Unknown to most of the people, professionals in the accounting field handle sensitive data. Accountants do not just gather, compute, and handle numbers. They do not just balance the books and account every item. They deal with numbers and this, in turn, can have a significant impact on prices, markets, and other financial consequences for a business or a company.
Accountancy, a career which bears significance to growing and competing businesses, is not without ethical issues. Outlined below are the most common of these issues and the proper way to avoid them at the earliest time.
Common Dilemmas Of The Accountants
- Conflict Of Interest
This issue may arise if you have consulting clients not just of different interests but conflicting ones. Both may be looking to acquire the same asset or company. You need not choose one, or which one to side with. You can formulate different teams each not affecting the other’s consulting and decision.
Conflict of interest may also arise, most especially for accounting firms (big accounting firms in fact), if a client is under investigation and you, as his or her auditor, are faced with the dilemma of conducting an account investigation or doing nothing at all. In this instance, there is a conflict of public interest and the client interest.
2. Knowledge Of Illegal Acts And Activities
It is the auditor’s job to report suspected and alleged fraud in a company. The accountant, however, may have a good grasp of the illegal acts of the management and the board. They are not prohibited from reporting the irregularities and illegal actions affecting financial reporting.
In fact, they can report it but only to internal management and authorities. External authorities with a high possibility of imputing civil and criminal charge against the accused are out of the question.
3. Confidentiality Of Clients
Accountants are not bound to disclose the name of the clients, their financial reports, and other private data and figures that the accountant handled. Following the first dilemma, accounting firms are in fact, not allowed to disclose any client information (such are data from tax services) that will be against the client’s interests. The main dilemma of every accountant is this: “When should I spill the beans?” More importantly, “Should I spill the beans?”
How To Properly Resolve Them
The dilemmas and problems stated above are not without remedy. Take note of the following to also avoid the potential legal liabilities arising from certain acts.
- Know The Consequences
Identify if this particular dilemma is covered by any special laws penalizing your choices of acts. Just because you are doing something out of good faith to serve the public interest, it will never absolve you from criminal or civil liability.
2. Be Prepared For Possible Legal Issues
Get professional advice and seek help from the people in the legal profession. Suppose you got a hold of this information about a client’s illegal act, the first thing to do should not be to report them right away to external authorities. Find a lawyer specializing in this kind of legal issues and heed their advice about what to do.
3. Look From An Outsider’s Point Of View
Best to illustrate this is to go back to your perspective as a student when you were just earning your accounting degree. If you, as that same student years ago, heard about the dilemma you are in right now, what would you advise yourself? What would you feel? What would constitute as your ‘best action’?
They say that these dilemmas are even worse than the problems encountered by budget analysts or actuaries. Every aspect of a dilemma and the usually bad choice may be tempting. Accountants should always keep in mind these basics to avoid ending up in a legal battle (which is the worst case scenario) for something done out of the profession of their dream and choice.