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ACCOUNTING CODE OF ETHICS

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    1 ACCOUNTING CODE OF EHICS Discuss the importance of a Code of Ethics in accounting, particularly in relation to the ethical issues such as depreciation, creative accounting, taxation, and auditing. How can the implementation of such a code ensure transparency and corporate governance in an organization? In your response, explain the role of various stakeholders, including accountants, auditors, and management, and propose practical methods for the effective implementation of the code. (Word count: 1500 words)

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    2 Ethics are the rules and regulations which define the legitimate behavior of a person at a particular place . It is the demarcation line between the good and the bad behavior at the workplace. Every working place has a set of rules which guide the way for the working behavior in the organization. These rules are mandatorily applicable on every person working in the organization and also help to fix the responsibility in case of the deviation. An e ffective set of ethics has many codes of ethics which are fragmented into rules that are area stream specific that help to manage every activity of the organization which at the macro level will help to promote transparent corporate governance. Organizations have a huge amount of stake of large number of investors and thus it becomes mandatory for the managers that the working environment should be ethically governed so that the duties of every individually is detailed and distributed well. This bring s unanimity in the working behavior and i n case of the deviation it helps to fix the responsibilit y and take necessary actions. Finances of any of the business are one of the most essential wings which can also be termed as the heart which pumps blood in whole of the business. In the same manner accounting is the tool that takes care of the finances. There have been many ethics and the codes of conduct to get the accounting treatment of every transaction noted and affect the finances of the organization in a very legitimate manner. As a Director finance of this business it will be the priority to identify the areas where the snag in the accounting is taking place and formulate the code of conduct so that the adherence of the accounting policies can happen and the accounting procedure should become transparent and detailed.

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    3 Identification of ethical issue in accounting - The foremost step is to identify the ethical issues in the field of accounting where the framing of the code of ethics is needed. The following areas have been identified for this purpose. a) The Ethics of Accounting Regulation - D epreciation is an expense that is allowed to the companies for charging against the profits. This expense has been treated as a heaven for the companies as they can charge the depreciation at the rate they think is applicable to a particular asset. The amount so charged will be debited to the Profit and Loss account and will reduce the profits. b) The Ethics of Creative Accounting - T hough the accounting bodies of the respective countries have specified the rates at which the depreciation should be charged on a particular asset so that the cost of the asses can be reduced to nil during the effective life of the asset and the huge capital cost of the asset could go on to be charged from the yearly profit of the company. But the rates of the depreciation are not mandatory and can be charged as per the needs of the business. c) The Role of Accountant in Ethics pertaining to Ethical Issues - E very accountant has the knowledge of the rates of depreciation that has to be charged on the assets and they are also aware of the fact that these rates are not mandatory on the assets and the actual depreciation to be charged on the assets can be done either by reducing balance method or the straight line methods of charging the depreciation. d) Ethical Issues related to Taxation - S ince depreciation is charged from the profit before charging the tax from it thus it goes on to reduce the profit of the company and thus the taxes amount to be paid are also reduced. Thus depreciation is an effective method of paying lesser amount of taxes on the revenues generated.

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