Accounting Theory & Practice Assessment Answers

Select a recent journal article from the accounting literature which addresses one of the following issues:

• International Financial Accounting Rules and Regulations

• Management Accounting Techniques;

• Business Ethics

Answer:

Introduction

Quoting Kenneth Arrow, 'it can be argued that the presence of what are in a slightly old-fashioned terminology called virtues in fact plays a significant role in the operation of the economic system'. Virtue determines the future of the economic system. The system can be well defined and better projection is seen once the system has virtue and proper system of ethics into operation.

Area of Examination

The write up involved a lot of thinking a research. The impeccably efficient research and expertise of ethicists, and studies conducted by them is a major source of this write up. Virtues and values have been a topic of study for ethicists worldwide since time immemorial. These intrigue any researcher who wishes to stimulate value with work. Ethics and virtues in today’s time, finds a wide application in the corporate sector. Without ethics, it is difficult to operate and attaining the objectives would be a daunting task (Christoph, 2013).

Methodology

It is extremely important to integrate virtues with business practices, as virtues and business is make up the soul of any business. A business cannot run by itself. It needs people to run the business. In addition, where there are men involved, comes the need of practices and regulations. The actions of men can be regulated either by someone else or by self. Self-regulation is a rare scene. Educationalists and researchers have spent years in analysing the relationship of business virtues and ethics, to the functioning of the business. The system of ethics in important in this scenario because it is through people that the aims of the organization are met (Alzola, 2015). Hence, proper training should be there in the system that will enable better performance of the work force. Virtues and ethics are abstracts of a healthy business, but are jeopardised very often in the need of fulfilling professional and organisational goals (Douma & Hein, 2013).

Critical Analysis

Virtues are an intriguing concept. To do something and not to the others, to feel selectively, to choose from an array of options, is a dangerously subjective task. In addition, taking up an analysis of virtues and virtuous people, is an interesting task (Weiss, 2009). Also, in the process of the analysis and writing, somewhere deep, I try to ask myself- what are those qualities which you feel are your virtues?’ This question, one must ask himself from time to time. The article was selected to ensure that the research and ideas reach out to people someone somewhere gets inspired and tries to look for goodness within him. That is how we can effect a change and witness a good result (Alzola, 2015). Moreover, it will be beneficial in the end. It is like connecting dot in a sequence one by one. In addition, this world demands more of virtues than vision now. Vision touches many, virtues smile at a few (Clarke, 2010).

There is not anything here, which is right or wrong. It all depends on the societal price we are ready to pay for a selected course of action. However, given our societal rulebook, we have segregated things, as virtues and vices. Moreover, virtues are virtues because most people feel they are supposed to be named so. In fact, it is not that difficult when it comes to real scenario. The habits and character with which we are born, and those that we pick up and imbibe with time make us how we are. We got these basic traits. Such features in there in the nature from the very beginning. Social harmony, moderate attitude instead of extremism, positive and right intensions make up virtues in totality (Douma & Hein, 2013). It is a great way that boosts the existence of virtue and enhances it further. Virtue is in fact, a mixture of various elements and that determines the future. This is the main reason why there has been an enhanced stress on corporate governance. The presence of such elements ensures that the company has the correct virtue and can be said to be the catalyst that will propel the business higher and further. The greatest of philosophers such as Aristotle and Plato too were intrigued by the idea of virtues, and they did an elaborate analysis on the same. The soul, the mental side to be precise, of a person has many capabilities such as thinking, wanting, liking, hating, and an array of other such mental capabilities. These can be teamed as either the passion driven capabilities or reason driven or the strongest of all- desire driven. However, in a virtuous person, the rational part is more stimulated than any other virtue and thus, his desires and passion too bootstraps the lead of reasoning from their rational part (Choi & Meek, 2011).

Virtues can be impaired in two ways. It is either the weak will power or the vice of self-indulgence. A weak will power suggests that the person is aware of the existence of wrong in his action, and is conscious about them, but is helpless because of his weak will. The ill will becomes a barrier and that debars him from performing the desired task. Now we here must also know what these ethical jargons really mean (Mallin, 2011). There are four kinds of people. In ethical order, there are moderate people, who know what they are doing, are aware of actions, and choose the moderate course. In this course of action, there is a good approach and no complexity is involved. Then there are self-controlled people, who fight against their inner appetites and still choose to tread the ethical path. The other category is of the weak willed people who know what the right action is, and wish to do the same, but their vice-appetite pulls them away from righteousness (Mcdaniel, 2011). The major loophole lies in their inner sense that prevents them from doing the correct thing. The last ones are immoderate ones. They are either ignorant or unmoved at the idea of virtues and choose not to drop a sweat on it either. It is the most ignorant group and is completely drifted away from the good ideas. In short, they do not have any aim or purpose. These ideas are all pervasive. Be it at an organisational, societal, or individual level, we all need to follow them. We cannot do away with our virtues. These are the little bricks upon which the entire empire of success and well-being lay. Virtue is the pillar on which the entire concept stands (Brealey et. al, 2011). Without virtue, everything will come under the scanner and there will be little scope of good performance.

