The Negative Effects of Poor Ethics in Accounting

Why do you think there are laws that are implemented in every state and in every country in the world? They are there because we need to follow them. Without abiding by the rules, we tend to go astray and we commit crimes.

In accounting, there are also some rules and regulations that everyone must follow. These are created to help ensure that all of the financial statements that are made are not only useful to the clients, but also to help influence the decision-making processes of company owners and board of directors.

This makes it very important for us to get good services, which is why accounting services in Malaysia are lauded for their impeccable performance in this regard.

Every accountant should uphold good ethical standards in their work. If they operate with poor ethics, not only will it result in an increased number of criminal activities, but it can also hurt the reputation of the company they’re working in- making their financial statements utterly useless in the process.

In today’s article, I will go over some of the possible negative effects of poor ethics in accounting as it pertains to business and company processes.

Reputation of the Business

If the accountant doesn’t uphold the right ethical standards, it can definitely tarnish the reputation of the company they’re working in. That is because the financial statements that they’re going to create might raise some eyebrows given that the information laid out in these papers might be deemed as untrustworthy and, therefore, useless.

When this happens, this usually ends up hurting not only the company itself, but also for the accounting firm from which they came from.

Criminal Activities

Accountants that have poor regard for ethical standards would try to gain the upper hand, especially inside the corporation they are working in.

For example, some accountants would embezzle money from the company and they will misrepresent the fact to the organization. This usually happens when the organization doesn’t have a governing body that will oversee all of the operations within the company.

Unethical accountants may also work alongside the corporation- something to the extent of tax evasion and fraud, among many other things.

Personal Consequences

Unethical accountants or those that have no regard for ethical standards are punished accordingly whenever they are caught and consequently tried.

The extent of their punishment will depend entirely on what they did using when using their profession. If the accountant is found guilty with the charges that are filed against them, not only will it completely destroy their reputation, but it also deals damage to their friends and family as well.

Why Financial Statements Are Important

The information that is stipulated in financial statements should remain true and valid at all times. Whenever an unethical accountant does their own bidding and tries to manipulate or misrepresent certain data, it will render these statements useless.

Remember, the information that is found in such statements would be very helpful not only for the company, but also for potential investors who are willing to put their money in for the organization’s cause.


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