Why is the appearance of impropriety sometimes more damaging than the legal penalties for actual impropriety? Provide an example.

(Related to the "Professional Ethics and Social Responsibility" this subject.)

 

 Impropriety failure to observe standards of honesty or modesty; improper behaviour or character.

Professional ethics are principles that govern the behaviour of a person or group in a business environment. Like values, professional ethics provide rules on how a person should act towards other people and institutions in such an environment.

Social responsibility is an ethical theory in which individuals are accountable for fulfilling their civic duty, and the actions of an individual must benefit the whole of society. In this way, there must be a balance between economic growth and the welfare of society and the environment.

Sadly, not everyone who works in the accounting field is trustworthy. Daily violations of public and private trust occur, and resolving ethical dilemmas doesn't always end favorably. The following are five areas that deserve the attention of anyone considering working in the accounting profession.

1. Independence and Objectivity - Ethics and independence go hand in hand in the accounting profession. A critical component of trust is making unbiased decisions and recommendations that benefit the client. Conflicts of interest, for example, demand exposure under independence guidelines. Benefiting from the sale of one financial product over another could lead to a bias that skews financial advice to a client. To remain objective and independent, it is also necessary to ensure that recommendations are not subject to outside influence. An accountant's professional judgment is compromised if they subordinate their judgment to someone else's.
2. Integrity - Demonstrating integrity means being straightforward and honest in all business and professional relationships. Upholding integrity requires that accountants do not associate themselves with information that they suspect is materially false or misleading — or that misleads by omission.
3. Confidentiality - Disclosure of financial information or revealing the disposition of a potential merger by an accounting professional without express permission violates the trust that is the foundation of a professional relationship — unless there is a legal or professional reason to do so.
4. Professional Competence - As technology, legislation and best practices change, a professional accountant must remain up to date. To exercise sound judgment, an accountant must stay abreast of developments that could affect a decision's outcome. Practicing due care means recognizing your skill level and not suggesting that you have expertise in an area where you do not. Consulting with other professionals is a standard practice that helps to bond a network of individuals and generate respect. Similar guidelines also apply to accounting professionals who supervise others. These accountants must ensure that the subordinates receive proper training and guidance as they carry out their responsibilities.
5. Professional Behaviour - Ethics require accounting professionals to comply with the laws and regulations that govern their jurisdictions and their bodies of work. Avoiding actions that could negatively affect the reputation of the profession is a reasonable commitment that business partners and others should expect.

The main function of Social responsibility accounting is to measure and disclose the 'costs' and 'benefits' to society created by the production-related activities of a business enterprise. They include product and quality improvement, fair business practices, human resources, environment, and community involvement. It can offer an organization a method of organizing and examining both performance and its effects on people, communities and the environment. Customers can be involved with the social accounting process and thereby feed their perspectives into the organization's planning and measurement process. It helps in attracting new investors because of the boost in the company's image. It serves the purpose of providing an ongoing record of how an enterprise or company has developed and its subsequent changes over time. It also helps the organization to get feedback on how things are going from the range of people involved in the organization. It helps the organization or company to make a clear picture or identify the areas where things are working well and not so well. It helps in attracting more capital inflow from various resources. It helps in the generation of clean and renewable energy from the environment. It helps the company with positive publicity. Social responsibility accounting is a commitment to improvement, managing the business process to produce an overall positive impact on society.