Academic journal article Journal of Accountancy

Do the Right Thing

Academic journal article Journal of Accountancy

Do the Right Thing

Article excerpt

Business ethics is not only a matter of what's right or what's legal but also a matter of the bottom line. So argues Larry Ponemon, CPA, CMA, CIA, CFE, holder of a doctorate in accounting and ethics. He's the national director of KPMG Peat Marwick's business ethics services group. "If you have a company with problems such as sexual harassment or diversity clashes, it's likely there are problems that will find their way to the financial statements," Ponemon told the journal. "Our benchmarking studies have identified links - red flags - between a corporations culture and its financial statements."

The in-house CPNS role

Although Ponemon and his staff assess ethics-related business risk in their audits, CPAs do not have to wait until their companies are audited to effect changes. They can head off potential problems before they develop. Ponemon says one of the more insidious problems occurs when good employees are pressured. "Controllers or chief financial officers should look at their staffs: Have there been downsizings lately, forcing people to work so hard quality is diminishing? Have performance pressures or incentives pushed people over the edge?"

Among the issues a CFO or other CPA in a supervisory position can look at are quality of work, the type and frequency of errors and the consistency between the entity's code of conduct and the employees' view. …

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