Ethics Article Review

Ethics and accounting go together like peanut butter and jelly. Ethics is instilled in accounting principles starting with accounting 101. The selected article discusses how accounting ethics have been compromised recently to include such sordid scandals as Enron and World Com.

Einhorn writes; “CPAs need to follow the golden rule: Always be factual and reasonable when evaluating a client’s presentations. That sounds simple enough, but nearly all the dot-com scandals were rooted in inflated projections, signed off on by accountants that should have known better.” At this point, a rhetorical question is in order: When did it become fashionable to deceive documentation in order to profit and how does an executive think that the inflation will not be found? The author relates this greed to a think track that “playing fast and loose with the facts will help their businesses grow” however, even though accountants have been trained to be ethical, the author describes accountants as “Afraid to rock the boat that was bringing in tremendous profits in the 1990s.”

While I cannot compare the points in this article to my current organization, the University of Michigan, I can directly relate this article to a situation I found myself in back in 1999. I started to work as a receptionist for an engineering firm in Detroit. The company fabricated conveyor belts for major auto manufacturing plants. I was quickly promoted in order to assist a recently hired CFO. I also started after our CEO had been recently released from prison for tax evasion. Quite an atmosphere to work in at 20 years old! I had just finished two semesters of 200 level accounting courses and was ready to bring enthusiasm to the CFOs office. I realized that my firm was participating in what I was taught to label “creative accounting” and was appalled. I confronted the CFO to which he promptly replied, “Not everything in the real world is textbook accounting.” I was certainly taken aback by his comments and tried to agree that maybe this was ok, however, I knew it was not. Working in this office I could easily see that we had no money coming in, no projects on the line, bills piling up, accounts being cut-off due to non-payment, payroll checks bouncing and accounts receivable being created in order to borrow more from the bank. It does not take a genius to realize that this was a recipe for disaster. I quickly started searching for my next job