Ethics in Accounts:
Ethical accounting is when the accounting firm makes a commitment
to ethics. One of the ways to easily determine whether an
accounting firm has this commitment is whether they have an
ethicist on staff. An ethicist can help a business clarify their ethical
standards. An ethical accountant wishes their clients to be ethical,
stressing this aspect in their advertising, in the contract or Memorandum
of Understanding, and all other procedures. An ethicist knows the
intricacies of business through studies in business ethics.
Business ethics is the glue that brings the accountant and
ethicist together. The ethicist is able to provide a non-accounting
perspective while the accountant offers financial expertise. If you’ve
ever had to deal with professionals, you know they all have their own
jargon or industry specific language. Accountants, for example,
use terms like debits and credits, assets and liabilities. An ethicist
can help you understand the jargon and can advocate for you. In
addition, the ethicist provides insights to the accountant, alerting
them to any action that might be unethical or illegal.
Are Ethics in accounts relevant?
Of Of course. An ethical accountant is proactive and can design
systems for keeping track of mileage, petty cash and the correct way of
using credit cards for business purposes – all tax deductible expenses. In
the long term, ethical accounting pays. First, you’ll sleep at
night assured your financial statements are correct. And secondly,
you will never be brought to courts some unethical businesses eventually
are
Need for ethical accounting:

Over the years there have been several large accounting scandals in the
United States, India and in the world at large, which caused private
investors and public shareholders to lose billions of dollars, and giant
businesses and accounting firms to fold, because of falsified or
incorrect information given out about the companies in which the
money was invested. The Satyam scandal is perhaps the most recent
and glaring example of unethical accounting causing widespread
negative effects, including the loss of $25 billion in shareholder assets,
the closure of the Arthur Anderson auditing firm, and the subsequent
loss of 85000 jobs when the unethical practices were reported and the
company dissolved. Ethical accounting is not only important to private
businesses or individuals for reliable information about their respective
financial states, but has a responsibility to the public to provide
transparent evaluations of publicly held business entities. Ethical
accounting can help eliminate the serious problems raised when
incomplete or incorrect information about business or individual is
disseminated, saving money and jobs and helping to increase stability
in financial markets.

Case of Enron’s fraudulent accounting practices – USA: 

Fraud has been a threat in business for as long as business has
been around. However, there are few scenarios as fraud that
sticks out as much as the Enron scandal of 2001. The Enron scandal
put into light the shady practices of many corporations and
helped to birth the modern version of forensic accounting. Enron
was a true test of the abilities of forensic accountants, and is still used
today as a learning example to forensic accounting students across the
nation. History Enron was a successful energy company established in
1985 in Omaha, Nebraska. As the company grew, it moved its
headquarters to Houston and became a multibillion-dollar publicly
traded company. It had more than 20,000 employees and an income of
more than $100 billion. Enron also moved from dealing with mostly
natural gas to electricity, paper and communications. Fortune even
named Enron America's Most Innovative Company in 2000.
Unfortunately, as Enron's wealth increased, so did its corruption.
Through the 1990s, Enron started making deals with limited
liability corporations that it controlled, allowing them to hide
many of their debt sand losses from their financial statements. In
reality, Enron was close to bankruptcy, but no one knew but its
accounting firm, Arthur Andersen, and its executives. In 2001 the
scandal was exposed, causing its stock to drop from nearly$100 a share
to less than $1 a share. Significance Enron woke the business world to
the many possibilities of accounting fraud throughout the economy. It
also helped to put forensic accounting on the map. Forensic
accounting is, in basic terms, accounting that can be used in
court as evidence. After the Enron
scandal broke, there was a public outcry. Because of how
successful Enron had been, their stock also had a lot of investors.
Some investors had their entire finances invested into the
corporation and lost everything when the stock fell. With
any public outcry comes an increased scrutiny on other
companies to ensure that the incident does not happen
again. As a result or Enron, hundreds of other companies
underwent similar  8
 
audits. Not only did it help to expose other companies with similar
fraudulent accounting p r a c t i c e s , i t c r e a t e d a s e r i e s o f
systems for yearly audits to ensure the safety
o f   stockholders. As such it also widened the field for accountants who
specialize in forensic accounting.

