Threat faced by Finance & Accounting Professional-Free-Samples

Question: Explain the various threats which can be faced by a Finance and Accounting professional, working as an auditor, consultant or an employee in an organisation. Answer: Introduction This assignment is about the professionals of accounting, in this assignment we are going to discuss about various aspects of the ethical issues that is faced by the auditors, accountants or the consultants of the organization(Ittelson, 2010). Financial accounting is all about preparing financial statements of an organization that shows the financial position to the investors, governments, general public, potential investors, competitors of an organization. Every organization in this world whether operating its business on a small scale, medium scale or a large scale is required to prepare financial statements as it comes under a compulsory legal laws(Helfert, 2016). Every organization in this world is liable to prepare and maintain its financial statement. The financial statements are made by professional accountants or auditors, these financial statements cannot be verified and published until it is thoroughly checked and signed by an auditor or an accountant(Fridson, 2014). These statements are sometimes contains false information to show an organization more profitable than it actually is. So in this assignment we are going to discuss about these ethical issues. The financial statements are of various types and all these are need to be prepared by an organization, these statements are; Income Statement, Balance Sheet, Cash Flow Statement and Statement of Retained Earnings(Tracy, 2013). Critical Analysis Financial statements are the statements that show the financial standing of an organization to the outer world. Sometimes these statements are prepared with wrong intentions of showing an organization much more profitable than its actual position, this is done in order to raise more and more of capital from the market(Brodersen, 2014). There have been so many cases worldwide of this kind of fraud by many big business organizations. These kinds of organizations do not believes in any ethics, all they want and do is to loot people by preparing false or untrue financial statements(Fraser, 2012). An accountant or an auditor or a finance consultant is the peoples that are so experienced in preparing these statements that only one accountant can prepare false statements for an organization and no one can make a mistake in such statements for years. However not every accountant, auditor or consultant are corrupt or under the influence of graft. Some work with all their ethics and believes in only ethical working(Fabozzi, 2013). Such kind of accountants, auditors, consultant has to face different threat and ethical issues(Epstein, 2016). An accountant or an auditor whosoever is preparing a financial statement for an organization must keep in mind the ethics of doing right and lawful act while preparing the financial statements, sometimes it is the organization itself that wants their accountants to prepare the financial statement and do not disclose the facts of loss so that it does not lose its market share by the true disclosure of the facts. There are different types of ethical issues that are faced by the accountants or auditors in an organization while preparing the financial statements of a firm(Lister, 2016): Fraud in Financial Reporting: The burden from management on the accountant to not to or to misstate the financial transactions of the organization so that it does not shows any inflow or outflow of the cash, or recording of some transactions that are not as per the accounting principles. Misappropriation of Assets: It is the misuse of the assets of the organization in a way that it incurs losses for the organization. Management puts burden on the accountants or the auditors to not to disclose any misappropriation of the assets. Disclosure: Another ethical issue that is faced by the accountants or the auditors by the management of an organization is to not to disclose or to disclose wrong information to effect the decisions of investors. Any person who wants to invest will always invest in an organization that is earning good money, so financial statements are the tools in the hands of the investors to judge the profitability of the organization. By false disclosures an organization can attract a large number of investors and their money. Cases of Financial Statement Frauds In the year 1998, an organization that was based in Houston, reported fake earnings of around 2 billion US dollars. All this was done in order to raise money from the investors. The companys auditor increased the depreciation on the property, plants and equipments of the organization. The main guilty personalities in this case were founder and the CEO Dean. L Buntrock along with his top executives and their auditor Arthur Anderson(Degree, 2017). Another Houston based organization in the year 2001 committed a fraud due to which the shareholder of the organization lost their 74 billion US dollars. The organization and its accountant did not disclose the high debts of the organization because of which its position always shown in profits. This fraud not only left the investors in the lose but also took the jobs of many innocent employees of the same organization. Conclusion Here is a brief and a concise conclusion has been provided. Ethical issues in accounting are not new, while there are many accountants or auditors that fall for greed and ignore all the ethics of preparing financial reports then there comes the ones who always put forward their ethics and becomes whistleblower to put an end on the fraud practices of the organizations. The accountants or the auditors must follow their ethics as no fraud or false disclosure can remain safe for a long period of time. In the case of the 1rst Houston company the former CEO and auditor made fraud while the later newly recruited team found out the fraud and reported it to the higher authorities which resulted in the penalty on the CEO of 437M US dollars. So the final conclusion is all the accountants and the auditors or the financial consultants should follow their ethics and must not let the management to come in between their work and ethics. Bibliography Brodersen, P. P. (2014). Warren Buffett Accounting Book. Degree, A. (2017, January 23rd). AccountingDegree. Retrieved March 25th, 2018, from AccountingDegree.com: https://www.accounting-degree.org/scandals/ Epstein, L. (2016). Reading financial reports. The Accounting Review , 2. Fabozzi, F. J. (2013). Analysis of Financial Statements. Auditing: A Journal of Practice Theory , 7. Fraser, A. O. (2012). Understanding Financial Statements. KMF Publishers. Fridson, M. (2014). Financial Statement Analysis: A Practitioner's Guide. Marshley Printing Press. Helfert, E. (2016). Techniques of Financial Analysis. Accounting Finance , 2. Ittelson, T. R. (2010). Financial Statements: A Step?by?step Guide to Understanding. SYdney: J.L Printing and Press. Lister, J. (2016, Feburary 25th). Chron. Retrieved March 2018, from Chron.com: https://smallbusiness.chron.com/ethical-issues-facing-accounting-profession-18307.html Tracy, J. A. (2013). How to read a financial report : wringing vital signs out of the numbers. Accounting Horizons , 5.