ETHOS

Submitted by – Shubhangi Sonkar
Roll No. -2310019025198
Serial No. -6
Class – MBA 1st semester
Subject – INDIAN ETHOS & BUSINESS ETHICS
Topic – Ethics in Accounting and Finance
Submitted to – Dr.Priya
WHAT IS ETHICS ?
Ethics refers to the principles of right and

wrong that guide individuals or groups in
making decisions and behaving responsibly. It
involves considering what is morally right or
wrong in various situations and is often
influenced by cultural, religious, philosophical,
and societal factors.
Ethics in Finance
Ethics in finance is a critical aspect that involves applying

moral principles to financial activities and decision-
making. Financial professionals, including those working
in banking investment, accounting, and financial
planning, face various ethical challenges. Key
considerations in the realm of finance ethics include
Transparency and Honesty, Fiduciary Duty, Fairness and
Equal Treatment, Integrity in Reporting, Risk
Management, Confidentiality and Social Responsibility.
Ethics in Accounting
Accounting ethics involves ethical guidelines for

accountants, ensuring ethical and consistent behavior in
both public and private accounting. Accountants need to
adhere to ethical codes for certification, and violations
may lead to certification revocation. Professional
accounting organizations mandate adherence to ethical
standards, and failure to comply may result in dismissal
from the organization.
IMPORTANCE
1) Individual Morality: Ethics guide personal behavior and moral choices, helping
individuals distinguish between right and wrong. They contribute to the development of virtues
such as honesty, integrity, and empathy.
2) Social Harmony: Ethics provide a common set of principles that foster cooperation, trust,
and mutual respect within communities. They contribute to the establishment of social norms that
promote fairness and justice.
2) Professional Integrity: In the workplace, ethics guide employees and employers in

making ethical decisions, maintaining honesty, and upholding the values of the organization.
Ethical conduct is often linked to professional reputation and can impact career success.
3) Legal Framework: Many legal systems are built upon ethical principles. Ethical
behavior often aligns with legal requirements, ensuring that individuals and
organizations adhere to established laws and regulations.
4) Public Trust: Ethical behavior enhances public trust in institutions, businesses, and
leaders. When people believe that those in power are acting ethically, it strengthens
social cohesion and stability.
5) Global Relations: Ethics play a role in international relations and diplomacy.

Nations and organizations often engage in ethical considerations when forming treaties,
alliances, and conducting international affairs.
6) Environmental Stewardship- Ethical considerations are crucial in addressing

environmental issues. Sustainable practices and responsible resource management are
ethical imperatives for the well-being of the planet and future generations.
7) Personal Development: Ethical reflection and decision-making contribute to
personal growth and self-awareness. It encourages individuals to consider the
consequences of their actions on themselves and others.
Issues
Some specific issues that are commonly associated with these
fields are:
1) Conflict of Interest:
Issue: Professionals in accounting and finance may face
conflicts between their personal Interests and professional
duties, compromising objectivity.
Example: A financial advisor recommending investments in

a company they have a personal stake in.
2) Fraudulent Financial Reporting:
Issue: Deliberate manipulation of financial statements to
deceive stakeholders about a company's financial performance.
Example: Inflating revenues, understating expenses, or hiding
liabilities to create a false impression of profitability.
3) Insider Trading:
Issue: Trading securities based on non-public information,
giving individuals an unfair advantage and undermining market
integrity.
Example: Executives selling shares before negative information
is publicly disclosed.
4) Auditor Independence:
Issue: Threats to the independence of external auditors
may compromise their ability to provide unbiased assessments
of financial statements.
Example: Auditors having financial or personal relationships
with the companies they audit.
5) Bribery and Corruption:

Issue: Offering, giving, receiving, or soliciting something of
value to influence business decisions.
Example: Companies paying bribes to secure favorable
treatment or contracts.
6) Inadequate Disclosure:
Issue: Failing to provide complete and transparent
information in financial reports, which can mislead investors
and stakeholders.
Example: Withholding significant risks or liabilities that could
impact the company's financial position.
7) Social and Environmental Responsibility:

