A financial accountant is in a unique position; they have access to the financial information of people or companies. With power comes responsibility, which leads to the importance of accounting ethics.
There’s always the possibility of an accountant manipulating numbers to improve the perception of a company. Ethics also come into play when financial audits come around.
Definition of accounting ethics
Accounting ethics refers to the set of principles or rules that guide the behavior and decision-making for accountants. It’s an all-encompassing set of standards that focus on fairness, honesty, objectivity and responsibility revolving around financial services and information. A professional financial accountant is aware of these ethics and puts them into practice in every task that they execute.
Why are accounting ethics important?
Ethics are integral in building trust with creditors, stakeholders, investors, creditors and customers. One example is when an accountant is putting together a financial report. This document reflects the business’ financial health and is used in different applications. Ethical behavior also refers to protecting sensitive financial information from unauthorized parties.
Ignoring ethical guidelines and best practices can have severe consequences. Missteps can result in not only significant financial losses but a tarnished reputation that’s nearly impossible to rebuild.
Principles of accounting ethics
Together, the principles of accounting ethics cultivate an environment of transparency and trust.
Confidentiality
Accountants have access to information that not many other parties do. This means that a financial accountant needs to keep all of this sensitive information confidential. Confidential information can include personal information, business strategies, trade secrets, financial information, research data, passwords, IT information and more. To help uphold integrity, accountants can regularly back up data, use both physical and digital methods to store financial records, review and update access privileges often and use secure communication channels, to name a few.
Integrity
Integrity refers to adhering to ethical and moral principles. This means that accountants who have integrity are always truthful in their work and don’t succumb to pressures to manipulate figures or fail to represent financial data accurately. As a result of this ongoing transparency, stakeholders can have confidence that the financial statements and analyses are accurate.
Compliance
There are certain rules and regulations that a financial accountant must follow when it comes to reporting. All reporting needs to be accurate with the existing laws and regulations in accordance with Generally Accepted Accounting Principles (GAAP) and government accounting laws. For example, if there’s a company involved in a lawsuit, the accountant needs to disclose this information in the financial statement notes.
Accountability
In accounting ethics, accountability refers to the responsibilities that accountants undertake for their actions, decisions, and overall outcomes. If a stakeholder makes a decision based on a certain piece of financial information that was disclosed to them and it results in disaster for the company, the accountant must take accountability for this mistake.
We’re here to help
Founder’s CPA is proud to offer modern accounting services for startups at every stage, and you can rest assured that our team takes accounting ethics very seriously. Our personalized services are both flexible and scalable to take your company to new heights. We serve industries including SaaS, blockchain and cryptocurrency, and fintech. Contact us today to get started!
Curt Mastio started Founder’s CPA in 2017 and currently serves as the Managing Partner of the firm. After obtaining both his Bachelor’s and Master’s degrees in accounting from the University of Illinois in Urbana-Champaign Curt started his career in Big Four public accounting. Shortly thereafter Curt served as the Chief Financial Officer of Storage Squad began his stint as an Adjunct Instructor at Northwestern University’s Farley Center for Entrepreneurship and has been teaching Accounting & Finance to undergraduate students for 6+ years. In his current role Curt oversees strategy, operations, and business development at Founder’s CPA. Further, Curt has experience working directly with 200+ startups and small businesses providing accounting, tax, and outsourced CFO services. His industry expertise lies in the SaaS, Blockchain, Marketplace, and Fintech industries. He has served as a key advisor working directly with startups that range from pre-revenue to companies generating over $30 million dollars a year in revenue. Lastly, he serves a key role working directly with the firm’s clients that have collectively raised over $200 million in venture capital funding to date. Curt is also an active advisor, mentor, and investor in the startup ecosystem. He has facilitated numerous workshops, webinars, and presentations to incubators and other startup-centric organizations. He is also an active mentor for Techstars in both Chicago and Iowa. Outside of his daily professional duties Curt is actively involved with Beat the Streets Chicago and was a founding member of its Young Professionals Board. His efforts in both leadership and community involvement were recognized when he was awarded the Illinois CPA Society’s Outstanding Young Professional Leadership Award in 2020. He was also a panelist at their annual conference in 2022 where he spoke about his experiences starting and operating a public accounting firm. He maintains an active Certified Public Accountant designation that he obtained in 2014. Outside of work, Curt can be found spending time with his friends & family including his dog Rufus. His hobbies include golf, boating, cooking, reading, and attending sporting events & concerts.