 Hello, in this discussion we will discuss the discussion question of explain why ethics is important in accounting. This is a very common essay question and is becoming more and more common as an essay question. The idea of ethics is going to be very important to any profession, including the accounting profession. We can answer this question by first defining ethics, but of course ethics is a very broad topic and a topic that's been debated for a long time has a lot of different aspects to it. We then want to narrow that down and say why are ethics important in a specific profession and then possibly narrow that down and talk about why ethics is important to the field of accounting and to people who practice in accounting as well as the profession of accounting as a whole. When considering ethics from a broad standpoint we can get some broad ideas of what ethics are, ethics being the ideas of good and bad, right and wrong, what would be considered good behavior versus bad behavior and how would we get to those kind of determinations would be part of what is going to be included in ethics overall. Of course there's a lot of different topics in terms of what type of decision is good or bad and different situations and there's still a lot of thought processes out there in terms of how do we make those decisions. Do we make them in terms of absolute truths that are out there or do we make them on a utilitarian basis meaning do we make decisions just in accordance with a set of natural laws that are set and we just follow the natural laws and that would be the most ethical path or do we actually look at the outcomes and say what kind of outcome would benefit the most people and possibly make some different ethical choices in terms of what those outcomes would be. Those are just some of the topics that are still open debates in terms of what would be ethical behavior is are some stuff that's going to be ethical in a certain area and not in other areas are there some things that are going to be ethical in a certain culture and not in another culture. Is ethics a cultural thing or are there ethical laws that are as concrete as the laws of physics. Those are some questions again still debated but the general topic for ethics would be that it's going to be some type of series of rules that are going to guide behavior that we would be considered to be ethical and whether that be in behavior in general or within a specific place and of course when considering ethics in terms of a profession we can narrow that down a bit and narrow that topic down a bit and be talking about ethics as it relates to a profession. Now many times when we think about profession we typically some of the older professions is a legal profession or a medical profession and of course the accounting profession grew up in a sense from the legal profession in some ways as the business entities became larger and we have separate corporations and what not then the accounting for these corporations becomes much more complex accounting just in general becomes much more complex and that's where all these other types of professions start to happen when this knowledge base increases. So what is a profession then and why is ethics important within the profession would be the next step to answer an essay question such as this and we can we can think that a profession is something that's going to have some type of specialized knowledge that the society needs certain people with specialized knowledge in order to perform certain tasks. So when we think of the legal profession or the medical profession we're thinking about areas where we have people that have that spent a lot of time putting together specialized knowledge so that they can do these special tasks in terms of a legal or medical profession by that by the nature of that unlike other types of businesses the people that people doing business in these areas really are completely dependent meaning if we have a medical problem and we're going to the doctor we are completely dependent on the doctor's decision on what they're going to do as the medical professional and we really don't have the means in order to assess whether what we're being told is correct or not and the stakes of the decision the stakes of what are being advised are very high in those cases. So when those when those group of characteristics are put together that is a set of characteristics in which a profession might be needed and we can see that because the the society would need somebody then that they can they can trust they need to be able to have a higher level of trust into those types of situations and situations where they're completely dependent on the person that they're looking to get advice from and where it's a high stakes thing that we're we're looking at and the cost is high that's where we need these types of things if we don't have these types of things we've seen where the profession falls apart we've seen where the profession is developing the types of things that happen that are harmful to society those things being like an individual claiming to to have medical knowledge and selling things that are not medically approved and things that don't work and that type of thing when that goes on that of course hurts the people involved in the two transactions meaning it hurts the individual purchasing and it hurts the reputation of the person selling but of course the person selling is probably going to be moving on soon that's what those that's what that kind of thing does they're going to move on after a while and what's really happening then is we're hurting the name of the profession what that individual is basically doing is claiming to have the clout of a professional have the medical knowledge and therefore selling that that brand name and lowering the the brand of of the profession by doing that and and that hurts anybody else that actually does have the knowledge and wants to to practice in an ethical