Issue: Neglecting the broader impact of financial
decisions on society and the environment.
Example: Ignoring environmental regulations or engaging in
practices harmful to communities for financial gain.
8) Inaccurate Valuation:
Issue: Misrepresenting the value of assets or liabilities,
leading to incorrect financial reporting.
Example: Overvaluing assets to inflate the company's net
worth.
9) Lack of Professional Skepticism:

Issue: Failing to critically assess information and relying too
heavily on management assurances without independent
verification.
Example: Accepting financial data without questioning its
accuracy or validity.
10) Pressure to Compromise Ethical Standards:
Issue: Professionals may face internal or external
pressures that encourage them to compromise ethical
standards for short-term gains.
Example: Pressure from management to manipulate financial
results to meet targets.
Common Problems
Ethics in accounting and finance is of paramount
importance due to the fiduciary responsibility
accountants and financial professionals have toward
their clients, organizations, and the public. Unethical
practices in these fields can have significant
consequences, including financial scandals, loss of trust,
and legal repercussions.
Some common issues related to ethics in accounting and
finance:
1 Conflict of Interest:
Description: Situations where personal interests or
relationships may compromise the objectivity and
independence of financial professionals.
Consequences: Can lead to biased decision-making,
compromised integrity, and a breach of professional
standards.
2 Insider Trading: Description: Trading securities
based on material, non-public information, giving
individuals an unfair advantage in the financial
markets.
Consequences: Illegal activity with potential for
severe legal penalties, undermines market integrity,
and erodes confidence in financial markets.
3) Inadequate Corporate Governance:

Description: Weak internal controls, lack of transparency
and insufficient oversight by boards of directors can
contribute to unethical behavior.
Consequences: Increases the risk of fraud and financial
mismanagement, leading to financial instability and
reputational damage.
4) Unethical Lending Practices:

Description: Providing loans or financial products with
terms that are deceptive, predatory, or otherwise
harmful to clients.
Consequences: Harms consumers, contributes to financial
crises, and can lead to regulatory intervention.
5) Creative Accounting:
Description: Manipulating accounting methods or
using aggressive accounting practices to present financial
information in a more favorable light.
Consequences: Misleads investors and stakeholders,
distorts financial performance, and can result in financial
instability.
6) Bribery and Corruption:

Description: Offering, giving, receiving, or soliciting
something of value to influence the actions of an official
or other person in a position of trust.
Consequences: Undermines fair business practices,
violates laws, and damages the reputation of individuals
and organizations involved.
Conclusion
Ethical conduct is not just a set of rules to follow; it is a
foundation upon which the entire financial and
accounting profession rests. Upholding high ethical
standards is not only a professional obligation but also a
commitment to serving the public interest, fostering
investor confidence, and contributing to the long-term
success and sustainability of businesses and financial
institutions. In a world where financial decisions impact
individuals, organizations, and society at large, ethics in
accounting and finance is a cornerstone for building a
trustworthy and resilient financial environment.
Thank you!!

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ETHOS

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Submitted by – Shubhangi Sonkar

Roll No. -2310019025198

Class – MBA 1st semester

Subject – INDIAN ETHOS & BUSINESS ETHICS

Topic – Ethics in Accounting and Finance

Ethics refers to the principles of right and

Ethics in finance is a critical aspect that involves applying

Accounting ethics involves ethical guidelines for

2) Professional Integrity: In the workplace, ethics guide employees and employers in

5) Global Relations: Ethics play a role in international relations and diplomacy.

6) Environmental Stewardship- Ethical considerations are crucial in addressing

Example: A financial advisor recommending investments in

5) Bribery and Corruption:

7) Social and Environmental Responsibility:

9) Lack of Professional Skepticism:

3) Inadequate Corporate Governance:

4) Unethical Lending Practices:

6) Bribery and Corruption:

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