Safeguarding Accounting Ethics
By Brian Harden
Across industries, the most effective managers understand that leading by example is the best way to influence corporate culture. In the realm of accounting ethics, this concept is known as Tone at the Top.
The premise is simple: Employees look to management for leadership, and odds are high that their behavior will mirror the conduct of their bosses. If managers act with honesty and integrity, employees will generally follow suit. By the same token, if workers see their superiors engaged in activities that are less than ethical, they may think that they, too, can get away with dishonest workplace practices.
Ethical accounting procedures aren’t just about doing the right thing — although that is important. Unsavory business activities can also lead to regulatory and financial repercussions. For example, in most instances of fraud, the culprits don’t get away with it forever, and whatever short-term gains may result from dishonesty pale in comparison to the long-term consequences for the company. By establishing best practices within the accounting department, management can uphold a strong ethical standard that will benefit their business as a whole.
Set the standard
Too often, a company’s mission statement fades from its employees’ consciousness as soon as their corporate training is complete. To prevent this from happening, periodically carve out time for employees to reread the mission statement and refresh their understanding of the company’s values and goals — beyond just its financial goals. Encourage employees to think about how their personal goals and values align with those of the company.
It’s easier for employees to act ethically when they know exactly what the responsibilities of their jobs are; if they understand what they are supposed to be doing, they also know what they are not supposed to be doing. Require employees to read the company’s personnel handbook and its policies and procedures manual so they understand how they are expected to behave. Equally important is to ensure that those resources are reviewed and updated periodically to reflect any changes within the business, and that these changes are clearly communicated to employees.
Employees are the eyes and ears of accounting ethics, so protect them with a companywide whistleblower policy. Once or twice a year, meet with the accounting department to reinforce the importance of acting with honesty and integrity, and to ensure that workers understand the proper reporting structure if they do witness unethical behavior.
By implementing these best practices, you can help safeguard your company’s accounting ethics and ensure your employees do the right thing.
Brian Harden is an Audit Senior at Wiss & Company, LLP. If you would like to speak with Brian, you may reach him at email@example.com or at 973.994.9400.