Ethical Principles
To,
John Robert- Trainee Accountant
JM Accounting,
884 Stanley St, East Brisbane QLD 4169 Australia.
Subject: Explaining the ethical principles and possible courses of action to be taken.
Dear John,
One of the important traits of the accounting professional is abiding to the rigorous set of the ethical guidelines. When an accountant deviates too far from the ethical standards, their judgement and trustworthiness come into question. Ethical codes assist the entities to ensure that they meet the accounting standards for the accurate financial reporting.
Hence, I am writing this letter to explain the ethical principles that will be affected if you perform the reconciliation tasks, and the possible courses of action that you can take in the given situation. It will enable you to understand the ethical principles that accountants are required to follow, the ethical threats they face at work, and the way they deal with those ethical challenges.
As per the APES 110 Code of Ethics for Professional Accountants, the ethical principles that all the accountants must follow are integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. The ethical approach of professional competence and due care, integrity, and professional behavior will be affected if you will perform the reconciliation tasks. According to the APES 110 Code of Ethics for Professional Accountants, the professional competence and due care principle requires an accountant to maintain professional skills and knowledge at the required level to ensure that the employers or clients receive the competent professional service, and also act diligently as per the suitable professional and technical standards when providing the professional service. The accountant requires to be fair to all those who are involved and act in the straightforward manner. Lastly, the professional behavior imposes the obligation on all the members to abide with the relevant laws and regulation and prevent any omission or action that the member must know or knows may discredit the profession.
Since you work in this company as a trainee accountant and in the 1st year of training within the entity, as well as due to go on study leave, completing the complicated reconciliation work within the short span of time is quite difficult. You do not have much experience in completing some complicated reconciliation tasks. Also, given the complexity level of the tasks, the deadline suggested by the manager- Peter is quite unrealistic. In absence of the senior trainee, it will be quite difficult for you to complete the overall reconciliation work. The process of bank reconciliation is a key control in the management of the monetary assets of a company. Bank reconciliation is an important internal control tool that are required in prevention and detection of the fraud. Determine whether the deadline can be further extended or how soon your colleagues will return from the sick leave. You need to consider the practice’s policies and procedures and code of ethics.
The key parties affected includes you, the practice, your manager, the other employee, and the client.
You must attempt to resolve the problem by involving your manager or with the one with whom you are receiving training. The professional body’s involvement may also be useful in such a situation.
You must explain to the manager that you do not have enough experience and time to complete work to the satisfactory standard. Nevertheless, you must show a constructive attitude and recommend how the issue may get resolved, such as contacting client to extend the deadline if possible, so that you can complete the task after coming from the study leave or when the colleagues come back from the sick leave. In this respect, your professional body will suggest you. You might ask your manager regarding the likelihood of assigning another staff member to supervise your task.
If you think that your manager fails to understand the matter then you can escalate the matter to the person who is responsible for your training. Further, rather than resigning from job because of the pressure, you must take advise from the professional body. It is important to maintain confidentiality at all the times.
I, therefore, request you to kindly consider the issue and solution to the issue discussed in this letter, as it will help you to solve your ethical dilemma.
