Meaning of Ethics In Finance
Ethics in finance are concerned with how to make good and moral choices in regard to the preparation, presentation and disclosure of financial information.
Why Ethics are Important in Finance
Ethics are important to any business, creating trust and customer confidence. When business people make unethical decisions, benefiting themselves only, it can lead to the kind of scandal and outrage that destroy careers and even companies. Nobody wants to deal with shady, unethical individuals, giving preference to those they can trust to behave in an ethical way.
Trust-
Ethics means transparency in accounting and financial matters, building trust within a community and among investors and customers. Once trust is lost, it is very hard to gain it back.
Confidentiality-
An ethical person will not disclose private financial matters to people who should not have the information.
Collaboration-
Collaboration requires a sense of honesty and ethics. If you know that your idea will be stolen by a colleague or that it will be misused, you will not collaborate.
Ethical issue faced by finance manager
1-Disclosure Violations - Disclosure violations are errors of ethical omission. While intentionally recording transactions in a manner that is not in accordance with generally accepted accounting principles is considered fraudulent financial reporting, the failure to disclose information to investors that could change their decisions about investing in the company could be considered fraudulent financial reporting
2-Penalties for Violations - This legislation allows for harsh penalties for manipulating financial records, destroying information, interfering with an investigation and provides legal protection for whistle-blowers.
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