La Consolacion College Manila

School of Business Administration

IMPACT OF ACCOUNTING ETHICS ON PRACTICE OF

ACCOUNTING PROFESSION IN THE PHILIPPINES

SYNTHESIS

Carao, Iris N.

Muyco, Michelle T.

Reyes, Daenielle Lorvieanne T.

February 2019
 ACKNOWLEDGEMENT

First of all, we would like to express our deepest gratitude to our professor, Michelle Cortez for

giving us opportunity to make this study as part of our endless search for knowledge. Great thanks to our

parents for all the love and support in doing this study. They made us successful by helping us in a big

way for providing financial support, accommodation, and especially the strength and inspiration in

accomplishment of everything we do. We want to acknowledge as well all our respondents who spent

some time and effort in cooperating for answering our questionnaires and other people who provided

some assistance and information that we needed in the study. We would also like to thank everyone who

helped us even in a small way, particularly our friends and classmates contributing to the success of this

project. And above all, this study won’t be possible without the guidance and inspiration given by the

Almighty God.
 ABSTRACT

The accounting profession is concerned with the ethical beliefs of its members. To this

end, the authors surveyed public accountants, questioning them about the “Impact of

Accounting Ethics on Practice of Accounting Profession in the Philippines” and their

perceptions of how potentially unethical behaviors impact the firm. The paper focuses on

respondents' perceptions of the impact on the firm's practice, image and degree of concern.

Their mean responses indicate that they believe that Ethics on Practice of Accounting

Profession are extremely important, especially demonstrating professionalism and maintaining

independence while performing independent audits .

KEYWORDS

1. Ethical Issues

2. Unethical Behaviors

3. Objectivity

4. Practitioners

5. Professionalism
I. INTRODUCTION

The study investigates the practice of accounting profession in the Philippines

in ethical decision making of their acceptance of the responsibility to act in the public

interest. A recent report from the global anti-graft watchdog Transparency

International disclosed that the 2015 Philippine score in the Corruption Perceptions

Index registered at 35 out of a possible 100, placing the country to rank 95 among

168 countries. It was also noted that the country’s score is “based on expert opinions

of public-sector corruption,” and is lower than 2014 score of 38. The region’s average

score stands at 43/100. Regionally, New Zealand topped it at 88, followed by

Singapore’s 85 (from Rappler’s report). The major finding from the study is that in

the development of professional practices, compliance with well-grounded ethical

values are a good prerequisite for an enduring practice and that penalties meted out to

erring members are grossly inadequate. The researcher recommended that to provide

remedy or improve the situation, there is the need for practicing accountant to pay

attention to good ethical conduct and there is the need to adhere strictly to the ethical

code of conduct.

II. STATEMENT OF THE PROBLEM

Even with knowledge of good ethical guidelines, members still fall foul of the

rules. The confidence of the investing public in the practicing accountants is being
 called to question. People have asked why members breach rules and whether all that

needs to be included under ethical guidelines have been duty covered or whether the

problem has more to do with procedures for implementing/enforcing the ethical

standards. The following questions were raised:

1. What are those ethical rules that are frequently breached?

2. Examine the effect of ethics on disclosure of financial reports of firms in the

Philippines?

3. Investigate the effect of ethics on objectivity of Professional Accountants in the

Philippines

III. HYPOTHESIS

Based on the data available that we have gathered the first hypothesis is that

ethics guidelines or ethical code of conducts are not relevant to the situations that

confront the practitioners. Practitioners explore whether the issue is regulated by law

or policy. The sources of information are their employer, their professional

association, a governmental regulatory body such as the Securities and Exchange

Commission — or all of the above. The Philippine Institute of Certified Public

Accountant (PICPA) has a Code of Professional Conduct, and Financial Executives

of the Philippines has a Code of Ethics. Both are excellent resources that they use

when they are uncertain about the ethics of a situation they’re confronting. The

second hypothesis is that there is no significant relationship between ethics and

disclosure of financial reports of firms in the Philippines. Practitioners seek legal

whistleblowing resources. The third hypothesis is that ethics has no significant effect

on the objectivity of financial reports of Professional Accountants in the Philippine.

When it comes to conflicts of interest, or even the appearance of one, practitioners

ensure they will not adversely or inappropriately sway their business judgments. They

navigate such situations; they create distinct accounting teams for different clients

and notify all parties of the nature of the conflict.

