While ignorance is no excuse for committing unethical or illegal actions, it may play a role in accounting crimes. When problems are discovered, the internal auditor serves the organization by finding ways to prevent them from recurring. In my opinion all the above methods should ring a bell and raise ethical issues in the mind of an accountants or executives who actually instruct accountants to do such tricks Accounting Fraud Fraudulent accounting methods are not very different from creative accounting or even regular accounting activities, however the clear purpose of these intentionally made transactions is to misinform either the public or the management. The extent of the importance of the information to the user increases the ethical factors governing the development and disbursement of that information. External auditors focus primarily on financial control systems that have a direct, significant effect on the figures reported in financial statements.

Another remarkable fact to come out of the survey is that about one-third of companies said that they have actual evidence that attention to corporate responsibility has improved their bottom lines. In addition, many firms overstated asset values such as inventory, accounts receivable, property, equipment, investments, and patent accounts. These are the questions and considerations that need to be reflected in the books by the accounting. Concerned with right and wrong, and how conduct is judged to be good or bad. In case we want to examine business ethics or corporate behavior we have to look at the certain individuals behavior in business. Independence, competence, and confidentiality. As a direct result, the US Congress passed a law, called the Sarbanes-Oxley Act, which imposed stricter rules on auditors and made corporate executives criminally liable for lying about their accounts.

Usually it is timed to occur when the company is trying to cleanse the books and may occur at a time when it works against a one- time gain, leaving the net effect whatever value is required to make the quarter.

thesis the parmalat scandal

This expansion, however, required large initial capital investments and long gestation period. Certainly there are businesses that try to avoid tax paying hiding real revenues and profits but that is a category I do not want to discuss, as they are not relevant from my thesis point of view.


The company had dubious loans treated as equity. However, there are other types of benefits, as well. Confidentiality Accountants should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper or specific authority or unless there is a legal or professional right or duty to disclose. The announcement surprised financial analysts and, coming on top of accounting problems at other corporations, had a noticeable effect on the financial markets.

Any deviation from the moral code of conduct or abusing accounting ethics can result in dire consequences for him, such as suspension of license, termination of right to practice and severe penalties.

Challenges facing the accounting profession

Accountants in academia are entitled to educate and pass the knowledge, skills and ethical behavior parmalatt the profession to the next generation. Another remarkable fact to come out of the survey is that about one-third of companies said that they have actual evidence that attention to corporate responsibility has improved their bottom lines.

thesis the parmalat scandal

Technical standards Accountants should ensure that all work undertaken is performed to the highest standards.

Enron continued its policy of acquiring companies and in acquired Wessex Water in the United Kingdom, which formed the basis for its water subsidiary Azurix. Highlights are; Section describes criminal penalties for altering documents, Section describes whistleblower protection and Section describes criminal penalties for fraud. Lehman Brothers however found a loophole in the financial accounting standards, which allowed it to move its repurchase agreements liabilities off its balance sheet.

When will they start to receive their retirement benefits?

(PDF) Accounting ethics, education and professional legitimacy | Laszlo Mindszenti –

The objective of internal auditing is to assist members of the organization in the effective discharge of their responsibilities. For a professional, such as an accountant, reputation is the most valuable asset. WorldCom filed for bankruptcy protection on July 21st Also, if the write-off is later found to be too large, which may have been the intention all along; some of it can be reimbursed at a future date, directly adding to profits.

Ethical standards have since then been developed through government groups, professional organizations, and independent companies. What turned out after the investigations Parmalat created fictitious sales, double counts sales or fictitious subsidiaries.


Everyone knows that one can’t walk into a bank with a gun and steal the money without breaking the law, but thsis regulations aren’t nearly this simple. Its purpose, in part, is to ensure parmaalt the financial status and operating performance of publicly traded companies are fairly presented and disclosed. Professional accounting bodies globally have the important role of representing, promoting and enhancing the global accountancy profession.

Individualism, Instrumentalism, and Exchange considers that right behavior means acting in one’s own best interests Level 2 – Conventional! Everyone knows that one can’t walk into a bank with a gun and steal the money without breaking the law, but accounting regulations aren’t nearly this simple. Then I will elaborate 3 cases in order to provide more details and background parmala of those specific examples in terms of motivation reasons, applied accounting tricks and outcomes.

(PDF) Accounting ethics, education and professional legitimacy | Laszlo Mindszenti –

These banks rated Parmalat bonds as sound financial paper, when they knew, or should have known, that they were worth nothing. In the case of professional accountants in business, not only must they maintain high standards but they also have a key role to play in helping organizations to act ethically. They should act diligently and sfandal accordance with applicable technical and professional standards when providing professional services.

Thesid is exactly what the management wanted to avoid at all costs. However, these pparmalat may be contrary to what are allowable in the accounting standards or to what the professional accountant may feel comfortable with.

For better understanding of Earnings Management, it is important to clarify why earnings need to be managed. Many ethicists note that it’s the developing and continuing dialogue around the code’s values that is most important.

This gives the company the ability to increase their revenues and expenses without changing the net income of the company.

Author: admin