When it comes to management of a company’s finances, it is essential to know that the information can cause a manager to be vulnerable to misinterpretation, manipulation and deliberate deception. The purpose of the fiscal documents is to assist the top managers to make a decision, but the decision has to undergo many ethical considerations to ensure that the decision benefits the company regarding sales and does not negatively affect its financial status in the market (Coombs, Hobbs & Jenkins, 2005).
Matters of ethics when it comes to management of finances have not been the primary attention of many managers in the business world. One of the immediate concerns is the achievement of the company goals. Managers would go to any extent to ensure that there is the accomplishment of those objectives and that includes using accounting analysis to manipulate operating procedures (National Association of Accountants, 1990). The methods are legal but unethical because they cause the company achieve profits at present times but start another financial year with a hole and lag behind.
A test performed on an aspect of ethics in money management using research that had a sample of more than 500 people, the majority of them being a manager. It had the aim of proving if using operation of manipulating production procedures was ethical. The results of the research with testimonies show that there was a delay of the manufacturing process, last minute backend sales, overpayment, future extra costs and digging into reserves all to be inconsistent with the budget and meet the objectives. The conclusion of the research is that even though the practices were legal, they were not ethical (National Association of Accountants, 1990).
Most of the action managers do end up being unproductive in the end, even though within the confines of the law. The performance of those activities is with the mentality that they are for the best interest of the company. However, they fail to consider the future effect, which could be negative on stakeholders. It makes those actions unethical (Coombs, Hobbs & Jenkins, 2005).
The accounting process may be absolute; it has many benefits that assist the business to be successful. The company has to ensure that ethics is part of every activity in the organization including management. The techniques a company can use are such as discussions where the corporation communicates the corporate standards and their importance. It will assist managers to have the ability to judge the quality of earning maintained. Another method is to have a proper chain of command. The role of manipulating operation should be the role of managers but to ensure that they make a long term benefiting decisions using financial data, then they should have the advice of auditors and financial staff to enhance their experience and judgment. The firm can also deploy strict observance on corporate culture. The method will enable the work environment to be cooperative, which allow problem solving among managers resulting in long-term earning (National Association of Accountants, 1990).
References
Coombs, H. M., Hobbs, D., & Jenkins, D. E. (2005). Management Accounting: Principles and applications. London: SAGE Publications.
National Association of Accountants. (1990).Management Accounting. Prentice Hall. Print.
