Ethics in Business

what is ethics in business?

Most businesses today appreciate the importance of ethical behaviour in all their business dealings. In order for a business entity to function effectively, all people working in the entity have to be honest, abide by the rules and ‘do the right thing’. If managers, owners, employees and customers regularly deceived one another, told lies, falsifed records and did not conform to the rules, the entity would eventually collapse and cease to exist. A high standard of ethical behaviour is thus in the long‐term interest of business entities.

It is sound economic policy to have a business highly regarded by the whole business community for its reputation for honest and straight dealings, quality products and service. Most of the highly successful businesses today are noted generally for their high ethical standards of business. Financial statements are one of the many control mechanisms designed to assess the accountability of management and protect the interests of parties who have an interest in the performance of a particular business entity.

The reports enable an evaluation to be made of a company’s management performance, and provide information on the establishment of contracts, business dealings and resource allocations. The audit and assurance services function of accounting also represents a controlling infuence in maintaining ethical behaviour in business entities.