Monthly Archives: June 2004

Business Ethics

John Cargo asked:

A business of any kind, whether online or on-site (“real world”), can be like navigating a mine field, especially where ethics are concerned, so some knowledge of law and a certain degree of fair-mindedness are necessary to conduct business professionally and equitably.Ethics keep business practices well-grounded and focused on what is really important; that is, the customers’ needs and wants come first.

Entrepreneurs must keep themselves informed on the terms of service and the interests of the population. This will allow customers to make informed and therefore confident purchases. No one likes business ventures that are oblivious to what is going on around them or that are behind-in-the-times; shoppers are not likely to feel comfortable with the judgment of those who have absolutely no clue or are doubtful regarding what’s expected and required to satisfactorily answer shoppers’ questions. Deception, or “pulling stuff out of one’s butt,” will not suffice; businesses are likely to be more successful when they stay on top of the research so they can offer honest and current feedback to everyone who needs it. Business representatives who can’t assist shoppers are useless. Taking this extra effort shows shoppers that businesses really do care about the customers.

Fair prices are always the best way to go. Despite what many business owners might think, providing services and merchandise at higher rates will not necessarily guarantee a profit; on the contrary, such outrageous costs will only drive the shoppers to go elsewhere and the business will ultimately lose money. When businesses compare given products offered by various competitors and then set appropriate prices, customers see that said businesses are cognizant of what typical shoppers are able and willing to to pay. In the long run, operations will be consistent or gradually growing, and profits foreseeable.

Honesty is the best policy, as the saying goes. Many think that’s a crock, but, in actuality, it isn’t. Those who are open and straightforward about their intentions and offer quality services and merchandise will inevitably find themselves in a successful venture. Why? Simple: shoppers and returning customers will know that businesses that play honestly and fair value them, and the trust factor is increased exponentially. Customers are not stupid, and so they should not be treated as such. Eventually, all underhanded schemes are discovered one way or another, and the scarred reputation that businesses acquire from such bad dealings will eventually lead to a downfall.

There are many ethical situations that lead behavior in business every single day. Knowing what they are and letting them lead the way through every circumstance will make interactions easier and more fulfilling. Such honesty and integrity will always leave a pleasant, trusting and indelible impression on everyone involved.

Copyright © John Cargo

Rules of Self Employment – The Ethics & Morals of It

Abhishek Agarwal asked:

It can be said that there are primarily two rules to be followed for a self employed individual while framing rules. They may be, the rules regarding taxation and those regarding business ethics.

While considering the taxation for a self employed individual, there is not much he can do towards making any major changes in that area. As a person who is self employed you might see a hefty increase in the taxation sum as you would have to shell out for both Social Security as well as Medicare which would otherwise have been reduced by the employer paying half the amount.

But it is possible for you to change the rules of your organization, in relation to the tax bracket you would come under before the deductions as well as after it. Tax payers, submitting returns which are fully legal, the sum can reduce by up to half the tax amount which you would owe. This is due mainly to their individual approach to deductions as well as depreciations and also any legal advice they may give you regarding the same. But if you decide to file your tax returns by yourself, the golden rule is to pay the correct amount and note every deduction that you would make.

Ethics and morals are important and what one might consider perfectly ethical might not find resonance with another. You, as a self employed business man must run the company on a certain code drawn by your own views as well as those followed by other people in the field. It might be required that you draw up a set of rules and ethics which you would follow, with or without the help of the latter, this helps you in your interactions while working.

This relationship may range from those with your customers to even your future employees. Depending on the rules that you frame for your company, you will accordingly attract the right sort of business but also affect the way you conduct your work. By framing the goals and targets as well as the rules you create as a self employed individual, you can build the vision your company will strive to achieve.

There are basically two types of rules which you would have to follow. Those under the compulsion of law and those which you set for yourself based on your sense of righteousness. Irrespective of what you choose to follow or not, you are still under the law to the respective people with the authority whatever you are required to do so. The rules which you create on your own will determine how your contact with your customers and your suppliers will be. It will also create the framework on which you can gauge the actions of others.

