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Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The accounting profession requires its members to follow a code of ethics. Glencoe AccountingCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Explain the meaning of ethics Describe the components of business ethics. Identify the role of the accountant in business ethics. Discuss how ethical behavior benefits individuals, businesses, and society. Explain the key principles an accountant is expected to follow. Identify the accounting organizations that establish codes of ethics for the profession. Describe the Sarbanes-Oxley Act. Glencoe AccountingCopyright © by The McGraw-Hill Companies, Inc. All rights reserved. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Key Terms ethics business ethics code of ethics ethics officer The Nature of EthicsSection 29.1 Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The Nature of EthicsSection 29.1 Business ethics are not very different from ethics in general. ethics The study of our notions of right and wrong; a set of basic principles. Ethics business ethics The policies and practices that reflect a company’s core values such as honesty, trust, respect, and fairness. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The Nature of EthicsSection 29.1 Ethics How are business ethics determined? The Law Company Values Training and Outreach Ethics Committees Enforcement Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The Nature of EthicsSection 29.1 What is a code of ethics? code of ethics A formal policy of rules and guidelines that describes the standards of conduct that a company expects from all its employees. Ethics Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The Nature of EthicsSection 29.1 Ethics Training and Outreach Distribution of a written code Formal training Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting The Nature of EthicsSection 29.1 Ethics Ethics Officer Creates Programs Evaluates Performance Enforces Standards ethics officer The employee directly responsible for creating business conduct programs, evaluating performance, and enforcing standards of conduct. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Ethics The Nature of EthicsSection 29.1 Enforcement Performance Appraisal Notes Probation SuspensionDemotion Termination Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Ethics The Nature of EthicsSection 29.1 The Accountant’s Role Avoid harm to stockholders. Optimize the interests of the public. Adhere to universal standards of what is right. Respect the human rights of all people. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Ethical Behavior The Nature of EthicsSection 29.1 Individuals Businesses Society Acting ethically can increase self-esteem, contentment, and self-respect. A DePaul University study found that companies that made commitments to an ethics code provided twice the value to shareholders than those that did not. Society is the sum of all social relationships between humans and is only as ethical as the individuals and business that make it up. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Key Terms integrity objectivity independence competence confidentiality Ethics in the Accounting Profession Section 29.2 Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Key Principles Ethics in the Accounting Profession Section 29.2 Key Principles Integrity Objectivity IndependenceCompetence Confidentiality integrity The principle that requires accountants to choose what is right and just over what is wrong. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Key Principles Ethics in the Accounting Profession Section 29.2 Key Principles Integrity Objectivity IndependenceCompetence Confidentiality objectivity The principle that requires accountants to be impartial, honest, and free of conflicts of interest. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Key Principles Ethics in the Accounting Profession Section 29.2 Key Principles Integrity Objectivity IndependenceCompetence Confidentiality independence The principle that requires accountants to have no financial interest in the company being audited. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Key Principles Ethics in the Accounting Profession Section 29.2 Key Principles Integrity Objectivity IndependenceCompetence Confidentiality competence The principle that requires accountants to have the knowledge, skills, and experience needed to complete a task. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Key Principles Ethics in the Accounting Profession Section 29.2 Key Principles Integrity Objectivity IndependenceCompetence Confidentiality confidentiality The principle that requires accountants to protect and not disclose information acquired in the course of work unless they have the appropriate legal or professional responsibility to do so. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Codes of Ethics Ethics in the Accounting Profession Section 29.2 American Institute of Certified Public Accountants Institute of Management Accountants Institute of Internal Auditors Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Sarbanes-Oxley Act Ethics in the Accounting Profession Section 29.2 Sarbanes-Oxley Act (SOX) Effective 2002, SOX protects investors after several corporate scandals failed to be identified and prevented by auditors. SOX requires CEOs, financial officers, accountants, and auditing firms to comply with new regulations and procedures. SOX established an accounting board to oversee and investigate the audits and auditors of public companies. Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Question 1 What are five items that could be included in a business’s code of ethics? Conflicts of interest Product quality and testing Customer relations Employee relations Suppliers and consultants Expense reports Security Political contributions Environmental actions International business Workplace safety Technology Whistle-blowing Answers can include: Home

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Question 2 What is the foundation for ethics in accounting? Certain principles provide the framework for rules of conduct that an accountant is expected to follow. The principles include integrity, objectivity, independence, competence, and confidentiality. Home

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