18.1 Ethical principles in accounting

• Ethical principles in accounting guide professionals in maintaining high standards of conduct to ensure the integrity and credibility
• Objectivity in accounting requires presenting financial statements based on personal views.

  False
• Protecting confidential information acquired during professional services is the ethical principle of confidentiality
• Ensuring clarity and full disclosure in financial reporting is the ethical principle of transparency
• Arrange the key ethical principles in accounting in alphabetical order:

  1️⃣ Confidentiality

  2️⃣ Fair Presentation

  3️⃣ Independence

  4️⃣ Integrity

  5️⃣ Objectivity

  6️⃣ Professional Competence

  7️⃣ Transparency
• Being honest and straightforward in all professional relationships aligns with the principle of integrity
• What does the principle of confidentiality require accountants to protect?

  Client financial details
• Independence in accounting means being unbiased and free from undue influence
• Using appropriate accounting standards ensures fair presentation of financial information.


  True
• Match the ethical principle with its description:

  Integrity ↔️ Being honest and straightforward

  Objectivity ↔️ Avoiding personal biases

  Confidentiality ↔️ Protecting client information
• Why do ethical principles in accounting guide professionals?

  To ensure high standards
• Protecting confidential client information aligns with the principle of confidentiality
• Avoiding financial relationships with clients is necessary for independence.

  True
• What does transparency in financial reporting ensure?

  Full disclosure
• Presenting financial information accurately and without intent to mislead aligns with the principle of fair presentation.
• Ethical principles in accounting protect the interests of stakeholders such as investors and creditors.


  True
• Why is upholding ethical principles vital for the accounting profession?

  To preserve integrity
• Why are ethical principles crucial in accounting?

  Maintain high standards
• By adhering to ethical principles, accountants promote trust in the financial information they provide
• Steps in resolving ethical conflicts in accounting

  1️⃣ Adhere to ethical principles

  2️⃣ Seek guidance

  3️⃣ Consider stakeholder impact

  4️⃣ Document decision-making
• Upholding ethical principles is essential for preserving the integrity of the accounting profession.


  True
• What is an ethical conflict in accounting?

  Clash between interests
• Accountants must resolve ethical conflicts by adhering to principles like integrity, objectivity, and confidentiality
• Match the ethical strategy with its description:

  Adhere to ethical principles ↔️ Prioritize public interest

  Seek guidance ↔️ Consult professional bodies

  Consider stakeholder impact ↔️ Evaluate effects on stakeholders

  Document decision-making ↔️ Record reasoning behind actions
• What role do professional accounting organizations play in maintaining ethical standards?

  Enforce ethical codes
• Professional accounting organizations can discipline accountants who violate ethical codes.


  True
• Professional accounting organizations ensure accountability by holding accountants responsible for their actions
• What are the consequences of violating ethical principles in accounting?

  Loss of trust
• Match the consequence with its impact:

  Damage to reputation ↔️ Loss of trust and credibility

  Disciplinary action ↔️ Sanctions from organizations

  Legal liability ↔️ Lawsuits and fines

  Harm to stakeholders ↔️ Misleading financial information
• Being honest and straightforward in all professional and business relationships is the ethical principle of integrity
• Maintaining up-to-date knowledge and skills to perform duties effectively is the principle of professional competence
• Independence in accounting means being unbiased and free from undue influence.


  True
• Presenting financial information accurately and without intent to mislead is the principle of fair presentation
• What are the key ethical principles in accounting?

  Integrity, objectivity, confidentiality
• Presenting financial statements based on personal views is acceptable under the principle of objectivity.

  False
• What ethical principles would an accountant violate if they concealed a material error in financial statements?

  Integrity and objectivity