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ISSN: 2395-5929] UGC Jr Impact Factor.1.14: Mayas Publication [ISSN: 2395-5929] UGC Jr. No. : 45308: Paper ID: 13170813 AN URGENT NEED OF ETHICAL EDUCATION FOR ACCOUNTANTS AND AUDITORS IN INDIA Paper Recceived : 8th Aug 2017 Paper Accepted : 20th Aug 2017 Paper Published : 30th Aug 2017 Reviewers : Dr.Rambabu Gopisetti Dr.M.Mohamed Dr.M. RAMACHANDRA GOWDA Mrs.S.R. MADHAVI Professor and Coordinator-MFA & MTTM Research Scholar Department of Commerce Department of Commerce Bangalore University Bangalore University Bangalore. Bangalore. Abstract Auditors and Accountants in India to mitigate Corporate Scandals. For the purpose of study secondary data has Globalization leads to Social, political and been collected, processed and presented in the form of technological changes have challenged traditional idea of tables, figures and Interpreted accordingly.. professional practice by accountants and auditors. Ethics is a code or moral system provides criteria for evaluating Keywords— Ethics, Auditors, Accountants, Corporate right and wrong. Scams, Ethical Education. The high standard of ethical behavior is expected from I. INTRODUCTION Professional like Accountants and Auditors. From two In competitive corporate world accounting and decades lot of Corporate scams noticed in India Bofors Scam, Enron scandal, World Com scam, Tyco scandal, auditing profession is extremely important to be Telgi Scam, The Hawala Scandal, Harshad Mehta &Ketan ethical in their practices due to the very nature of Parekh Stock Market Scam, Health south scandal, Freddie their profession. The Professionals should maintain Mac scandal, American International Group scandal confidence of clients and ethical conduct. Ensuring (AIG), Lehman brothers scandal, Bernie Madoff scandal, highest ethical standards is important to a public Satyam scandal, 2G Spectrum Scam, the UTI scam, C.R. accountant as well as to an accountant in business. Bhansali scam, Madhu Cora scam, Indian Coal Allocation Both public accountants and accountants in business Scam, Wakf Board Land Scam, Commonwealth Games are in a fiduciary relationship, former with the client Scam and The Fodder Scam appears that corporate and latter with the employer. In such a relationship, accounting fraud is a major problem that is increasing both in its frequency and severity. they have the responsibility to ensure that their duties are performed in conformity with the ethical values of The Primary cause of all frauds started from honesty, integrity, objectivity, due care, Accountants and Auditors as failure ofIt4fgcorporate confidentiality, and the commitment to the public governance. Initially start out small with the perpetrator interest before one‗s own. The recent fall of the thinking that small changes here and there would not make a big difference but eventually growing in two million white company SATYAM and the role played by its Elephant in the room. In this context a need has been long Auditor and auditing committee, has buzzed an alarm felt to Study an Urgent need of Ethical Education for in the Indian capital market. It has resulted into Emperor International Journal of Finance and Management Research [EIJFMR] Page 64 Impact Factor.1.14: Mayas Publication [ISSN: 2395-5929] UGC Jr. No. : 45308: Paper ID: 13170813 shaking the confidence of the public investing in the had taken place in the world affecting the credibility stock market. It has led to drastic declines in share of the accounting profession. These corporate prices and substantial financial losses to minor scandals have placed in doubt the effectiveness of shareholders. Both public and experts have contemporary accounting, auditing and corporate acknowledged primary cause of these scandals as governance practices, for which accountants are failure of corporate governance. In recent years, fraud responsible. Thus, the ethical code of conduct is has emerged as one of the biggest areas of not just closely linked with the accounting and auditing financial loss for companies and banks resulting in profession. Hence, we can say that the ethics has billions of dollars of loss worldwide, but also a loss become an essential part for accountants and audit of data and reputational brand image. Overall damage professionals. The ethics of a business is currently a and loss due to fraud can be staggering. But in most important issue owing to sensational corporate today‘s technology-enabled world of business, scandals that had taken place in many countries auditors are progressively relying on technology to which are damaging to the economy and society. assist them in with auditing functions and auditor These corporate scandals question the morality of skills, their effective use of dimensions of businessmen in general and accountants in particular. technology, professional