ETHICAL ISSUES IN FINANCE

Financial managers prepare reports, oversee accounting functions, plan investment strategies and direct cash management functions. They also are involved in branch management functions at banks and other financial institutions. They are required to uphold the highest ethical standards because internal and external stakeholders depend on transparent, timely and complete financial documents to make decisions.

1.Accuracy

A company’s financial manager ensures that all financial publications accurately and fairly reflect the financial condition of the company. Accounting errors and financial fraud, such as what was seen in the cases of Enron and World Com, damage the interests of shareholders, employees and affect confidence in the financial system.

2.Transparency

Financial documents reflect a company's performance relative to its peers, and its internal strengths and weaknesses. Regulatory agencies require publicly traded companies to submit periodic financial statements and make full disclosures of material information.

           UNETHICAL ISSUES IN FINANCE

The unethical practices in accounting are more in proprietary, partnership and private limited companies. It is at lower levels in public limited companies and MNCs.

Some of the unethical practices in financing and accounting are as under:

1. Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion costs.

2. Delays in paying wages, interest to financiers, incentive, bonus to employees.

3. Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payment to earlier vendors.

4. Not prompt in statutory payments of ESI, PF, Sales Tax and Excise Duties.

5. Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees etc.,

6. Opening of current accounts in different banks to avoid adjustments against loans by earlier banker.