial statements involves ethical considerations. For example, at the extreme, management could choose accounting policies that are designed to distort the financial statements and mislead investors. Clearly, ethical considerations arise in this example but there are many farmore subtle scenarios as well. This is why a brief introduction to ethics is included in this course. However, a consideration of the ethical aspects of day-to-daydecision making and policy setting will also be invaluable to you in all other aspects of your life. For example, accountants must also manage the ethicala spects of their relationships with their clients, colleagues and organizations. Some of the more important points to be discussed under this topic include the following:

• the nature of ethics

• why be ethical?

• the distinction between rule based(right/wrong)and value based(good/bad)ethics

• the role of "values" in ethics and an introduction to the values of the accounting professional

• the development of practical skills

• ethical decision making

• ethics in accounting practice and accounting policy choice

【CONCEPT】 WHAT IS ETHICS?

Ethics refer to values & prectices that reflect the three principles of ethics and that comply with Ethic Codes established by specific proffession Bodies.

‘Right/Wrong’Perspective on Ethics

• Relates to specified rules or laws

• A binary perspective – something is either right or wrong – no othercategory possible

• Rule or laws appear like they are objective as they are derived fromsome external source and so appear to offer a sense of ‘moral certainty’

• The justification for a rule or law that defines ‘right’ or ‘wrong’comes from an appeal to a source of authority

‘Good/Bad’Perspective on Ethics

• ‘Good/Bad’ relate to our value judgements about what promotes ourwell being

• ‘Good/Bad’ are the ends of a continuum along which judgements mightlie ( allows for “shades of grey”)

• ‘Good/Bad’ judgements appear subjective because they are derivedfrom our own experience

• The justification for ‘good’ or ‘bad’ judgements comes fromexperience, evidence, and facts

what is ethics?

'Right/Wrong' Perspective on Ethics

'Good/Bad' Perspective on Ethics

Costs of not acting ethically