Issues of ethics, regulation and compliance and the extent to which they are constraints or threats to the organisation

 

1. Issues of ethics, regulation and compliance: 

Ethics, regulation, and compliance are critical aspects of any organization. They help ensure that the organization operates within the legal framework and adheres to ethical standards. While they may be viewed as constraints by some, they are essential for the long-term success of the organization.

Ethical issues in accounting are place in the situations where accountants face conflicts of interest, pressure, or temptation to act dishonestly or illegally. It is the way to make good and moral choices for the preparation, presentation and disclosure ò the information of finance. There are a series of scandals about financial reporting during the 1990s and 2000s.

Some examples of ethical issues in accounting are:

• Fraudulent financial reporting
• Misappropriation of assets
• Disclosure violations
• Tax evasion
• Personal loss

2. The extent to which ethics, regulation and compliance are constraints or threats to the organization:

Ethics refers to the moral principles that guide the behavior of individuals and organizations. Ethical issues can arise in various areas of an organization, such as finance, marketing, and human resources. Failure to address ethical issues can lead to legal and reputational risks, which can be detrimental to the organization’s success.

Regulation refers to the rules and guidelines set by the government or other regulatory bodies to ensure that organizations operate within the legal framework. Compliance refers to the adherence to these rules and guidelines. Non-compliance can lead to legal and financial penalties, which can be costly for the organization.

While ethics, regulation, and compliance may be viewed as constraints by some, they are essential for the long-term success of the organization. They help build trust with stakeholders, including customers, employees, and investors. Organizations that prioritize ethics, regulation, and compliance are more likely to succeed in the long run.

All of the above scandals are making extremely large negative impacts to the world and these organization and there are several extents which can lead to constraints or threats to the organization:

• Familiarity Threat
• Intimidation Threat
• Self-Interest Threat
• Self-Review Threat

Every business both new or long period run need to pay attention to the ethics and regulations to avoid some threats for themselves. While ethics, regulation, and compliance may be viewed as constraints by some, they are essential for the long-term success of the organization. They help build trust with stakeholders, including customers, employees, and investors. Organizations that prioritize ethics, regulation, and compliance are more likely to succeed in the long run.

References 

Conflicts of interest and ethical threats (no date). https://kfknowledgebank.kaplan.co.uk/conflicts-of-interest-and-ethical-threats-.

Massachusetts Institute of Technology (2020) Ethics or compliance in a crisis? | MIT Sloan Management Review. https://sloanreview.mit.edu/article/ethics-or-compliance-in-a-crisis/.

 What is an "Ethical issue" in financial accounting? (2019). https://smallbusiness.chron.com/ethical-issue-financial-accounting-57889.html.

Team, C. (2023) Accounting ethics. https://corporatefinanceinstitute.com/resources/accounting/accounting-ethics/.