IV. METHODOLOGY

The researcher chose a survey research design because it best served to

answer the questions and the purposes of the study. The survey research is one in

which a group of people or items is studied by collecting and analyzing data from

only a few people or items considered to be representative of the entire group. In

other words, only a part of the population is studied, and findings from this are

expected to be generalized to the entire population (Nworgu 1991:68). Similary,

McBurney (1994:170) defines the survey assessing public opinion or individual

characteristics by the use of questionnaire and sampling methods. And it will be

based on the information obtained from selected practicing chartered accountants in

Philippines. Accountants are also included as part of the respondents by using

structured questionnaire and oral interviews.

Figure 1 Figure 2 Figure 3 Figure 4

Figure 5 Figure 6 Figure 7 Figure 8

working as accountants. The results clearly show that all accountants act in a consistent

manner with ethics and conduct rules. In figure 1 we can see that 74.3% of practitioners

over 35 responded positively to the question ‘Are you honest when sharing information

with others?’. In figure 2 shows that 54.3% of practitioners over 35 responded with

never to the question ‘Do you follow orders regardless if they appear unethical?’ It also

appears that 28.6% of practitioners responded with sometimes to the question. In figure

3 shows that 82.9% of practitioners over 35 responded with always to the question ‘Do

you maintain appropriate confidentiality?’. In figure 4 shows that 68.6% of

practitioners over 35 responded with never to the question ‘Does favoritism ever enter

into your decision making?’. In figure 5 shows that 71.4% of practitioners over 35

responded with always to the question ‘Are you able to manage personal biases?’ In

figure 6 shows that 77.1% of practitioners over 35 responded with always to the

question ‘Do you balance personal and organizational needs?’ In figure 7 shows that

71.4% of practitioners over 35 responded with always to the question ‘Do you say “no”

to inappropriate requests?’ In figure 8 shows that 65.7% of practitioners over 35

responded with always to the question ‘Are you able to avoid conflict of interest?’

VI. DISCUSION

According to the results of the survey, most people in the accounting

profession practices the qualities stated as per the accounting’s conceptual framework
 and ethical standards. Almost 80% of them still maintain their independence and

unbiased decisions. As much as possible these people refuse and stay away from

things that they think may be able to impair their decision making and they also do so

to avoid conflict of interest. The survey also says that 95% almost always maintain

the confidentiality of their work and other details of it, and integrity when it comes to

the information stated in their reports.

VII. CONCLUSION

One of the key traits of a practitioner is adherence to a rigorous set of ethical

guidelines. When someone veers too far from ethical standards, their trustworthiness

and judgment come into question. The positive responses of the 35 practitioners

shows that ethical codes are the fundamental principles that accounting professionals

choose to abide by to enhance their profession, maintain public trust, and demonstrate

honesty and fairness. Sadly, there are some who answered negatively to the questions

which we can only conclude that not everyone who works in the accounting field is

trustworthy. Though there are some who answered negatively, it doesn’t change the

fact that most of the practitioners answered positively. The result shows that

practitioners demonstrate integrity by being straightforward and honest in all business

and professional relationships. They uphold integrity by not associating themselves

with information that they suspect is materially false or misleading — or that

misleads by omission. In conclusion, practitioners comply with the laws and

professionalism which is a standard that goes beyond the office.

VIII. REFERENCES

 https://repository.up.ac.za/bitstream/handle/2263/28684/03chapter3.pdf?sequenc

e=4&isAllowed=y

 https://accountingweekly.com/ethical-issues-encountered-accountants/

 http://iosrjournals.org/iosr-jbm/papers/Vol12-issue1/G01214551.pdf

 https://www.socialworkers.org/About/Ethics/Code-of-Ethics/Highlighted-Revisions-

to-the-Code-of-Ethics

IX. APPENDIX

Survey Questions:

1. Are you honest when sharing information with others?

2. Do you follow orders regardless if they appear unethical?

3. Do you maintain appropriate confidentiality?

4. Does favoritism ever enter into your decision making?

5. Are you able to manage personal biases?

6. Do you balance personal and organizational needs?

7. Do you say “no” to inappropriate requests?

8. Are you able to avoid conflict of interest?