Unethical accounting practices not only cause instability in the market, but they also cause the

investor's safety within their investments go down. Investors and stakeholders have a right to have
their investments and interests kept secure. From a legal standpoint, the use of controversial
accounting practices becomes a breach of contract between the office holders and the stakeholders.
The office holders have a vested obligation to ensure that they perform their duties within the highest
possible standards and not only protect the shareholders' interests, but also maximize their value
where possible. The altering of the financial books constitutes fraudulent financial reporting, which is
an intentional misstatement or omission of amounts or a disclosure within the financial statements to
deceive financial statement ...

The role of accounting in business is to help

interested parties (internal and external) to
make business decisions.
LEARNING OBJECTIVE[ EDIT ]

Explain how the accounting process aids in the making of business decisions

KEY POINTS[ EDIT ]

Financial accounting generates some of the key documents,

including profit and loss account showing the method of business traded for a
specific period and the balance sheet which provides a statement showing mode of
trade in business for a specific period.
o
Without these financial documents it would be impossible to run the
business or to make decisions regarding the business.
o

The accounting process consists of measuring and summarizing business

activities, interpreting financial information, and communicating the results
to management and other decision makers.
o
Management accounting also motivates managers and other employees
towards achieving organizational goals. A well motivated staff performs better and is
more productive. Organizations are able to achieve their goals if employees are well
motivated.
o

TERM[ EDIT ]

financial accounting
Financial accounting is the field of accountancy concerned with the preparation of
financial statements for decision makers, such as stockholders, suppliers, banks,
employees, government agencies, owners, and other stakeholders.

Give us feedback on this content:

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FULL TEXT[ EDIT ]

The role of accounting in business is to help interested parties, both internal

and external, to make business decisions. The accounting process consists of
measuring and summarizing business activities, interpreting financial
information, and communicating the results to management and other
decision makers.
Financial accounting generates some of the key company documents,
including profit and loss statement or P&Ls. P&Ls show the financial details of
a business over a specific period. Financial accounting also produces the
balance sheet which provides a snapshot of a business's assets, debts,
and equity at a specific moment in time.. Financial accounting also helps the
managers in the business to manage more efficiently by providing them views
of financial information which may include monthly management reports
presenting costs and profits against budgets, sales, or other key metrics.
Reporting can be customized for the specific needs of the business.
Without these financial documents it would be very difficult to run the
business or to make decisions regarding the business .

Role of accounting
Accounting helps direct and control operating activities.

Business Decisions
Outside parties may decided to invest in a company based on its economic
performance as shown on the financial statements, but there are other ways to
use the financials statements to make business decisions. By carefully
reviewing the financial statements companies can make best use of their
assets.
Companies can use the statement of cash flows to make sure they are
collecting all the cash they are due. Companies can also choose to delay major

purchases or the retirement of equipment based on the affect that transaction

would have on the financials statements.

Source: Boundless. The Role of Accounting in the Business. Boundless Accounting. Boundless, 21 Jul.
2015. Retrieved 28 Feb. 2016 from https://www.boundless.com/accounting/textbooks/boundlessaccounting-textbook/introduction-to-accounting-1/overview-of-key-elements-of-the-business-19/the-roleof-accounting-in-the-business-119-7274/

What Role Does an Accountant Play in Business

Operations?
by Susan S. Davis, Demand Media

Accountants play a variety of roles within business environmrnent operations.

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An accountant performs financial functions related to the collection, accuracy, recording,

analysis and presentation of a business, organization or company's financial operations. The
accountant usually has a variety of administrative roles within a company's operations. In a
smaller business, an accountant's role may consist of primarily financial data collection,

entry and report generation. Middle to larger sized companies may utilize an accountant as
an adviser and financial interpreter, who may present the company's financial data to
people within and outside of the business. Generally, the accountant can also deal with third
parties, such as vendors, customers and financial institutions.
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Financial Data Management

The accounting structure of a company is an essential component to business operations.
One of the primary roles of an accountant usually involves the collection and maintenance of
financial data, as it relates to a company or firm. The accountant ensures that financial
records are maintained in compliance with lawful and accepted procedures and policies on
the corporate level. The financial information for any organization should be kept in a
pristine system because it is a key component used in operating and managing any
business. Managing the financial data of an organization can also include more sophisticated
duties, such as developing, implementing and maintaining financial data bases, as well as
establishing and monitoring control procedures.

