The reasons for unethical behaviour among finance and accounting professionals are as follows:
A finance and Accounting Professional faces an “Ethical Conflicts” in circumstance when he is not in a position to comply with the principles that govern ethical behaviour. “Conflict of interest” situation the professional is required to decide between compliance with principle, and actions which are beneficial to the business enterprise. Circumstances under which the conflicts occur are as follows.
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Finance and Accounting Professional working as consultant or auditor:
For professionals working as consultant or auditors a threat to objectivity is created, when a professional accountant in public practice competes directly with a client or has a joint venture or similar arrangements with a major competitor of a client.
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Such circumstances may give rise to conflict of interest and give rise to non – compliance with the fundamental principles.
Finance and Accounting Professional working as an employee:
Finance and Accounting Professionals working as an employee may be pressurised to act or behave in a way that could directly or indirectly threaten compliance with the fundamental principles.
Such pressure may be explicit or implicit or may come from a supervisor, manager, director or another individual within the employing organisation. Such professionals may face pressure to :
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(i) Act contrary to law or regulation.
(ii) Act contrary to technical or professional standards.
(iii) Facilitate unethical or illegal earnings management strategies.
(iv) Lie to, or otherwise intentionally mislead (including misleading by remaining silent) others particularly to the Auditors of the organisation or Regulatory Authorities.
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(v) Issue or otherwise be associated with a financial or non-financial report that materially misrepresents the facts, including statements in connection with the financial statements;
Tax compliance;
Legal compliance; or
Reports required by securities regulators etc.