Synthesis-final-na-final-na.docx

La Consolacion College Manila School of Business Administration

IMPACT OF ACCOUNTING ETHICS ON PRACTICE OF ACCOUNTING PROFESSION IN THE PHILIPPINES

SYNTHESIS

Carao, Iris N. Muyco, Michelle T. Reyes, Daenielle Lorvieanne T.

February 2019

ACKNOWLEDGEMENT First of all, we would like to express our deepest gratitude to our professor, Michelle Cortez for giving us opportunity to make this study as part of our endless search for knowledge. Great thanks to our parents for all the love and support in doing this study. They made us successful by helping us in a big way for providing financial support, accommodation, and especially the strength and inspiration in accomplishment of everything we do. We want to acknowledge as well all our respondents who spent some time and effort in cooperating for answering our questionnaires and other people who provided some assistance and information that we needed in the study. We would also like to thank everyone who helped us even in a small way, particularly our friends and classmates contributing to the success of this project. And above all, this study won’t be possible without the guidance and inspiration given by the Almighty God.

ABSTRACT The accounting profession is concerned with the ethical beliefs of its members. To this end, the authors surveyed public accountants, questioning them about the “Impact of Accounting Ethics on Practice of Accounting Profession in the Philippines” and their perceptions of how potentially unethical behaviors impact the firm. The paper focuses on respondents' perceptions of the impact on the firm's practice, image and degree of concern. Their mean responses indicate that they believe that Ethics on Practice of Accounting Profession are extremely important, especially demonstrating professionalism and maintaining independence while performing independent audits .

KEYWORDS 1. Ethical Issues 2. Unethical Behaviors 3. Objectivity 4. Practitioners 5. Professionalism

I.

INTRODUCTION The study investigates the practice of accounting profession in the Philippines in ethical decision making of their acceptance of the responsibility to act in the public interest. A recent report from the global anti-graft watchdog Transparency International disclosed that the 2015 Philippine score in the Corruption Perceptions Index registered at 35 out of a possible 100, placing the country to rank 95 among 168 countries. It was also noted that the country’s score is “based on expert opinions of public-sector corruption,” and is lower than 2014 score of 38. The region’s average score stands at 43/100. Regionally, New Zealand topped it at 88, followed by Singapore’s 85 (from Rappler’s report). The major finding from the study is that in the development of professional practices, compliance with well-grounded ethical values are a good prerequisite for an enduring practice and that penalties meted out to erring members are grossly inadequate. The researcher recommended that to provide remedy or improve the situation, there is the need for practicing accountant to pay attention to good ethical conduct and there is the need to adhere strictly to the ethical code of conduct.

II.

STATEMENT OF THE PROBLEM Even with knowledge of good ethical guidelines, members still fall foul of the rules. The confidence of the investing public in the practicing accountants is being

called to question. People have asked why members breach rules and whether all that needs to be included under ethical guidelines have been duty covered or whether the problem has more to do with procedures for implementing/enforcing the ethical standards. The following questions were raised: 1. What are those ethical rules that are frequently breached? 2. Examine the effect of ethics on disclosure of financial reports of firms in the Philippines? 3. Investigate the effect of ethics on objectivity of Professional Accountants in the Philippines III.

HYPOTHESIS Based on the data available that we have gathered the first hypothesis is that ethics guidelines or ethical code of conducts are not relevant to the situations that confront the practitioners. Practitioners explore whether the issue is regulated by law or policy. The sources of information are their employer, their professional association, a governmental regulatory body such as the Securities and Exchange Commission — or all of the above. The Philippine Institute of Certified Public Accountant (PICPA) has a Code of Professional Conduct, and Financial Executives of the Philippines has a Code of Ethics. Both are excellent resources that they use when they are uncertain about the ethics of a situation they’re confronting. The second hypothesis is that there is no significant relationship between ethics and disclosure of financial reports of firms in the Philippines. Practitioners seek legal

counsel either in-house or from an independent firm or access their company’s whistleblowing resources. The third hypothesis is that ethics has no significant effect on the objectivity of financial reports of Professional Accountants in the Philippine. When it comes to conflicts of interest, or even the appearance of one, practitioners ensure they will not adversely or inappropriately sway their business judgments. They navigate such situations; they create distinct accounting teams for different clients and notify all parties of the nature of the conflict.

