Topic Lesson 12: Ethical issues in business and accounting: As we discussed in lesson 08, those providing numbers are very powerful members of an organization. The numbers accounting produces are relied upon by managers to run their departments better. Many managers and owners don't understand enough about where the numbers come from to question what the accountants tell them.
Think about this: Numbers produced by a company's accountants can be used as justification for bonuses, raises, and benefits. They can also be used to justify hiring or firing personnel, including managers. Also, financial statements and analysis produced by accountants will be used as a main source of information by management to determine the future course of the company, and by investors and creditors to decide whether or not they will invest into or lend money to the company. You've heard the phrase "numbers don't lie". This is true, as long as the accounting is done competently and honestly.
Instead of looking at this from the perspective of an employee or manager with an opportunity to commit fraud as we did in lesson 08, pretend you are a manager, investor or other stakeholder that must rely on accounting information produced by others (this could be the most realistic standpoint for many of you). What can be done to protect yourself or your company from fraudulent activities by other managers or employees? How can accounting knowledge play a role in protecting you or the company?
Considering these questions might help guide your thoughts:
How can you identify situations where fraud or abuse is likely to occur?
How can you catch fraud or mistakes after they've happened?
How can you prevent fraud and mistakes from occurring in the first place?
How can you foster an environment in your organization which discourages sloppiness and dishonesty?