Analysis And Advice

As analysts, accountants may perform certain types of analysis using financial data that is
used to assist in making business decisions. From deciding which kinds of supplies to order,
payment of bills to payroll, the accountant handles many intricate financial details on a daily
basis. Advising on business operations can include issues, such as revenue and expenditure
trends, financial commitments and future revenue expectations. The accountant also
analyzes financial data to resolve certain discrepancies and irregularities that may arise.
Recommendations may also involve developing efficient resources and procedures, while
providing strategic recommendations for specific financial problems or situations.
Related Reading: An Operational Audit of the Effectiveness of Operations

Financial Report Preparation

Accountants typically prepare financial statements that may include monthly and annual
accounts based upon the financial information that is compiled and analyzed. The
preparation of financial management reports can include accurate quarterly and year-end
closing documents. Reports compiled may be used in connection with the continual support
and management of budgetary forecast activities. The financial reports may be used by a
financial director or officer for the development, implementation and operation of a

company's financial software and systems, such as Hyperion, Excel and CODA Financial
Management.

Compliance
An accountant may also be responsible for ensuring that all financial reporting deadlines are
met, internally and externally. For example, quarterly, semi-annual and annual reports all
have specific deadlines, as well as some tax implications. Monitoring and supporting
taxation issues and filings can also be a responsibility of an accountant. The accountant also
usually coordinates the audit process by assisting with financial data preparation.

External Busines Affiliations

Often, accountants must work with financial professionals from the four major fields of the
industry: public, management, internal auditing and government accounting. Accountants
may provide data to a public accountant, who acts as a consultant, auditor and tax service
professional. Corporations, nonprofits, organizations and governments use management
accountants to record and analyze financial information of the businesses in which they are
employed. They usually advise company executives, creditors, stockholders, regulatory
agencies and tax personnel. Accountants may also work with government officials who are
examining and maintaining the financial records of the private business for whom an
accountant is employed, in connection with taxation and government regulations.

Ethical Issues Facing the Accounting Profession

by Jonathan Lister , Demand Media
An accountant working in the public or private sector must remain impartial and loyal to
ethical guidelines when reviewing a company or individual's financial records for reporting
purposes. An accountant frequently encounters ethical issues regardless of the industry and
must remain continually vigilant to reduce the chances of outside forces manipulating
financial records, which could lead to both ethical and criminal violations.
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Pressure From Management

The burden for public companies to succeed at high levels may place undue stress and
pressure on accountants creating balance sheets and financial statements. The ethical issue
for these accountants becomes maintaining true reporting of company assets, liabilities and
profits without giving in to the pressure placed on them by management or corporate

officers. Unethical accountants could easily alter company financial records and maneuver
numbers to paint false pictures of company successes. This may lead to short-term
prosperity, but altered financial records will ultimately spell the downfall of companies when
the Securities and Exchange Commission discovers the fraud.

Accountant as Whistleblower
An accountant may face the ethical dilemma of reporting discovered accounting violations to
the Financial Accounting Standards Board. While it is an ethical accountant's duty to report
such violations, the dilemma arises in the ramifications of the reporting. Government review
of company financial records and the bad press caused by an accounting scandal could
cause the company's rapid decline and may lead to the layoff of thousands of employees.
Executives and other corporate officers could also face criminal prosecution, leading to
heavy fines and prison time.
Related Reading: Government Guidelines for Ethical Practices in Private Companies

The Effects of Greed

Greed in the business and finance world leads to shaving ethical boundaries and stepping
around safeguards in the name of making more money. An accountant can never let the
desire to earn a better living and acquire more possessions get in the way of ensuring that
she follows ethical guidelines for financial reporting. An accountant who keeps her eyes on
her own bank account more than on her company's balance sheet becomes a liability to the
company and may cause real accounting violations, resulting in sanctions from the SEC.

Omission of Financial Records

A corporate officer or other executive may ask an accountant to omit or leave out certain
financial figures from a balance sheet that may paint the business in a bad light to the public
and investors. Omission may not seem like a significant breach of accounting ethics to an
accountant because it does not involve direct manipulation of numbers or records. This is
precisely why an accountant must remain ethically vigilant to avoid falling into such a trap.

Ethical Dilemmas in Accounting

by Kendra James, Demand Media

Deciding how to handle ethical dilemmas are an important part of the accounting profession.