IV.

METHODOLOGY The researcher chose a survey research design because it best served to answer the questions and the purposes of the study. The survey research is one in which a group of people or items is studied by collecting and analyzing data from only a few people or items considered to be representative of the entire group. In other words, only a part of the population is studied, and findings from this are expected to be generalized to the entire population (Nworgu 1991:68). Similary, McBurney (1994:170) defines the survey assessing public opinion or individual characteristics by the use of questionnaire and sampling methods. And it will be based on the information obtained from selected practicing chartered accountants in Philippines. Accountants are also included as part of the respondents by using structured questionnaire and oral interviews.

V.

SURVEY RESULT

Figure 1

Figure 5

Figure 2

Figure 6

Figure 3

Figure 7

Figure 4

Figure 8

There were 35 responses to the distribution of questionnaires to people who are working as accountants. The results clearly show that all accountants act in a consistent manner with ethics and conduct rules. In figure 1 we can see that 74.3% of practitioners over 35 responded positively to the question ‘Are you honest when sharing information with others?’. In figure 2 shows that 54.3% of practitioners over 35 responded with never to the question ‘Do you follow orders regardless if they appear unethical?’ It also appears that 28.6% of practitioners responded with sometimes to the question. In figure 3 shows that 82.9% of practitioners over 35 responded with always to the question ‘Do you maintain appropriate confidentiality?’. In figure 4 shows that 68.6% of practitioners over 35 responded with never to the question ‘Does favoritism ever enter into your decision making?’. In figure 5 shows that 71.4% of practitioners over 35 responded with always to the question ‘Are you able to manage personal biases?’ In figure 6 shows that 77.1% of practitioners over 35 responded with always to the question ‘Do you balance personal and organizational needs?’ In figure 7 shows that 71.4% of practitioners over 35 responded with always to the question ‘Do you say “no” to inappropriate requests?’ In figure 8 shows that 65.7% of practitioners over 35 responded with always to the question ‘Are you able to avoid conflict of interest?’

VI.

DISCUSION According to the results of the survey, most people in the accounting profession practices the qualities stated as per the accounting’s conceptual framework

and ethical standards. Almost 80% of them still maintain their independence and unbiased decisions. As much as possible these people refuse and stay away from things that they think may be able to impair their decision making and they also do so to avoid conflict of interest. The survey also says that 95% almost always maintain the confidentiality of their work and other details of it, and integrity when it comes to the information stated in their reports.

VII.

CONCLUSION One of the key traits of a practitioner is adherence to a rigorous set of ethical guidelines. When someone veers too far from ethical standards, their trustworthiness and judgment come into question. The positive responses of the 35 practitioners shows that ethical codes are the fundamental principles that accounting professionals choose to abide by to enhance their profession, maintain public trust, and demonstrate honesty and fairness. Sadly, there are some who answered negatively to the questions which we can only conclude that not everyone who works in the accounting field is trustworthy. Though there are some who answered negatively, it doesn’t change the fact that most of the practitioners answered positively. The result shows that practitioners demonstrate integrity by being straightforward and honest in all business and professional relationships. They uphold integrity by not associating themselves with information that they suspect is materially false or misleading — or that misleads by omission. In conclusion, practitioners comply with the laws and

regulations that govern their jurisdictions and their bodies of work. Practitioners have professionalism which is a standard that goes beyond the office.

VIII. REFERENCES 

https://repository.up.ac.za/bitstream/handle/2263/28684/03chapter3.pdf?sequenc e=4&isAllowed=y



https://accountingweekly.com/ethical-issues-encountered-accountants/



http://iosrjournals.org/iosr-jbm/papers/Vol12-issue1/G01214551.pdf



https://www.socialworkers.org/About/Ethics/Code-of-Ethics/Highlighted-Revisionsto-the-Code-of-Ethics

IX.

APPENDIX Survey Questions: 1. Are you honest when sharing information with others? 2. Do you follow orders regardless if they appear unethical? 3. Do you maintain appropriate confidentiality? 4. Does favoritism ever enter into your decision making? 5. Are you able to manage personal biases? 6. Do you balance personal and organizational needs? 7. Do you say “no” to inappropriate requests? 8. Are you able to avoid conflict of interest?