way within the profession so in order to to safeguard against that a profession in and of itself has the a self-regulating need to regulate that type of behavior because what we want to do is we want to make sure that as a whole the profession is has that brand name has that trust so that we can we can provide the services needed and we can have business transactions happening business transactions only able to happen when when there's trust between the two parties within the business transaction and that trust will be greater within you know if we had a certain type of profession involved that type of idea would be from a from a normal ethics kind of standpoint more of a utilitarian kind of idea in that if we were to apply kind of a utilitarian type of concept to the profession of the medical profession we would think that people would kind of we want people to act within any profession including a medical accounting or a law profession in such a way that their actions would benefit the profession as a whole so if we were a doctor and we were prescribing things that are beneficial and we were generating money and generating value on that that would increase the reputation of the medical profession as a whole and therefore be a fairly good be a good thing for the profession if however the the doctor was prescribing things that were not approved of then that would hurt the profession as a whole and if everybody did that then it would be a the profession would have a very bad reputation and therefore it'd be something that we would not want to do so from a fairly simplistic kind of utilitarian concept in terms of professions that's one way we can think of a profession that's kind of a drive that the profession has now that means that well how do we do that how does that happen well there's a couple different ways we can start to regulate this we can we can put in things like a licensing process so clearly we have a licensing process for a law profession for a medical profession and for the accounting profession and we can put in a standardized testing we can try to make sure that individuals have the set of knowledge there and we can also do you know background checks and other types of things to make sure that the people are behaving in an ethical way or you know not they don't have a criminal record or something like that in terms of the profession and then have that licensing process that's one of the ways that a profession is going to be regulated and that's one of the ways we see that within the legal profession within the medical profession within the accounting profession then we can move to the accounting profession in general why is why is ethics important in accounting in general and why did accounting kind of happen later on in terms of the of the ethics why did accounting become more and more of a of a it's a big deal as ethics become why did ethics in other words become more and more of a big deal and part of the reason of that is that we the accounting is is a branching off as we have more information as we have more data as we have more laws that are in place then the specialized knowledge that's needed within the accounting field becomes greater and greater so when we when we basically when they be when we invented the idea of corporations that became much more complex in terms of keeping the books for a corporation and individuals and then as we include laws within the corporation laws and regulations the complexity again gets more and more complex as complexity gets more complex then that specialized knowledge is something that gets greater and greater so the the need for accounting professionals because of those factors because of a differentiation between people being dependent on the accountant in different types of areas having a big difference in in terms of knowledge having that specialized knowledge and the stakes being very high as we've seen in some of the the cases where where problems have happened that's usually when these these things happen when when there's big scandals and big problems and we see that the stakes are high then that's when we have those factors that are now becoming more and more relevant and are increasing to become more and more relevant for us a profession to be involved in and to take control and to regulate the brand name and make sure that people are acting acting in an ethical way what does that mean in a way that basically the way the professionals are acting within the profession would be such a way that if everybody did it it would increase the brand name increase the trust of the profession as we move forward within the accounting profession you'll note that specialized knowledge is becoming more and more specialized because there's more data going out there there's more need to specialize even further and as that happens the the accounting field the accounting profession will split into subcategories as well including we see at this point managerial accounting the the public accounting we even see things that are going to break out in terms of you can be a specialist in payroll which is kind of a subset of accounting and a subset of of human resources human resources itself kind of a subset of general business practices that have happened in the past so we've got all these different kind of areas that are becoming more and more subsections more and more specialties within themselves due to these factors these factors that are happening these factors of we need individuals with more and more specialized knowledge we need we need the stakes are being higher and higher and depending on these people and therefore there's a high level of trust needed in order for business transactions to happen and we want business transactions to happen and therefore we have a big incentive to you know install that trust that transparency and therefore those ethics within to all these different areas of different professions within the accounting field