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Individuals in the accounting profession have a considerable responsibility to the general

public. Accountants provide information about companies that allow the public to make
investment decisions for retirement, a childs education and major purchases such as a
home. For the public to rely on the information provided, there must be a level of confidence
in the knowledge and behavior of accountants. Ethical behavior is necessary in the
accounting profession to prevent fraudulent activities and to gain public trust.
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Facts

In an article entitled "Business Accounting Ethics," Katherine Smith and L. Murphy Smith
explain that the main reason for ethical guidelines is not to provide an exact solution to
every problem, but to aid in the decision-making process. An established set of guidelines
provides an accounting professional with a compass to direct him toward ethical behavior.
Specific responsibilities of the accounting profession are expressed in the various codes of
ethics established by the major organizations such as the American Institute of CPAs. The
AICPA Code of Professional Conduct outlines an accountants responsibilities towards the
public interest and emphasizes integrity, objectivity and due care.

Significance
The effects of ethical behavior in accounting are far reaching in the economy. Every business
entity has an accounting professional provide information at some point in the organizations
life cycle. Many accounting professionals are tempted to alter financial results and often
rationalize the behavior by calling it creative or aggressive accounting. Aggressive
accounting is the process of employing questionable accounting methods to boost results.
An accountant may record revenues and expenses in an incorrect manner or omit expenses
altogether. Repeated incidences of aggressive accounting are a result of the lack of ethical
behavior.
Related Reading: Ethics in the Accounting Profession

Example
A common example of an ethical dilemma involves management instructing a subordinate
employee to record a transaction in an incorrect manner. For instance, a company with a
Dec. 31 year-end calendar year, signs contracts with consumers to perform services. The
contracts are usually signed Dec. 1 and are a year in length. Accounting principles require
the company to record the revenue for the contract for one month only, the month of
December. The remainder of the revenue is recognized on next years financial statements.
However, management instructs an employee to record the entire amount of the contract in
December to boost revenues for the current year end. Management receives a bonus for the
boosted revenue and the subordinate receives recognition in an upcoming performance
review.

Solutions
Unfortunately, ethical dilemmas, such as the example provided, are common. To help curb
the desire to practice aggressive accounting and ignore ethical behavior, a number of
organizations require accounting professionals to complete continuing professional
education courses on ethics. In addition, a number of companies establish whistleblower
hotlines to encourage employees to demonstrate honesty and integrity in the workplace.

Considerations

Many accounting professionals do not encourage ethics courses and argue that ethical
behavior is not taught, but it is inherent in an individuals personality. In addition, Faculty
Director J. Edward Ketz notes that accounting professors do not like to research or study
ethics because of its unscientific approach. The results are difficult to examine and it is hard
to gauge the level of success from teaching ethics courses.

What to Look For in an Accountant: The

Importance of Integrity
Michael Sack Elmaleh, C.P.A., C.V.A.
I was recently asked what to look for in selecting a small business accountant. I initially answered with
the obvious someone with experience in your business area. But as soon as I gave this response I
knew that this was not the right answer. Or at least not the full answer. The answer I should have
given was to first look for someone with integrity. Integrity is a far more important trait to look for in
an accountant or any professional person than the extent of knowledge.
The reason for this is simple. Almost all practicing professionals who have high integrity will also be
knowledgeable, but more than a few knowledgeable professionals will lack integrity. A professional
who has high integrity recognizes that their highest responsibility is providing quality service to their
clients. A high integrity professional would not accept a client that they could not serve. For this
reason a high integrity professional will seek to insure that they are thoroughly knowledgeable before
accepting a client.
A high integrity accountant is also an honest accountant. Yes I know that in the wake of the fall out of
the Enron scandal that phrase seemed to become an oxymoron. But a very large number of
accountants were as deeply appalled by the behavior of Arthur Anderson auditors as the general
public. More than a few of us were deeply appalled by the conduct of our professional organization the
American Institute of Certified Public Accountants in opposing needed reforms to insure that the
auditing process was not tainted by the desire for higher fees.
How can you tell if you are dealing with a high integrity accountant? One telltale sign is their
willingness to say I do not know the answer to that question or I think the answer is this thus and
so but let me recheck and get back to you. An honest practitioner who is confident in their own
abilities is not bashful about admitting they do not know the answer to every question. The
accountants who lack confidence and/ or integrity will attempt to answer every question despite their
lack of certainty.
One indicator of an accountant that lacks integrity is one who will boast to you about how he or she
will save you lots of money on your tax return. While it is true that a competent and diligent tax
professional may be able to save you money compared to lesser trained practitioners beware of
practitioners who boast of this. These boasts may be thinly veiled hints that lines will be crossed and
unnecessary risks taken. Keep in mind that if a practitioner is willing to cheat the IRS, more than likely
they are willing to cheat you too.

