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Accounting: Ethics and the Conceptual Framework

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Since the scandals of the late '90s, a discussion has taken place about principles-based and rules-based systems for accounting. Many of the scandals involved issues where the organization technically may have met the rule while clearly violating the principle involved.

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Considering George Batavick's comments regarding principles-based accounting, prepare a 700-1,050 word paper in which you do the following:

a. Evaluate the conceptual framework developed by the Financial Accounting Standards Board (FASB)
b. Analyze the role and ethical considerations of judgment and decision making in accounting.
c. Take sides on whether principles-based accounting or rules-based accounting more adequately includes the role of ethics and fits best within the conceptual framework. In your paper, state the main arguments of each side, along with evidence to substantiate the arguments. You should conclude with a brief discussion of which side of the argument is stronger and why.

Book: Abdolmohammadi,(2002), Applied research and financial reporting, New York: McGraw-Hill.

Please show references and thank you in advance.

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a. Evaluate the conceptual framework developed by the Financial Accounting Standards Board (FASB)
The conceptual framework developed by the FASB has several benefits. It helps users of financial reports to better understand the information and assess its limitations. It also helps the preparers of financial accounting with guidelines and concepts. The framework provides a more permanent body of principles and rules that govern the accounting practice. In addition, the framework helps remove and reduce personal bias from accounting. The framework provides the basis logic on which accounting information is to be maintained and presented and the framework helps improve communications with both the external and internal stakeholders. Most importantly the conceptual framework helps the FASB to set standards and concepts and to use as a template to resolve accounting queries and problems. The framework helps the FASB in clearly stating the accounting objective of a standard, give enough details and structure so that the standard can be applied consistently. Avoid exceptions to the standards.
There are however, some insufficiencies in the FASB standard framework. It has been claimed that the framework has not kept up with the changes in the business environment. Moreover, the FASB has not been able to rectify the inconsistencies in the framework. Further, the FASB has not yet completed the different segments of the framework In addition, there areas that need further work, for example, the framework gives an excellent definition of all assets and then allows exceptions if they have been allowed to operate as leases. It allows ...

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Ethic Models for Accountants

While codes of ethics may provide guidelines for employees, including accountants, these guidelines may not offer the methods to follow for moral reasoning when confronted with ethical issues when performing accounting duties. Alternative models to assist accountants have evolved to assist them in making morally sound judgments.

1. Identify and analyze the different moral standards as used by each of the following moral reasoning models:
- the utilitarian model
- the rights model
- the justice model

2. Choose the model that is most appropriate for accountants and using that model answer:
- Explain how the theory applies to accountants in the deployment of their duties.
- Explain why you think the model you selected is most appropriate for accountants to stay within the realm of ethical behavior. Defend your position with specific examples of different situations that accountants may be faced with, and how your selected model will be appropriate to stay within the realm of ethical behavior in those situations.

3. Discuss the process that involves moral standards and the several-step process that you may utilize to make a decision that is morally ethical.

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