The plant is also making use of electronic commerce

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The plant is also making use of electronic commerce and moving toward a JIT inventory policy. You have a meeting with your accountant to discuss possible changes in your accounting system. What types of accounting-system changes might be warranted?
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Objective 7 Why ethics and standards of ethical conduct are important to accountants Ethics: The Institute of Management Accountant says The field that deals with human conduct in relation to what is morally good and bad, right and wrong. It is the application of values to decision making. These values include honesty, fairness, responsibility, respect and compassion
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Objective 7 Why ethics and standards of ethical conduct are important to accountants The business process and accounting system change. However the need for accountants to maintain high ethical standards of professional conduct will never change . An action may be unethical, when the justification for the action is Everybody else is doing it ” – Warren Buffet has described as “the five most dangerous words in business”
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Standards of Ethical Conduct IMA Statement of Ethical professional practice: A code of conduct developed by the Institute of Management Accountants; this code includes competence, confidentiality, integrity and credibility * Code of Conduct : A document specifying the ethical standards of an organisation. It is the centerpiece of most ethics programs. Eg: Enron, Worldcom, Tyco, Global Crossing, Adelphia, Xerox were accused of creating accounting entries to make their financial reports look better than actual performance.
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Situations that create pressures for unethical behavior Emphasis on short-term results : if Making the Numbers is goal number one, accountants may do whatever is necessary to produce the expected profit numbers Ignoring Small Stuff : Most ethical compromise start out small. The first step may seem insignificant, but large misdeeds are often the results of many small steps. Economic Cycles : A down market can reveal what an up market conceals. Eg. When Enron was flying high at the turn of the century, no one seemed to question its financial reports.
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Worldcom - Case In June 2002, Cynthia Cooper, vice president of internal audit for Worldcom, told the companies board of directors that fraudulent accounting entries had turned $662 million loss into a $2.4billion profit in 2001. This disclosure led to additional discoveries totaling $9 billion erroneous accounting entries the largest accounting fraud in the history. Cooper was proud of Worldcom and highly committed to its success. Nevertheless, when she and her internal audit team discovered the unethical actions of superiors she admired, she did not hesitate to do the right thing .
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