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Let'S Analyze Activity 2. Getting Acquainted With The Essential Terms in The Study of Accounting and Its

Ethics is important in business for two main reasons: 1) to prevent legal and regulatory difficulties for firms by practicing strong business ethics, and 2) to retain a great reputation with the public and employees by displaying excellent ethical behavior. Independence, both in form and in substance, is a requirement for external auditing because the auditor must be objective and free of interests that could influence the audit findings. Violations of accounting professional ethics include performing unethical acts like falsifying records or documents at the request of clients. This violates principles of integrity and objectivity. Internal and external users of accounting information include management, employees, owners, creditors, investors, customers, and regulatory authorities who each have different interests in the information for purposes like

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42 views2 pages

Let'S Analyze Activity 2. Getting Acquainted With The Essential Terms in The Study of Accounting and Its

Ethics is important in business for two main reasons: 1) to prevent legal and regulatory difficulties for firms by practicing strong business ethics, and 2) to retain a great reputation with the public and employees by displaying excellent ethical behavior. Independence, both in form and in substance, is a requirement for external auditing because the auditor must be objective and free of interests that could influence the audit findings. Violations of accounting professional ethics include performing unethical acts like falsifying records or documents at the request of clients. This violates principles of integrity and objectivity. Internal and external users of accounting information include management, employees, owners, creditors, investors, customers, and regulatory authorities who each have different interests in the information for purposes like

Uploaded by

Mary
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Calunod, Mary Rogen Archelle A.

ACC111-6316

LET’S ANALYZE

Activity 2. Getting acquainted with the essential terms in the study of accounting and its
environment is not enough, what also matter is you should be able to explain how these concepts
principles and ethics being applied in the practice of accounting.

1. Why do you think ethics is important in business? (Give at least 2 reasons)

 It is more important than ever to strive for high ethical standards in today's business
world. A set of moral and ethical principles that guides an organization's and its employees'
behavior and operations is known as business ethics. The beliefs and aims of a company, as well
as how it conducts its day-to-day operations, are all influenced by business ethics.

 To prevent legal and regulatory difficulties, firms must practice strong business ethics.
However, in order to retain a great reputation with the public and employees, it is equally critical
to display excellent ethical behavior.

2. Why do you think independence in form and in substance is a requirement in external


auditing?

The auditor's independence means that he or she is not beholden to anyone whose interests may
be affected by the audit's findings. Internal management difficulties include insufficient
governance, risk management, and internal controls. In addition to independence, the audit
process demands objectivity and integrity. The auditor must perform his or her duties in a free
and objective manner, according to the notion. Auditor independence is often referred to as the
cornerstone of the auditing profession because it is the source of public confidence in the
accounting profession.

3. Cite practices that you know which may violate the basic principles of professional
ethics for accountants and why do you think this is a violation? (Cite at least 2)

Personal Implications

When an unethical accountant is caught and brought to justice, he or she will be punished.
Although it depends on the individual circumstances surrounding the case, the accountants found
guilty may face prison time, fines, license suspension, and other legal penalties.

Loss of Human Capital


The majority of employees do not want to work for a corporation that engages in unethical
activities. Accounting should be done ethically and with integrity, which is one of the objectives
of accounting professional standards. If you force your accountants to act unethically, they will
be unable to uphold the norms of their profession, which may result in the loss of their license or
credential by the accounting authorities. 

4. Cite at least 2 users of accounting information and state also why they are interested of
such information.

Internal User it is Accounting's purpose to deliver vital information to management, who are
also known as internal users.
 Management- Accounting information is especially useful to management in the
planning, controlling, and decision-making processes.
 Employee- Utilize accounting information to determine their job security, future salary,
retirement benefits, and employment opportunities based on the financial health, number
of sales, and profitability of the company.
 Owners- Accounting data is used by owners to assess the viability and profitability of
their investments.
External users are persons who are interested in an organization's account information but are
not involved in the organization's administrative process.
 Creditors- Accounting information captivates their interest because it allows them to
assess a company's solvency. Credit terms and standards are established based on a
company's financial health; therefore, it aids in the analysis process by providing
correct data.
 Investors- They require the information because they are concerned about the risks
and returns associated with investing.
 Customer- have an interest in accounting information for assessing a company's
financial position, particularly when they have a long-term relationship with, as it
allows them to keep a constant source of cash.
 Regulatory Authorities - They require accounting data to ensure compliance with
rules and regulations, as well as to safeguard the interests of stakeholders that rely on
it.

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