Ethical Considerations in Financial Management

Ethical Considerations in Financial Management

Ethics Considerations in Financial Management This analysis is to explain how ethics plays a role in financial decision-making. This analysis will explain how ethical considerations are involved in decision-making as pertains the article found on the Internet; will name the objectives of the organization, and describe how these objectives could influence the financial reporting decisions. Ethics and the Financial Decision-Making Process Ethics plays a large role in financial decision-making.

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A company’s financial decisions can affect everyone from the top executives down through the general public. For businesses to effectively use ethics in their financial decision-making, the decision-makers are required to address their financial decisions with responsibility, objectivity, integrity, and professional practices (Think+Up, 2011). Ethical Considerations In this article, the ethical considerations that are involved for financial decision-making are that the American Institute of Certified Public Accountants (AICPA) follows a professional ethics code of conduct.

This code requires that all accountants use these codes in their business operations to guide them in the use of professional and ethical behavior. Also required by the AICPA is that all accountants are willing to make a pledge or commitment to use honorable behavior in their practices, even if this is at the expense of any personal benefits (Think+Up, 2011). Organizations Objectives Accountants need to use a systematic financial decision-making process for evaluating outcomes and decision alternatives.

This process includes 1) create constructive environments, 2) come up with reasonable alternative options, research these alternative options, finding the best decision-making option and verifying that decision. Next, an accountant or financial manager must communicate the decision and put it into play. The technical financial information and or forecasts for decision-makers are usually obtained from management accountants.

Influence of Objectives on Financial Decisions The information obtained from the management accountant is directly related to the costs of input, the costs of labor and wages, the costs of maintaining an office or building structure, and all revenues from sales. Accountants must be responsible for reporting financial information – management should be the ones to receive positive or negative reports, and not others who have no need for such information.

When an accountant relays a truthful report of financial information and the consequences or benefits of the company’s financial decisions, then the company can understand how economic impacts will help or hurt the business. Many businesses now use automated computer software programs that collect and report financial information electronically, cutting down on employee error and also response times. By setting up and using ethical and professional guidelines, businesses can keep from having too many negative impacts on the company with bad decision-making policies.

These guidelines will aid the business in keeping goodwill with its creditors as well as the shareholders who are impacted negatively with poor financial decision-making choices. Reference Think+Up. March 20, 2011. Ethics in Accounting and Financial Decision-Making. Think+up: College of Management and Technology. Retrieved March 18, 2011 from URL: http://thinkup. waldenu. edu/finance-and-accounting/accounting/item/11885-ethics- accounting-financial-decision-making


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