skills with ethical standards, The accountants and auditors are the main code of conduct in automated and novel methods of contributors in ethical standards of a business. These fraud mitigation or reduce or abuse the incidental scandals raised in the recent times were situations of corporate scandals in present business characteristics of deeper problems and identified that world. improvement of ethical standards, adequacy of financial management, reporting mechanisms, audit Professional Ethics is a comprehensive issue quality and strengthening of governance regimes as covering all aspects of business or profession. means to improve public confidence in financial Accounting includes accounting services and is one reporting. The accounting profession has a of the jobs based on discipline in the world. This responsibility towards these areas, whose deficiencies profession is associated with one of the issues of have led to corporate scandals and collapses. In this people in the society, property and assets of people. perspective a need has been long felt to Study Ethical principles or ethics are defined in a set of Importance of Imparting Ethical Education to spiritual values and principles. All of us have such set Auditors and Accountants is need of the hour in India of values although we don‘t know anything about to mitigate Corporate Scandals. them. If accountants and auditors working in business environment are not dependent upon professional II. REVIEW OF LITERATURE ethics, it has harmful effect for those trusting them. Sarıoğlu (2002) Enron case observed in America in Thus, accounting professional ethics is of great 2001 and non-ethical operations of Arthur Andersen importance for accountants and professional auditors being one of the 5 biggest independent inspection and those involved in auditing and accounting. The companies in the world known to approve all non- professional ethics and its implications on role of ethical accounting transactions of this company and accounting professionals and important issues in even suggest itself have shown that ethical problems accounting and auditing. Ethics has become a most about the accounting profession recently should be topical issue of concern in accounting and auditing at examined again. present owing to the series of corporate scandals that Emperor International Journal of Finance and Management Research [EIJFMR] Page 65 Impact Factor.1.14: Mayas Publication [ISSN: 2395-5929] UGC Jr. No. : 45308: Paper ID: 13170813 Kırlıoğlu and Akyel(200430) Xerox, Dynegy, Scope of the Study WorldCom, Global Crossing, Tyco International, The study has been confined only to need of Qwest Communications and Adelphia Imparting Ethical Education to Accountants and Communications cases observed in America are Auditors for Mitigating Corporate Scandals in India. among the examples to be given for ethical problems To give suitable Suggestions to overcome the about the accounting profession. loopholes in the Auditing Policies. The corporate scandals from 1990 to 2015 have been taken for Özkol et al (2005) Professional ethics notion, used in detailed Investigation. the meaning of acting as depending on ethical and Significance of the Study professional principles in the profession and related The New Government an urge of attracting more activities, is a matter which should be paid attention Foreign Direct Investments and encouraging Foreign in terms of that profession‘s gaining respect and trust Institutional Investors to come and invest in New from that society. Government Schemes like Smart city Projects, Make In India. It Increases Employment Opportunities, Özbirecikli (2009)Researched the progress which Improve Revenue Productivity, Increase Capital educational levels of members of accounting Formation, Contribution to GDP, Economic Growth profession follow from 1992 to 2009 in these studies. and Economic Development. From two decades lot of Following the research, he predicted that the corporate scams noticed in India like Bofors Scam, educational levels of members of profession will Enron scandal, World Com scam to 2G Spectrum increase more due to the obligation for being a Scam, the UTI scam, Commonwealth Games Scam faculty graduate at least which has been brought and The Fodder Scam appears that corporate today when it increases in periods with legal accounting fraud is a major problem that is increasing amendments generally. both in its frequency and severity. Therefore need has Kısakürek and Alpan (2010) measured the reasons been long felt to Study an Urgent need of Ethical for obeying the occupational ethical rules, causes of Education for Auditors and Accountants in India to non-ethical behaviours and opinions about the ethics mitigate Corporate Scandals in India.
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