Accounting Ethics Courses: Optional or Necessary

Justin Shomper asked:

Ethics and high morality are in high demand today especially among corporate America, and specifically within the accounting profession. After the ethical failures of Enron and WorldCom, a public outcry for future preventative measures resonated throughout the American Institute of Certified Public Accountants (AICPA), and the accounting community at large. Consequently, the Securities and Exchange Commission (SEC), the overseeing government board of the AICPA, released the Sarbanes-Oxley Act of 2002, otherwise known as SOX. The act requires a higher performance standard for accounting firms and the audits they perform to prevent future accounting scandals. SOX, which has been extremely beneficial, doesn’t change the ethical standards of an individual but instead takes away most of the opportunity to commit a scandalous act. The basic character of the fraudulent individual remains corrupt, even with legislation in place. The question is then posed: Can ethics be taught, and if so, what accounting or business ethics courses are available? The answer is not ironclad as the word ethics describes the morality of an individual, which is hard to measure. There are also very limited courses offered on ethics, however ethical education should be a required course in college and a prerequisite to new employment for all accounting firms.

Most higher education institutions, and some high school level institutions, are implementing brief ethical materials into their curriculum, but very few offer courses on the subject. The basic argument against incorporating a required accounting ethics course is that there isn’t any proof that individuals who take a course would be any more ethical than they already are. If this is truly the singular obstruction to imposing an accounting course in ethics, than why aren’t other courses in the curriculum subject to examination from proof. Many audits, specifically those at Enron and WorldCom, have failed because of poor functional accounting knowledge, not just ethical queries. Most other curricular accounting courses would fail a proof assessment required by those who oppose an accounting ethics course. It is necessary to have an accounting ethics course to properly prepare students for any future ethical temptation they may experience within the field. Without experience in fraud recognition or ethical righteousness, many new timid accountants are susceptible to fraud or ethical dilemmas. A recommendation would be to add not just one course on ethics into a curriculum, but possibly three or four. A course in ethical theory could tie into another ethics course involved in spotting frauds and ethical dilemmas while a third course could focus on answering these ethical uncertainties.

The need for an accounting ethics course is also very apparent in how much destructive attention financial catastrophes attract to the profession. The recent big company accounting scandals all brought negative publicity to the accounting field. The burden of the economic failures in today’s society must be placed somewhere, and many people look at accountants as an outlet to place that burden. All of these events from big companies provide a negative perception of the accounting field, and that’s not to mention the small business owners who have encountered other accounting mistakes or unethical occurrences. This is not to say that legitimate and honest mistakes will not be made by new students, but the ability to recognize the mistakes and evaluate ethical problems can be reduced with the addition of an ethics course. The more education and experience that new accountants have and acquire the fewer mistakes that will occur, and ultimately the less negative publicity the profession will receive. It is extremely important that in the accounting profession, clients feel secure and trusting of those who they employ.

Another need for an ethics course comes from a common stereotype of accountants. The stereotype is that accountants are known to simply follow the rules, or do just enough to meet the basic criteria. To correct ethical dilemmas, it is required to go above and beyond the norm to investigate and solve uncertainties. A class in the area of ethics could help prepare and motivate new accountants to become more proactive when evaluating a possible unethical or fraudulent scenario. Clients will feel a greater sense of security with a proactive accountant, and ultimately bring more profit to the profession.

Society can not function without ethical people. The business world and accounting profession can not function without ethical people. It is for this reason that an accounting ethics course or courses are imperative. The elimination of stereotypes, fewer mistakes, and a heightened sense of awareness is exactly what could be acquired from an accounting ethics course. It is important to add ethics courses immediately, and for employers to require that their new hire’s be educated in ethics knowledge. If an employee is not educated and courses are not offered, employers should take measures to offer a mandatory ethics course within their organization.