The Importance of Ethics in Finance

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Table of Contents

Introduction
Ethical Behaviors
Importance of Ethics in Finance
Ethical Issues in Finance
Conclusion
References

Introduction

Professionals in the finance sector should undergo intensive training regarding ethical issues in finance to enable them to perform their duties with a high level of integrity. According to Angle (2004), ethics is the study of how individuals must behave in a given society. Some scholars regard it as the amount of respect a person gives others in his or her community (Boatright, 2010). It is also a study of moral standards used to determine the morality of an individual’s actions.

This paper looks at ethical behaviors, the importance of ethics in finance, and ethical issues in the financial sector. The conclusion gives a summary of the key points, as discussed in the paper.

Ethical Behaviors

I was employed as a financial accountant for a manufacturing firm. The managing director expected me to participate in a plot to make stakeholders believe that the business was doing well. For this to happen, the managing director wanted me to give a false account of stock goods to portray a rosy picture of the company’s operations. The greatest challenge was to ensure that I stand my ground and act in an unbiased manner. Although it was such a delicate matter, I did everything possible to make decisions based on the required financial reporting standards.

In another incident, the production department head approached me with an already signed cheque for me to countersign. The amount raised was to be used to purchase raw materials. Although he tried so hard to explain, I could not understand why he wanted me to sign a cheque that had been raised without following the correct procedure. My efforts to get the right facts about the transaction failed to bear fruit, and I declined to sign the cheque.

In a third incident, the company needed to process a customer’s refund. The managing director presented me with a request for a refund and insisted that the customer be paid cash right-away. When I sought to find out why the payment had to be in cash, the managing director refused to provide a sufficient explanation. According to him, it was none of my business to question his motives or reasons for any of his actions. Further probing revealed an anomaly, and based on my understanding of financial reporting standards, I refused to do as he wanted.

In a fourth incident, I was required to prepare accounting records that were to be used during a cost-cutting strategy. Apparently, the company was not performing well, and several people had to be retrenched. Given the good relationship I had with my colleagues, I was afraid that their jobs were at stake, and I was responsible for preparing a document to be used in determining their fate. I wondered whether it was possible for me to remain unbiased. Nevertheless, I had to do my part and finally presented the management team with the requested information.

Importance of Ethics in Finance

Generally, the growth of a business is related to effective financial management (Brigham & Houston, 2009). To win the confidence of employees, customers, and stakeholders, it is imperative for the government to ensure fairness and integrity in all areas of operation. By providing that work done follows strict financial ethics, a company can guarantee its integrity and subsequently improve its public image.

One company that has been accused of treating its employees unethically is Wal-Mart. Despite being such a respectable company, it subjected one of its employees to unfair treatment. The employee got involved in a serious road accident that left her confined to a wheelchair. Later, she received compensation from an insurance firm. Unfortunately, Wal-Mart later sued her and her family for what it had spent to treat her, and the court ruled in its favor.

Ethical Issues in Finance

One ethical issue I may encounter at the workplace is the theft of time. This may happen when employees deliberately come to work late or sneak out when no one is watching while pretending to be committed to their work. Ethically, it is wrong for anyone to work for less than the recommended minimum amount of time while receiving full payment.

I may also be required to deal with cases of deceitful employees stealing from the company. This may happen when such employees provide falsified documents in order to receive more than they are entitled to. It is unethical for any employee to abuse such privileges.

Dishonest suppliers who believe in giving bribes to get business from a company may also pose an ethical challenge to my career as a finance expert. As a professional finance practitioner, I will ensure that I stick to acceptable financial standards and will do work as expected.

I may also be required to deal with cases of employees colluding with suppliers or customers so as to steal from the company. A supplies officer in the company may, for example, strike a deal with a corrupt supplier to inflate commodity prices in order to receive illegal payments.

Conclusion

It is undoubtedly essential for all finance professionals to undergo elaborate training on ethical issues in order to do a commendable job. As can be deduced from the discussions in this paper, all finance professionals face severe ethical challenges, and as such, they must be well prepared.

References

Angle, C. (2004). Defining Ethics Good & Evil. Redding, CT: Philosophy Publishing Co.

Boatright, J. R. (2010). Finance Ethics: Critical Issues in Theory and Practice. Hoboken, NJ: John Wiley & Sons.

Brigham, E. F. & Houston, J. F. (2009). Fundamentals of Financial Management. Mason, OH: Cengage Learning.

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