Ethical issues in Accounting and Finance

 

Ethics (maintaining true and fair statements) is a key part of financial reporting. For shareholders to trust a company with money, they must feel confident in the company’s financial reporting. Financial reporting presents all data relating to the entity’s current, historical and projected health meaning investors and shareholders rely upon the available financial data for making informed and educated decisions. To help entities comply with business regulations and maintain financial reporting, shareholders can trust the existing organizations designed to watchdog different aspects of the accounting world. Primary among the organizations are the Securities and Exchange Committee (SEC), Financial Accounting Standards Board (FASB) and Public Company Accounting Oversight Board (PCAOB). These three bodies together ensure financial reporting is fair, reliable, and available to all investors.

The specific importance of ethics in business and in financial reporting is to inspire and ensure public and investor confidence in companies. Without a strong code of ethics, and adherence to that code, individuals may not be certain their investments are secure. Accounting professionals must have a strong ethical and moral reasoning as their decisions regarding financial reporting can have major consequences for individuals as well as corporations and entire nations. Ethics in the business environment are more than just issues that relate to accounting; because ethical practices can and will cross boundaries from business practice in to what a company may ask its accounting professionals to do in financial record-keeping and recording. The many recent scandals involving accounting fraud generally began at the CEO and made their way down into the financial records.

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Introduction to Business Ethics

There is a big difference between what you have a right to do and what is right to do. – Justice Potter Stewart

Man is a social animal. Though rules of nature control humans as they control other living beings, man himself has derived certain principles to govern his own individual and group behavior. These rules, in the form of behavioral standards may differ across cultures and times, but their basic objectives are always mutual existence and peace within the particular community or the social group. By ensuring security and protection of the group these standards helps in the survival of the particular community or a social group and thus its members. These standards of behavior are called “ethics.”

Ethics is two things:

First, ethics refers to well-based standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethics, for example, refers to those standards that impose the reasonable obligations to refrain from rape, stealing, murder, assault, slander, and fraud. Ethical standards also include those that enjoin virtues of honesty, compassion, and loyalty. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.

Secondly, ethics refers to the study and development of one’s ethical standards. As mentioned above, feelings, laws, and social norms can deviate from what is ethical.… Read the rest

Warehouse Management System

Warehouse management systems (WMS) is described as the advanced technology and operating processes which optimize all warehousing functionalities. These functions begin from receipts from suppliers and ending with shipments to the customers, also including all inventory movements as well as information flows in between. Warehouse management systems are mainly associated with large and complex distribution operations. However even smaller and middle size companies are identifying the importance of WMS in today’s scenario of integrated logistics, just-in-time delivery and e- commerce fulfillment.

In practical situation, Warehouse Management System is used mainly in integrating computer hardware, software and peripheral equipment along with good operating practices so as to manage inventory, space, labour, and capital equipment in ware houses and distribution centres. Implementing of WMS serves the company by increasing its competitive advantage in matters of labour cost, improval of customer service, increasing inventory accuracy, and improving of flexibility and responsiveness. A WMS also helps the company in management of inventory in real time along with information regarding the latest order, shipment along with any movement in between.

Benefits of Warehouse Management System
  • Faster inventory turns. A WMS reduces lead times by limiting inventory movement and increasing inventory records thus implementing JIT environment. Thus the need of safety stock gets reduced thereby increasing inventory turnover along with working capital utilization.
  • More efficient use of available warehouse space. A WMs along with recuing safety stock requirements also increases available warehouse spacing by efficiently locating items with relation to receiving, assembly, packing and shipping points.
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