Yours sincerely
Sam
JM Accounting
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Reflection Question on Topic 1: Analyse and record transactions (Accounting equation) |
Your response |
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Evidence: Give an example of an accounting transaction that you have completed in the practice set (include a screenshot of the question and your answer). |
The transaction which I completed in the practice set covered cash which is brought in the business as capital and this is considered as an important transactions as it initiates the business process and commences other accounting transactions for the period. The journal Entry which was passed Cash A/c……………………Dr To Capital A/c |
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Reflection: Explain the importance of the accounting equation and indicate the effects of that transaction on the accounting equation (i.e. which accounts in the accounting equation have increased and/or decreased?). Prepare a manual journal entry for that transaction assuming that you do not have access to accounting software. |
The transaction is considered to be important considering the fact that it initiates the accounting process and the cash brought in forms part of the current asset and the double entry would be addition to capital funds. As per accounting equations Assets = Liabilities + Equity; Therefore any cash brought in would enhance the assets of the business and also the liabilities and equity side thereby balancing the accounting equations. In the case of this transaction both the asset side and the liability side would increase. The journal entry which would be passed for such a transaction is listed below: Cash A/c……………………Dr To Capital A/c |
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Reflection Question on Topic 2: Journals (Debits and Credits) |
Your response |
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Evidence: Give an example of a journal entry that you have processed (include a screenshot of the question and your answer from the Journal Report). Note: The example that you use for topic 2 should be different from the example you used for topic 1. |
The entry which is considered is credit sales made to a debtor during the period where the Debtor account would be debited and sales account would be credited considering the fact that the same is revenue for the business. The journal would be have implications in both the income statement and the balance sheet of the company. |
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Reflection: Explain the principles of debits and credits (i.e. different accounts and their normal balances) and their application to that journal entry. Prepare a manual journal entry for that transaction assuming that you do not have access to accounting software. |
As per the double accounting system, every transaction would have a debit as well as a credit balance. The transaction where credit sales is made from a debtor would result in increase in revenue and also in one of the current assets. The credit side would be portraying the sales revenue generated while the debit side of the business would be covering the name of the debtor from whom collection of cash is to be made on a future date. The journal entry which would be passed for such a transaction is listed below: Debtor A/c………………………Dr To Sales A/c |
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Reflection Question on Topic 3: Post transactions to the ledger |
Your response |
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Evidence: Run a General Ledger Summary Report. Select a general ledger account such as the bank account. Show transactions for this account for a specific month of data (include a screenshot of the bank account transaction report as evidence). |
The general ledger summary account which can be generated with the help of a software covers different transactions. In this case, we consider the bank account as it covers all the revenues and expenses which the business incurred for the period. The general ledger account would be covering the expenses paid by the business and also the revenue which the business is able to generate from its operations. |
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Reflection: Explain how the balance of this account has been calculated? |
The balance account has been computed considering the total value for the expenses and income which is generated for the period. The analysis follows double entry system and therefore it is clear that the account balances would have a closing balance. The general ledger account balances are then transferred to the balance sheet so that the asset position of the company can be determined appropriately. |
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Reflection Question on Topic 4: Trial Balance |
Your response |
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Evidence: Include a copy of your trial balance report. |
The trial balance is prepared for ascertaining the mathematical accuracy of the financial information and the trial balance gives a clear idea regarding the fact as to whether double entry system has been followed while reporting. It is only after the trial balance is prepared that we can move forward and formulate the financial statements of the company. |
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Reflection: Do you see any errors in your trial balance? How would you know that the trial balance has been correctly prepared? |
The trial balance computed during the practice work does not contain any errors and thereby the debit and credit side of the trail balance appropriately matches. I have gone through the trial balance and did not find any form of compensating errors, double entry errors or any omission from the trial balance and therefore it can be said that a level of accuracy has been maintained while formulating the trial balance. It is quite easy to understand that the trial contains any form of error or just by checking whether the debit and credit side of the statement matches or not. |
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Reflection question on Topic 5: Practice Set |
Your response |
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Evidence: Provide an extract of your answer to a practice set question that you found challenging/beneficial (include a screenshot of the question and your answer). |
The most challenging part of the practice set was the adjustments which included the computation of cost of goods sold any accrued expenses mainly due to the fact that these were required to be computed manually and presented in the software in the form of journal entries. |
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Reflection: How did this practice question help clarify your knowledge of the topic (consider your understanding of both manual and computerized accounting processes)? |
This practice set provide me with great deal of insights regarding the accounting treatments both in manual terms and computerized terms and therefore I can honestly say that this practice set was beneficial for me. Further the practice questions allowed to gain a level of accuracy in the accounting process and rightly place the adjustments so that the trial balance can match and further accuracy can be achieved. |
Alleyne, P., Hudaib, M., & Haniffa, R. (2018). The moderating role of perceived organisational support in breaking the silence of public accountants. Journal of Business Ethics, 147(3), 509-527.
Apesb.org.au. (2022). Retrieved 7 March 2022, from
https://apesb.org.au/uploads/standards/apesb_standards/23072019055710_APES_110_Code_of_Ethics_for_Professional_Accountants_December_2010_-_Final.pdf
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Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Routledge.
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