Business Ethics & Corporate Governance

SUMMARY: The chapter has discussed some of the ethical issues related to accounting. It also discusses the importance of financial statements and examines how some companies manipulate their financial statements. In this context the frauds that are committed in financial statements have been discussed with emphasis on fictitious revenues, fraudulent timing revenues, concealed liabilities and revenues, improper disclosures and fraudulent asset valuations.

There are two types of accounts, they are financial accounts that are used to report to the shareholders the financial position of the firm and the Internal management accounts that are essential to regulate internal business activities. The transparency in disclosure of these accounts is important and the role of accountant has been discussed in this context.