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

3. 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.
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Glencoe Accounting
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

4. Key Terms ethics business ethics code of ethics ethics officer
Section 29.1
The Nature of Ethics
Key Terms
ethics
business ethics
code of ethics
ethics officer
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5. Business ethics are not very different from ethics in general.
Section 29.1
The Nature of Ethics
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.
business ethics
The policies and practices that reflect a company’s core values such as honesty, trust, respect, and fairness.
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6. How are business ethics determined?
Section 29.1
The Nature of Ethics
The Law
Company Values
How are business ethics determined?
Training and Outreach
Ethics Committees
Enforcement
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7. Ethics What is a code of ethics? code of ethics
Section 29.1
The Nature of Ethics
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.
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8. Distribution of a written code
Ethics
Section 29.1
The Nature of Ethics
Distribution of a written code
Training and Outreach
Formal training
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9. Evaluates Performance
Ethics
Section 29.1
The Nature of Ethics
Ethics Officer
ethics officer
The employee directly responsible for creating business conduct programs, evaluating performance, and enforcing standards of conduct.
Creates Programs
Evaluates Performance
Enforces Standards
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10. Performance Appraisal Notes
Ethics
Section 29.1
The Nature of Ethics
Performance Appraisal Notes
Termination
Probation
Enforcement
Demotion
Suspension
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11. Ethics The Accountant’s Role Avoid harm to stockholders.
Section 29.1
The Nature of Ethics
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.
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12. Ethical Behavior Individuals Businesses Society
Section 29.1
The Nature of Ethics
Acting ethically can increase self-esteem, contentment, and self-respect.
Individuals
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.
Businesses
Society is the sum of all social relationships between humans and is only as ethical as the individuals and business that make it up.
Society
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13. Key Terms integrity objectivity independence competence
Ethics in the Accounting Profession
Section 29.2
Key Terms
integrity
objectivity
independence
competence
confidentiality
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14. Key Principles Key Principles integrity The principle that
Ethics in the Accounting Profession
Section 29.2
Integrity
integrity
The principle that
requires accountants to choose what is right and just over what is wrong.
Confidentiality
Key Principles
Objectivity
Competence
Independence
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15. Key Principles Key Principles objectivity
Ethics in the Accounting Profession
Section 29.2
Integrity
objectivity
The principle that requires accountants to be impartial, honest, and free of conflicts of interest.
Confidentiality
Key Principles
Objectivity
Competence
Independence
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16. Key Principles Key Principles independence
Ethics in the Accounting Profession
Section 29.2
Integrity
independence
The principle that requires accountants to have no financial interest in the company being audited.
Confidentiality
Key Principles
Objectivity
Competence
Independence
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17. Key Principles Key Principles competence
Ethics in the Accounting Profession
Section 29.2
Integrity
competence
The principle that requires accountants to have the knowledge, skills, and experience needed to complete a task.
Confidentiality
Key Principles
Objectivity
Competence
Independence
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18. Key Principles Key Principles confidentiality
Ethics in the Accounting Profession
Section 29.2
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.
Integrity
Confidentiality
Key Principles
Objectivity
Competence
Independence
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19. Codes of Ethics American Institute of Certified Public Accountants
Ethics in the Accounting Profession
Section 29.2
American Institute of Certified Public Accountants
Institute of Management Accountants
Institute of Internal Auditors
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20. Sarbanes-Oxley Act (SOX)
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.
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21. Question 1
What are five items that could be included in a business’s code of ethics?
Answers can include:
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
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22. What is the foundation for ethics in 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.
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23. End of