The Ethics of Accounting and Finance: Trust, Responsibility, and Control

The Ethics of Accounting and Finance: Trust, Responsibility, and Control

The Ethics of Accounting and Finance: Trust, Responsibility, and Control

The Ethics of Accounting and Finance: Trust, Responsibility, and Control

Synopsis

Edited and revised specifically for this volume, here are the best papers from the Tenth National Conference on Business Ethics, sponsored by Bentley College's Center for Business Ethics. Throughout, the contributors emphasize the ethical dimensions of problems and issues that confront the financial services and accounting industries, issues that are also of critical importance to business generally. Included among the contributors are members of the academic community, lawyers, government officials, and financial services and accounting professionals, each with his or her own special perspective, but all focused on the central theme: the importance of ethics and its proper role in the way financial services and accounting are done. Throughtful, challenging reading, not only for academics but for finance and accounting professionals as well.

Part I examines the ethics of the fiduciary relationship between principals and agents, defining the nature of trust and helping readers understand the fiduciary responsibility and conflicts of interest characteristic to the industry. In Part II, the contributors look at specific issues in ethics and financial disclosure, with particular focus on nonprofit healthcare organizations, financial derivatives, and confidentiality in a professional context as representative cases. More cases are presented in Part III, examining a variety of situations and events, such as the BCCI affair and the failure of banks. Part IV offers lessons from the past and a look toward the future, with such topics as the ethics of financial derivatives in the history of economic thought and the development of moral reasoning and professional judgment of auditors in public practice.

Excerpt

"Trust, Responsibility, and Control: The Ethics of Accounting and Finance," the Tenth National Conference on Business Ethics, was held on the campus of Bentley College on October 17-18,1994. The conference, which was sponsored by the Center for Business Ethics with the advice and assistance of members of the Bentley Department of Accountancy, covered a variety of issues that are of central importance for contemporary businesses. These included fiduciary responsibility and conflicts of interest in the financial services industry; ethical issues in financial reporting; the ethical implications of new financial instruments, such as derivatives; and the expanding ethical role of auditors and audit committees.

This volume contains the best of the conference papers, organized as chapters, submitted on these and related topics. The volume is divided into four parts. To assist the reader in exploring the chapters in more depth, in the remainder of this introduction each of the chapters will be briefly discussed, and common themes running through them will be identified.

Part I, [Ethics, Fiduciary Responsibilities, and Conflicts of Interest,] examines the ethics of the fiduciary relationship between principals and agents. Chapter 1, Richard N. Ottaway's [Defining Trust in Fiduciary Responsibilities,] characterizes fiduciary relationships as founded on trust. A fiduciary is an agent who acts on behalf of a principal, and who has specific duties to the principal. These include: skillful and diligent performance of contracted services; prompt communication of all relevant information; loyal commitment to act solely on behalf of the principal; obedience to the principal's instructions; and a complete and accurate account of all funds. In addition, the principal has duties to the agent: compensation for services . . .

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