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Finance

Importance of Ethics in Managerial Accounting

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Importance of Ethics in Managerial Accounting

Managerial accounting is an internal business work liable for dealing with an organization’s monetary records. Entrepreneurs regularly utilize managerial accounting to dispense business expenses to merchandise or services, make operational spending plans, and gauge production yield or deals. Ethics is a significant piece of managerial accounting, and organizations may build up a code of ethics or morals to set the anticipated moral conduct for accountants (Vitez, n.d.).  Managerial ethics guarantees all financial records are accounted for and delivered to the executives.

In my view, if ethics are compromised in business and especially the managerial accounting department, this could lead to a substantial negative impact on the company. This would mean the accountants have gone against their ethical standards. There would be the issue of lack of confidentiality and trust among employees and their seniors and lack of satisfaction by the managers due to incompetence by their accountants. The business environment will also be polarised, and staff morale will decrease. This will result in losses in the business.

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I believe the issues I have mentioned above will have a substantial negative impact on the business internally. Due to unethical practices in the managerial accounting, a department dealing with the finances of the company, there will be mistrust and communication breakdown between the accountants and the managers. If suspected of integrity issues such as stealing, audits will be conducted at the expense of the company reducing their profits margin. If found guilty or not, I believe the trust broken cannot be quickly built again. Externally, unethical practices will turn off investors. Who would want to invest in a business where there are thieves? Also, creditors such as banks would not want to transact businesses with a company where finances are misappropriated. Lastly, unethical practices will ruin the business’ reputation, chasing away customers, and this will take a long time to repair.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Vitez, O. (n.d.). About Ethics in Managerial Accounting. Retrieved from Chron: https://smallbusiness.chron.com/ethics-managerial-accounting-3737.html

 

 

 

 

 

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