Ethical Accounting Environment
Steps for creation of an Ethical Accounting Environment:
- Top management initiative for creating an Ethical Accounting Environment:- The attitude of top management for creating an Ethical Accounting Environment whether an entity’s employees will carry out their duties in an ethical manner. Top management should provide strong, visible support for the entity’s ethics program to make it successful. A statement on ethics should be incorporated in entity’s mission, vision and value statement.
- Code of conduct for an Ethical Accounting Environment:- Management can create an Ethical Accounting Environment by creating its own code of conduct. The code of conduct should provide guidance to employees . The code of conduct should contain the principles that employees should use at the time of decision making.
- Recruitment practices:- The management should hire employees who have a strong sense of integrity for an Ethical Accounting Environment. Integrity tests and psychological tests may be used to predict the conduct of potential employees.
- Employee training:- The employee should be trained to behave ethically in an Ethical Accounting Environment. The training program will be more effective if it uses the cases of actual accounting dilemmas because the employees will relate better to examples of situations they actually face and will receive guidance that will be useful in dealing with these issues.
- Effective communication and reporting of unethical issues:- The management should establish and promote open communication in an Ethical Accounting Environment. The employees should be allowed and encouraged to bring to the notice of management the suspected unethical behavior, malpractices, wrongful conduct, fraud and violation of the code of conduct. The system for reporting unethical issues in an Ethical Accounting Environment should be such that any employee can report the unethical issue without any fear of getting punished or getting abused.
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