ACCOUNTING CODE OF ETHICS

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1ACCOUNTING CODEOFEHICSDiscuss the importance of a Code of Ethics in accounting, particularly in relation to the ethicalissuessuchasdepreciation,creativeaccounting,taxation,andauditing.Howcantheimplementationofsuchacodeensuretransparencyandcorporategovernanceinanorganization? In your response, explain the role of various stakeholders, including accountants,auditors, and management, and propose practical methods for the effective implementation ofthe code. (Word count: 1500 words)

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2Ethics are the rules and regulations whichdefine the legitimate behavior of a person at aparticular place.It is the demarcation line between the good and the bad behaviorat theworkplace.Every working place has a set of rules which guide the way for the working behaviorin the organization. These rules are mandatorily applicable on every person working in theorganization and also help to fix the responsibility in case of the deviation. An effective set ofethics has many codes of ethicswhich arefragmented into rules that are area stream specificthathelp to manage every activity of the organization which at the macro level will help to promotetransparentcorporate governance.Organizations have a huge amount of stake of large number of investors and thus it becomesmandatory for the managers that the working environment should be ethically governed so thatthe duties of every individually is detailed and distributed well. This bringsunanimity in theworking behavior and in case ofthe deviation it helpsto fix the responsibility and take necessaryactions. Finances of any of the business are one of the most essential wings which can also betermed as the heart which pumps blood in whole of the business. In the same manner accountingis the tool that takes care of the finances. There have been many ethics and the codes of conductto get the accounting treatment of every transaction noted and affect the finances of theorganization in a very legitimate manner. As a Director finance of this business it will be thepriority to identify the areas where the snag in the accounting is taking place and formulate thecode of conduct so that the adherence of the accounting policies can happen and the accountingprocedure should become transparent and detailed.

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3Identification of ethical issue in accounting-The foremost step is to identify the ethical issues in the field of accounting where the framing ofthe code of ethics is needed. The following areas have been identified for this purpose.a)The Ethics of Accounting Regulation-Depreciation is an expense that is allowed to thecompanies for charging against the profits. This expense has been treated as a heaven forthe companies as they can charge the depreciation at the rate they think is applicable to aparticular asset. The amount so charged will be debited to the Profit and Loss account andwill reduce the profits.b)The Ethics of Creative Accounting-Though the accounting bodies of the respectivecountries have specified the rates at which the depreciation should be charged on aparticular asset so that the cost of the asses can be reduced to nil during the effective lifeof the asset and the huge capital cost of the asset could go on to be charged from theyearly profit of thecompany. But the rates of the depreciation are not mandatory and canbe charged as per the needs of the business.c)The Role of Accountant in Ethics pertaining to Ethical Issues-Every accountant hasthe knowledge of the rates of depreciation that has to be charged on theassets and theyare also aware of the fact that these rates are not mandatory on the assets and the actualdepreciation to be charged on the assets can be done either by reducing balance methodor the straight line methods of charging the depreciation.d)Ethical Issues related to Taxation-Since depreciation is charged from the profit beforecharging the tax from it thus it goes on to reduce the profit of the company and thus thetaxes amount to be paid are also reduced. Thus depreciation is an effective method ofpaying lesser amount of taxes on the revenues generated.

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