Ethics review processes and practices

¶ … Accounting Ethics (or Dr. Smith Goes to Washington) by L. Murphy Smith. Specifically, it will contain a summary of the journal article. This article discusses the 2002 Sarbanes-Oxley Act and what the Act means to the accounting world.

After the Enron/Arthur Anderson accounting scandal, there were many worries about the ethics and accountability of accounting firms all around the world. This article discusses the 2002 Act Congress passed in an attempt to control accounting and stock brokerage transactions, and how these companies could gain the confidence of the public. The author notes, "Confidence will be restored only by ethical leadership from the accounting profession, business community, and government" (Smith, 2003). The author testified before Congress during hearings about the Act, and he discusses his experiences and theories about regaining the public trust in the article.

He notes the industry has to act with the utmost integrity to preserve their reputations, and they must consider who could be affected by their actions (besides themselves, they have their clients to consider). He discusses whether ethics can be taught in higher education (he maintains they should be taught, and he talks about the importance of ethics in society. He writes, "Ethical values provide the foundation on which a civilized society exists. Without that foundation, civilization would collapse" (Smith, 2003). Thus, ethics are one of the foundations of society, and they should be the foundation of any accounting practice, large or small. He also believes it is the duty of businesspeople to create ethical operations that help support an ethical society. He continues, "The purpose of ethics in accounting and business is to direct business men and women to abide by a code of conduct that facilitates, indeed encourages, public confidence in their products and services" (Smith, 2003). He talks about what responsibility the government has in ensuring accounting firms act ethically, and the role integrity plays in making the right ethical choices. He ends by urging accounting professionals to hold themselves up to excellent standards, which will benefit themselves, but society as a whole, as well.

The concepts in this article relate and apply to my former organization because the organization did strive to maintain the highest ethical standards, and did treat their clients professionally and ethically. It was a good model for a young accountant to follow, and I do not believe they could improve on the organization's ethics, unless they held their accountants to even higher standards of excellence. Ethics is primary in accounting and financial decision-making, because it is not only the reputation of the firm that comes into question. When firms forget who they are representing and use questionable ethical practices, they are not only harming their reputations. They are harming the reputation and integrity of their clients, and this is inexcusable. It will only harm the firm in the end, because their clients will lose faith in them, and they will turn to other, more ethically sound organizations.