Ethics in Financial Accounting

by
Kendra Martin

In 2015 at Santa Clara University Anne Federwisch wrote an article called Ethical
Issues in the Financial Services Industry. She wrote about a presentation that was given in
2006, but I believe what the speakers said still holds true today in 2017. Ethics affect
everyone including the consumer, as well as the workers/owners, share holders, the list
goes on. I like how Mike Hackwater (From the Markkula Center for Applied ethics)
quoted Bill Hewitt and Dave Packard in defining Ethics Ethics is doing the right thing
and avoiding the appearance of doing the wrong thing.

Mark also stated that trust in business is very important. If you have High trust your
efficiency will be high, Low trust makes low efficiency, and if you have no trust at all
you have dysfunction. This can apply to anything and everything we do.

In the article Anne mentions that one of the speakers went into the Why do ethical lapses
occur? Duska (one of the speakers who is the post chair of Ehics and the Professions at
The American College. This position supports the research and studies of the social
responsibilities and challenges in ethics in the industry of finances. He talks about 5
reasons that these ethical lapses can occur; they are:

1. Self interest can morph into greed and selfishness. This is

defined as unchecked self-interest at the expense of others.
2. Some people suffer from stunted moral development this could
be due to the failure to be taught, to look beyond ones own perspective, or the
lack of proper mentoring.
3. Some people equate moral behavior with legal behavior is
disregarding thefactthatanactionmanynotbeillegalitstillmaynotbemoral.Thereasons
wehavelawsisthemoralagreementbreaksdown.
4. Professionaldutycanconflictwiththedemandsofthecompany.Oneofthe
waysacompanycaninduceunethicalbehavioristohaveafultyrewardsystem.
5. Individualresponsibilitiescanwitherunderthedemandsoftheclient.Another
waytoputthisispeerpressure,theclientpushestheagenttodounethicalactstomakehim
happy.

TheywentontogivesuggestionsonhowtoimprovetheFinancialindustry.Educationisimportatnt,
consumersneedtobebetterinformedandknowhowtocontrolyourownfinances.Oneneedstoknow
enoughtoasktherightquestions,andknowwhototrust.Companiesincentivescompensationneedsto
alignmorewithcustomersinterestsandnottheagents.Moreregulationwhenitcomestoethics.

Intheendwhenabusinessisgrowingthepeopleinchargeofdecisionswhoevertheymaybeneedtoask
thesequestions:

Doesitoptimizethebottomline?
IsitLegal?
IsitEthical?