Most individuals and business owners shopping for an accountant are not in a good position to gauge
directly a practitioners competence level. However, during even a brief interview most folks can get at
least a sense of whether the person has integrity. It also helps if you can get recommendations from
individuals and business owners you know to have integrity. Clients with integrity will usually insist on
integrity in their accountants.
Finally, remember it is far easier to acquire and possess knowledge than it is to acquire and possess
integrity.

Ensuring Accurate Accounts, Records and Disclosures

We observe the most stringent standards in the keeping of our accounts and
records. Accurate accounts and disclosures are essential to our operations
and compliance with laws on accounting, taxation, filings, public disclosures
and other important obligations.
Accurate accounts, records and disclosures
Our Company is subject to extensive and complex accounting and reporting requirements. Our
operations must comply both with applicable accounting and financial reporting rules and regulations
of the jurisdictions in which they operate, and with any international rules and regulations which may
apply as a result of being part of the Liberty Global Group.
All of our books, records, accounts and financial statements must be maintained in reasonable
detail, appropriately reflect our Companys transactions and conform both to applicable legal
requirements and to the Liberty Global plc system of internal controls. Our filings with the U.S.
Securities and Exchange Commission, as well as other public disclosures by or on behalf of our
Company, must be timely, understandable, fair, accurate and complete in all material respects.
Accounting and financial reporting practices must comply with applicable generally accepted
accounting principles and other criteria, such as local statutory reporting and tax requirements.
Furthermore, financial reporting for Liberty Global Group purposes must be compliant with the
Liberty Global Accounting Policy Manual. You may obtain a copy of the Accounting Policy Manual
from your Chief Financial Officer or Compliance Officer.
Our internal controls must enable us to demonstrate that entries in our financial records are accurate
and complete and made in accordance with applicable regulations.
No officer, director, employee or other person acting on behalf of our Company may take any action
intended to influence our Company's auditors in an improper manner or to influence the conduct of
an audit of our Company's financial statements.

Employees involved in our Companys disclosure process must be familiar, and must comply, with
Liberty Global plcs disclosure controls and procedures, including internal controls over financial
reporting, so that the reports and other documents filed by Liberty Global plc with the U.S. Securities
and Exchange Commission or SEC comply in all material respects with applicable laws and SEC
rules. Disclosures must be made in a timely fashion and, when made, must be accurate and
complete in all material respects.
Examples of financial practices that are prohibited and must be reported:

Approving or making any payment if you know that any part of that payment is to be used for

any purpose other than that described by the supporting documents, or if such approval exceeds
your authority.
Fraud in preparing, evaluating, reviewing or auditing any financial statement, such as

concealing or falsifying data given to internal or external auditors or making false representations in
the quarterly letter/certification process.
Fraud in recording and maintaining Company financial records, such as intentionally

recording revenue or expenses in the wrong period, capitalizing items that should be expensed or
recording personal expenses as business expenses.
Noncompliance with Liberty Globals Accounting Policy Manual or internal controls

processes.
Misrepresenting to a senior officer or to the Company's internal or external auditors or

accountants a matter contained in the Company's financial records, financial reports or audit reports.
Intentionally failing to comply with local statutory or fiscal requirements.
Find out more: Contact your Compliance Officer or Chief Financial Officer.

Proper authorization and approvals

Ensuring that proper authorization is obtained for any transaction is an essential business practice.
Authority to approve a transaction does not mean you have authority to also sign the related contract
or document which binds the Company. The list of approved signatories for a particular company is
generally small. It is your responsibility to ensure that appropriate approvals, signatories and
execution procedures are followed in connection with any transaction in which you are involved and
that you abide by your personal authorization limits. If you have any questions about your company's
authorization requirements or limits, please contact the controller's group for your business unit or
division or your Compliance Officer.