Code of Ethics

This essay will discuss the following main statement; the adoption of a proposed new look Code of Ethics, based on the international Federation Accountants code, will ensure that New Zealand Charted Accountants meet their ethical responsibilities. Within this essay an adverse position will be taken towards the previous statement. The international Federation of Accountants (IFAC) states that, professional standards and the code of ethics form important benchmarks that should be met by practicing accountants. Accountants should understand and apply them when conducting any type of work (Pickett 2005). The New Zealand Institute of Charted Accountants (NZICA) is a member of IFAC, as part of its member obligations NZICA has to apply the same standards as IFAC (nzica) . This is how the previous statement arises, due to IFAC recently going through a major revision of the code in the area of independence. (nzica) .This essay will appoint different issues and concerns about adopting a new code of ethics and how this change will actually affect the society. Such points are; personal moral judgment, ethical education being a factor of ethical responsibilities and unclear types of enforcement and points of the Code of Ethics. Good ethics, whether at work or home, demands self-knowledge, Whereas some groups want to see ethics as a skill or a particular part of organizational transformation, practising good ethics ultimately comes down to you and how you make decisions.(6). Moral judgment is unique to any individual, adjustments to the NZICA Code of Ethics will not provide a higher rate of success in ethical decisions by professional accountants this is stated in certain studies .Such studies show that moral judgment is not affected just by rules and codes, according to Arnold, Audi and Zwolinski (2010) moral judgment is affected by culture, education and previous experiences. Although the introduction of the new Code of Ethics by NZICA will still aid moral decisions, the overall change will not ensure that New Zealand Charted Accountants meet their ethical responsibilities, as personal moral judgments plays a key role in such decisions. Brady (1999) who studied different ethical codes and how to teach them, states that overall the main problem occurring within different organizations, is individuals having different moral standards and lack of understanding of what an ethical code means. These previous studies show that by just adopting a new proposed Code of Ethics, New Zealand cant ensure that all accountants will meet ethical responsibilities. An important theory that can be apply regarding moral judgment is, agency theory, the general definition of this theory is that agents (managers, accountants, auditors) need to perform business in a good behavior matter, and they are closely watch by external or internal auditors (auditing book). In such theory it is important for the principle to keep a close eye on the agent (the person hired), for then it is essential that the agent follows ethical standards, in this case applying to the main statement, it is important that all accountants are aware of the NZICAs Code of Ethics and what responsibilities they have to follow under such code. This awareness of the Code of Ethics will benefit the society as a whole, obtaining such awareness is not an easy task to perform and a simple change of the current Code of Ethics will not ensure that ethical responsibilities are met by all accountants. However there are other factor that affect the successfulness of the proposed new look Code of Ethics, in ensuring that New Zealand Charted Accountants meet their ethical responsibilities. Ethical education is a point that will be discussed furthermore in this essay to show another factor affecting the overall

main statement. Ethical education is a major factor in ethical responsibilities. Possessing knowledge of ethical codes and standards is essential in the current world of accounting. Employers are no longer satisfied with just hiring competent accountants, but are looking for those who know the importance of, and are equipped with skills necessary to make ethical decisions (2). The importance of having a wide an extensive understanding of the NZICAs code of ethics is necessary to any New Zealand Charted Accountant. As stated by Amlie,(2010) in the recent past years, there have been several well-known companies that have engaged in less than-adequate financial reporting . The numerous incidents of unethical behavior in the accounting profession stress the need for increased ethics in accounting education(2). Obtaining an overall education on the code of ethics will not be simply achieved. The proposal of a new looks on the Code of Ethics will not informed professional accountants on the obligations and ethical responsibilities that they have to follow. Educating accountants of how to manage in challenging ethical situations is crucial to obtain, that sense of knowledge of ethical responsibilities. Overall research, states that ethical education shows an improvement in ethical responses over a period of time (Amile, 2010), for then it is essential that ethical education is continuous throughout an accountants career. Ethical education is vital to apply public interest and social accountability theories; the view on these theories is that accountants, auditors are a representative of the general public. Professional accounting is a public good; accountants are expected to act in a manner that furthers the public interest (book auditing). Absence off ethical education can lead to, unethical decisions, that can lead to legal liabilities. This occurs when a member of the public can demonstrate in court that a loss has been suffer due to unethical decisions made by a professional accountant. This lack of ethical education affects social accountability, as lack of transparency towards the society occurs. LINK Overall the NZICA Code of Ethics is expected to be taken into consideration by all members of the organization. Compliance with the Code of Ethics is mandatory for all members. Members must be able to demonstrate at all times that their actions, behaviour and conduct comply with the Code of Ethics.(NZICA). This does not mean that enforcement is in place according to the gravity of conducting an unethical decision, and violating the Code of Ethics. NZICA (2011), under their compliance part of the Code of Ethics in section seven, states that, Compliance with the Code of Ethics depends primarily on members acceptance of their responsibilities to act ethically and their voluntary actions to meet those responsibilities; secondarily on reinforcement by peers and public opinion; and ultimately on disciplinary proceedings. Non-compliance with the Code of Ethics may expose a member to disciplinary action (p.02). This compliance shows that primarily comes to the individual to act in an ethical way and that even that there is disciplinary consequences, those come third to ones own personal judgement and the judgement of the public. The main problem as Wright (1993) states is that the Code of Ethics comes without any teeth and it is most influential on professionals that are ethical and responsible already, than on those of need of real direction. The Code has minor effect on those performing unethically, and a simple change will not improve the problem of unethical decisions. There are some unclear points in the Code of Ethics. NZICA (2011) states that, Members should be bound not merely by the terms but also by the spirit of the Code of Ethics. The fact that particular behaviour or conduct does not receive a mention within the Code of Ethics does not prevent it from amounting to breach of ethics (p.02). This

compliance states that members should follow the Code in spirit; such compliance shows the lack of clear points in the Code of Ethics, and the absence of clear understanding that will not be simply fixed by some overall changes. Following the code in spirit, can change within different individuals and the new look Code of Ethics will not ensure that this dilemma will be fix as the changes do not provide a clear meaning of what is meant by following in spirit the Code. The lack of enforcement and the absence of some clear points in the Code of Ethics show the problem is far more extensive than just a few overlook of the previous code. To ensure that New Zealand Charted Accountants act ethically there is need of bigger changes. Ultimately , this essay discussed why the statement; the adoption of a proposed new look Code of Ethics, based on the international Federation Accountants code, will ensure that New Zealand Charted Accountants meet their ethical responsibilities, is not essentially right. Throughout the essay with the aid of journal articles, books and other resources a point of agreement that the previous statement is not correct has been achieved. Three different points were arise, personal moral judgment, ethical education being a factor of ethical responsibilities and unclear types of enforcement and points of the Code of Ethics to prove that the previous statement was not correct.

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