The analysis above which talks about ethics on personal level, apply to professionals and businesses too. Ethics are an important feature in corporate and plays a determines role because business that runs on ethics provide immense utility (Gibson & Douglas, 2013). Key business practices thrive on the lines of business ethics. Successful business thrives on the concept of ethics, as business with a system of ethics tends to grab the opportunity with ease and flexibility. Moreover, there is calmness in the environment as the practice is fair and free from all ill practices. Generosity, honesty, fair play, and equality are the keys practices to follow in order to be called ‘ethical’ in business. Honesty is rooted in the core values of a business (Serenko & Bontis, 2009). Honesty can be expanded into a full set of three subjects for guidance and principles: Working along with partners, collaborations along with other colleagues and protecting the company and business. Containing a perfect virtue like honesty or courage, though, or having an ideal person in a company to follow, might help in striving to develop the value of acting in a virtuous way (Lubatkin, 2009). A company that has a strong level of ethics out performs the one that has low level of ethics. Hence, it can be said to be a part of any company. Generating profit at the cost of others will deteriorate the business and least chance will be there to be successful in the long term.

Conclusion

Overall, the inference of the discussion is that no matter how good the business prospects and the business practices are, an organisation cannot succeed unless it follows sound business ethics. Each individual working there needs these ethics at all levels of management. Not only is it necessary for survival but also for healthy growth and synergies in business. Virtues are not just set of best practices. They are the whole set of practices actually undertaken to make a righteous work machinery. The special spice mix can add flavour of success to even the smallest of entities. As an inference to the entire discussion, a successfully implemented ethic plan is all that one needs in order to succeed. Ethics plan will not only bring a well-cultured environment, but will also help in attainment of the goals with ease and flexibility. Ethics are the need of the hour and it is imperative for each organization to have a sound system of ethics that will help to attain the goals (Goergen, 2012). This will ensure better performance and an ambiance will be created where things will be dealt with a strong degree of evaluation and hence chances of errors will be reduced to the utmost.

Reflection

From the above module, it is established and learnt that ethics must be implemented in every organization, as it is the backbone. It leads to a strong cultured environment. This is a great learning as the importance of ethics is brought to the forefront and the immediate benefits are known. It provides a great experience in strengthening the mindset and stress on the fact that deficiency in the ethics portion can erode the entire goodwill and prove to be of immense danger. Doing this presentation, I have learnt that ethics is the soul of the business and without it, the business will not be able to sustain in the long run.

References

Alzola, Miguel 2015, Virtuous Persons and Virtuous Actions in Business Ethics and Organizational Research, Business Ethics Quarterly, vol. 25, pp. 287-318

Brealey, R., Myers, S. and Allen, F 2011, Principles of corporate finance, New York: McGraw-Hill/Irwin.

Christoph, Luetge 2013, Handbook of the Philosophical Foundations of Business Ethics, Heidelberg/New York: Springer.

Clarke, Thomas 2010, International Corporate Governance, London and New York: Routledge

 Douma, Sytse & Hein, Schreuder 2013, Economic Approaches to Organizations, London: Pearson

Gibson, Andy & Douglas, Fraser 2013, Business law, Pearson.

Goergen , Marc 2012, International Corporate Governance, Prentice Hall.

Lubatkin, M.H 2009, One more time: What is a realistic theory of corporate governance? Journal of Organizational Behaviour, vol. 28, pp. 59-67

Mallin, Christine A 2011, Handbook on International Corporate Governance: Country Analyses, Edward Elgar Publishing.

Mcdaniel, Charles 2011, Theology of the Real Economy, Journal of religion and business ethics, vol.2,pp. 22-56

Choi, R.D. and Meek, G.K 2011, International accounting. Pearson.

Serenko, A. and Bontis, N 2009, A citation-based ranking of the business ethics scholarly journals, International Journal of Business Governance and Ethics, vol. 4, no.4, pp. 45-68

Weiss, J. W 2009, Business Ethics: A Stakeholder and Issues Management Approach With Cases, Mason, OH: South-Western Cengage Learning.