The Ethical Analysis Of Accounting Fraud

Since 2001, there have erupted successively in the USA fraudulent financial reporting scandals in which Enron, Worldcom and so on were involved. The scandals urged the United States Congress to pass through THE SARBANES-OXLEY ACT of 2002, to strengthen the corporate governance. But, similar scandals still repeated in US. In our country, the government has strengthened accounting regulations in recent years. Such reforms achieved some effect. In practice, however, accounting fraud is still serious. Obviously, accounting fraud has become stubborn illness, like the malignant tumor, multiplying and spreading in the capital market and the business circles. Revolving the hot topic of why the accounting fraud happens and how to govern it, accounting scholars have launched a multi- angles multi- domains and cross-discipline research. This paper attempts to analyze the ethics reason of accounting fraud and discusses countermeaasures to it from the perspective of ethics.The basic problem of ethics is righteousness advantage relations, that is to say, the relations between the pursuit of the benefit and the conformity with the morality. According to the basic problem of ethics, accountants may truthfully disclose or untruthfully disclose corporate financial information..Truthful disclosure means that accountant behavioral subject abides by the professional morals to guarantees the accounting information authenticity. The contrary operation, on the other hand, means that accountant behavioral subject violates the accountant's moral by making and providing the fraud accounting information in order to pursue the benefit. Ethics mainly has two perspectives:the Utility and Benefit Theory and Morality and Justice Theory. The essence of Utility and Benefit theory is the benefit how to gain the balance between personal interest and other people's benefit, individual benefit and public benefit. The Utility and Benefit Theory advocates the consideration of both the personal interest and the other people benefit, and of both the individual benefit and the public benefit. Therefore, if the balance keep maintained, accounting fraud generally will not to be able to occur. If the balance cannot be maintained, then accounting fraud will occur. In a words, if accountant behavioral subject place more emphasis on the benefit of his own and his company than on the benefit of other people and the public, he will choose the untruthfully discose corporate financial information causing the benefit to be unbalanced. The Morality and JusticeTheory ,on the other hand,emphasizes the moral premise and the standard of behavior. The loss of the moral standard (including in and outside the law) is the roof of immoral behaviors. From the angle of view of Morality and Justice Theory, false accounting information is the inevitable result of the loss of moral standard in accountant behaviors. This paper applies the Utility and Benefit Theory and the Morality and Justice Theory of ethics to analyze how accounting fraud comes into being as well as how it is brought under control. The basic conclusion of this paper is that the ethics reason of accounting fraud lies in the loss of the beneficial balance and the moral standard.This paper is organized as follows:The first chapter defines what accounting fraud behavior is and who are subject to making accounting fraud, then points out accounting fraud behavioral subject concerned and the hazardous nature of accounting fraud and the importance of the ethical perspective of analyzing the rise of accounting fraud behaviors.The second chapter analyzes accounting fraud from the perspective of the Utility Benefit Theory. Fatherly, this chapter applies "the cost - benefit analytic method" and gambling analytic method to analyze behavioral subject's benefit measures, benefit unbalance and accounting fraud.The third chapter analyzes accounting fraud from the perspective of the Morality and Justice Theory and makes concrete ethical analysis of the accounting fraud caused by the loss of the moral standards both in and outside the law.The fourth chapter proposes, through ethics analysis of accounting fraud by Utility Theory and Morality and Justice Theory, from ethics angle of view that the long-time and effective measure of governing accounting fraud is to seek righteousness-advantage balance and the unification of asking for morals and profit.The main contribution of this paper is to analyze the ethics causes of accounting fraud and to propose countermeasures by applying the Utility and Benefit Theory and the Morality and Justice Theory.