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The Role of Accounting in Serving Public Interest Versus Self-interest - Coursework Example

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The paper "The Role of Accounting in Serving Public Interest Versus Self-interest" discusses that historical-cost accounting (HCA) can prick incipient bubbles if the information it gathers about asset prices in balance sheets is used as policy inputs for regulators…
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The Role of Accounting in Serving Public Interest Versus Self-interest
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Download file to see previous pages The public interest is the collective well-being of people and the institutions they serve. Failure to fulfill this mandate can have very serious adverse consequences such as what happened to the Arthur Andersen auditing firm for being complicit in the Enron scandal. This paper examines the role of accounting in serving public interest versus self-interest when accountants and auditors are engaged for their services. I will state the answer to the above question is in the negative in relation to the financial crisis brought about by the bursting of the real estate asset price bubble and the issue of stock buybacks within the context of academic research. Real life as used in this paper refers to actual business and economic conditions; regulations pertain to all the government orders issued to control the conduct of business to protect the public interest.
The accounting profession adopted a code of ethics and professional conduct for its members to guide them in serving the public interest. The foundation principle of public interest is contained in this code of ethics and yet only 62% of accountants in a survey were able to identify correctly that a formal definition of public interest can be found in their code of ethics. The accountants cannot be faulted because accounting services are contracted in private during service engagements (Thomadakis, 2009:3). Contracts are usually done in private and it is easy to forget public interest during the discussions and focus on self-interest only (Cohen and Eimicke, 2008:160).
The dilemma that most accountants face often is a conflict of interest between public interest and their self-interest. In conflict-of-interest situations, the tendency is to side with private firms that had engaged their services. The International Federation of Accountants (IFAC) was formed to guide members in 164 countries how to conduct themselves to resolve issues involving professional ethics in diverse areas like public accounting and auditing. The chief ethical dilemma of most accountants is what constitutes timely and full disclosure (Duska and Duska, 2003:7). ...Download file to see next pagesRead More
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