Ethics in Accounting and Finance: A South African Perspective

Ethics in Accounting and Finance: A South African Perspective

Vannie Naidoo (University of KwaZulu-Natal, South Africa)
DOI: 10.4018/978-1-7998-4637-6.ch002
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Abstract

Ethics forms the cornerstone of business and commerce today. It is the lifeblood of every institution be it private or public enterprise. Organisations have to develop and implement a properly structured policy on ethics outlaying proper governance within the institution. Accounting and finance services are crucial in managing a company's finances and wealth. In the accounting profession, in order for there to be transparency and trust, ethics is a crucial area that needs to be present. The many scandals and ethical dilemmas faced by countries organisations throughout the world has made us pause and take stock of what is happening in industry and has prompted action in law and governance towards ethics and corporate governance. South Africa too, has had its fair share of scandal that has had its legal fraternity, government, and business sector develop the Kings I, Kings II, Kings III, and Kings IV laws that stipulate corporate governance and ethics. Organisations have to be honest, professional, and transparent in their business practices.
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Ethics In Accounting And Finance

To gain an understanding of ethics in accounting and finance, theorists have provided different views and insights on the subject. From all the different theorists’ views explored by the researcher, an important realization has emerged namely; that ethics is crucial to the survival and growth of the accounting profession. A synergistic approach should be followed within the organization, in order for ethics to permeate the relevant structures of the organisation in a holistic manner. Since the main aim is to instil a high moral code of ethics in accounting and finance, this means that all accounting and finance staff at all levels within the organization should implement this in their daily business practices.

The discussion will now turn to defining ethics. The word “ethics” is etymologically derived from the Greek word “ethos”, which means “character” or “manners” (Skorupski, 2003). Brinkmann (2002), defined ethics “as a discipline in which matter of right and wrong, good and evil, virtue and vice are methodically examined. Ethics looks at human behaviour, moral principles and the attempt to distinguish good from bad. When trying to identify common issues being dealt with within the business environment, professional bodies’ codes of ethics is the right place to look. These codes represent what we can consider to be the reflection of business ethics. Codes of ethics should mainly address the particularities of high risk activities and are built on the collective conscience of a profession as a proof for the group’s acknowledgment of the moral dimension”. In a South African tertiary business ethics education module, Rossouw and Van Vuuren (2010) define ethics as: “Ethics concerns itself with what is good or right in human interaction. It revolves around three central concepts: ‘self’, ‘good’ and ‘other’. Ethical behaviour results when one does not merely consider what is good for oneself, but also considers what is good for others. It is important that each of these three central concepts be included in a definition of ethics”.

Key Terms in this Chapter

Finance: Refers to the management of money and includes activities like investment, borrowing, lending, budgeting, saving, and future forecasting of shares or financial issues.

Accounting: Accounting is the reliable, systematic, and transparent recording and communication of economic information in accordance with Generally Accepted Accounting Principles (GAAP).

South Africa: Refers to a country on the southernmost tip of the African continent. It includes dessert, beaches, animal and plant life and a well- built infrastructure and business district.

Ethics: Is a moral philosophy or code of conduct practiced by a person or group of people within the business world.

Corporate Governance: Is grounded by three principles namely transparency, accountability, and security. Organisations have to conform to the necessary laws and legislations in South Africa that govern corporate governance.

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