Case of Satyam scam – India: 
Event On 7th
January 2009, Satyam founder and Chairman Ramalinga Raju admitted
to inflating financial statements of the company to show the company
in healthy condition. This news sent shockwaves through the
stock exchange of India and S a t y a m s h a r e s w h i c h o p e n e d
a t R s . 1 7 9 . 1 0 / - a t t h e beginning of the day ended at Rs.
30.70/-.Reactions Huge losses to investors aside, the Satyam scandal has
caused “serious damage” to India Inc’s reputation as well as the
country’s regulatory authorities outside, the government has
said. Seeking to dismantle the existing board and to nominate ten
new directors at the beleaguered IT firm, the Centre has
said in its petition before the Company Law Board that the
“interests of the company will not be safe in the hands of the
present board of directors.”“The admission of fraudulent manipulation
of the financial affairs has created an adverse impression in the minds of
the trade, business and industry across the world
.
Thishas also resulted in seriouhes damage to the reputation of
Indian Corporate sector and t regulatory mechanism in the eyes of
the world,” the government said. Allowing the government to nominate
10 new directors, the CLB said in its order that the “present board of
directors stands suspended with immediate effect” and the newboard
should meet within seven days of its constitution and “take necessary
action to put the company back on the road.” It also asked the new board
to submit periodical reports to the Centre and the CLB on the company’s
state of affairs. The CLB also observed that the residual board members
at the company after a string of resignations are those “who were also
party to the impugned decision to invest substantial funds in the
companiesrelated to Raju, the decision of which was the starting point
of the downward trend in thefortunes of the company.”Besides
Satyam, Ramalinga Raju and brother Rama Raju, the government
in itspetition has also named the company’s CA and auditor
Price Waterhouse, CompanySecretary as well as all the
directors. This include also those independent directors whohave
resigned — Vinod Dham, Rammohan Rao, K G Palepu and
Mangalam Srinivasan,9
 
as well as former Cabinet Secretary T R Prasad, V S
R a j u a n d i n t e r i m C E O R a m Mynampati.The CLB has also asked
all the respondents to submit their replies to the petitionby February 20.
The CLB had ordered the Central Government to immediately
constitutea fresh board of the company with not more than ten “persons
of eminence as directors.”“The Central Government may also
designate one of them as the Chairman of the Board… The
said Board will continue till further orders.” The government
said in itspetition that Satyam has about three lakh shareholders,
over 53,000 employees and hasclients in over 60 countries,
besides India. It has received a number of awards for
bestcorporate governance.“But the reputation and credibility of the
company suffered drastically in therecent past when the Board of
Directors of the company approved a proposal to acquirestakes in
two companies… Its share price crashed and four of the
independent directorswho were parties to the above proposal
tendered their resignation from the Board,” thepetitioner said.
The impact of the manipulation of accounts, as disclosed by Raju
onJanuary 7, runs into hundreds of crores of rupees.The reputation of
the company is at the lowest ebb and continuation of such astate
would affect the confidence in the concept of corporate
governance practiced inIndia.Economic ImplicationsThe Satyam
scam effect has started its infectious presence. U.S. listed stocks
of other Indian companies have started taken a severe beating.
Indian stocks listed on theAmerican bourses suffered a loss of close
to $ 2 billion
 
in a week, following unfolding of India’s biggest corporate scam.
Despite, a halt in trading in Satyam Computer
from Wednesday, the rest of the 15 Indian stocks on US bourses bore
the brunt of the negativem a r k e t s e n t i m e n t a n d w i t n e s s e d a
fall of $1.94 billion in their combined
m a r k e t capitalisation in the week ending January 9.The Satyam effect
 
has starting spreading its tentacles, and has proved to have
anegative impact on the Engineering students. IT (Information
Technology) which used tobe the Mecca of all jobs is now the outcaste.
Students are preferring to take jobs in their core branches rather than
move to the dwindling IT sector.The Government certainly can
not remain aloof and allow Satyam to die off especially when
it provides occupation to 53,000 odd people and indirectly supports
morethan a million Indians. While it is debatable that whether the tax
payers money be used tobail out a company which deliberate ly
got involved in a scam. The troubled SatyamCompute r
Services, facing a liquidity challenge, may get financial
support from the government, which is willing to New Satyam
board members consider “all aspects” of helping the crisis-ridden
company, Commerce and Industry Minister Kamal Nath said.