Accounting And Ethics

INTRODUCTION
1.1 Background to the Study
There has been failures and collapse of great organizations which has resulted in accounting and accounting scandals (Aamirs, Yasir, Shahzad, Ahmed & Mehmood, 2014). Those failures or collapse could have been results of unethical practices carried out by professional Accountants, who took advantage of their official positions to defraud/manipulate accounting statements (Feil, Diehl, & Schuck, 2017). Agwor and Okafor (2018) opined that those scandals made stakeholders to become skeptical about the quality of information contained in accounting record. It left a lot of doubt in the minds of users of accounting records whether Accountants applied professional skepticism in carrying out their duties (Enofe, Ukpebor, & Ogbomo, 2015). It also called to question the role of accounting ethics in accounting reporting (Atoyebi, Mustafa, & Mobolaji, 2018).
These recent failures and collapse of corporate organizations led to increasing interest in accounting reporting quality which makes it imperative for Accountants to ensure high accounting reporting quality both in practice and academic research. Quality accounting reports will entail re-building stakeholders’ confidence in the activities of management and professional accountants (Adeyemi & Fagbemi, 2011).The challenge of re-building stakeholders’ confidence is a global one. For example, in the United State of American (USA), when companies like Enron and WorldCom failed, billions of dollars were lost by various stakeholders. The loss made stakeholders’ confidence to dwindle given that the accounting reports they relied on were prepared and presented by management and the accounting record were also unqualified by Auditors/Accountants (Enofe, Edemenya, & Osunbor, 2015). It must be noted that professional Accountants have been entrusted with the responsibility of picking what is right in the midst of numerous ethical challenges. However, this trust has been broken in recent times and has resulted to accounting crisis (Atoyebi et al., 2018).In response to the loss of credibility on the part of management and professional Accountants, a lot of measures have been proposed and also implemented by various professional bodies in their countries. Among these measures is Sarbanes –Oxley Act 2002 which legislated on ethical behaviour in USA (Catacutan, 2006). However, the consensus according to Catacutan was that to restore stakeholders’ confidence, the members of the accounting profession should be ethical in their professional behaviour.
Sarbanes -Oxley Act 2002 fallout of accounting scandals in the corporate world and the accounting profession in the USA was aimed at addressing the culture in the corporate environment that encouraged unethical behaviour (Kermis & Kermis, 2016). Some corporations that were involved in those scandals included WorldCom, Enron, Tyco International, Adelphia and Peregrine system. Billions of dollars were lost as the share prices of the affected companies crashed (Jenning, 2012). Other affected companies with high profiled fraud included Polly and Peck, Bank of Credit and Commerce International, Parmalat and Global Crossing (Otalor & Eiya, 2013). Also companies like Satyam, Xerox, NAMPAK, Afri-bank and Cadbury were broadcasted among the failed corporations (Salaudeen, Ibikunle, & Chima, 2015). The failure of the corporations resulted in the crash of their share price resulting in adverse multiplier effect on the securities markets worldwide.
Eginiwin and Dike (2014) argued that the recent accounting scandals have called to question the etiquette of the Board of Directors and that of the Accountants and probable that there is collusion between them. The Board of Directors and the Auditors/Accountants were accused of misleading accounting reports and analyses, creative accounting and falsifying accounting records which resulted in misleading accounting statements. Salaudeen et al., (2015) attributed the accounting scandal to ethical negligence on the part of the board of directors, auditing and other professional accounting. Jackling, Cooper, Leung, and Dellaportas (2007) also identified self-interest, inappropriate professional judgment, lack of objectivity and auditors’ independence, inappropriate leadership and morally bad culture, not being able to withstand threats to advocacy, poor ethical sensitivity, not having peer and organisational support, incompetence and having poor professional body support as contributing to unethical behaviour.
Society expects that management should be guided by the code of best practices of corporate governance (Hermes, Postma, & Zivkov, 2007) and Accountants should be guided by their professional codes of ethics in quality service delivery (Mautz, 1988; Nwagboso, 2008; Shehu & Musa, 2014; Salaudeen et al., 2015). Contrary to this expectation, recent researches and happenings have witnessed the failure of companies.
Jennings (2012) took a close look at Enron Corporation scandal which revealed some ethical issues that emanated from their accounting reports. Firstly, Mark-to-Market Accounting used by Enron is an accounting method used in energy companies. This method allows excepted profits to be posted in current earnings. The problem with this method is that it is subjective and based on assumptions which are not disclosed to stakeholders to allow them compare current year with previous years’ accounts or accounts with other energy companies. The method of mark-market-accounting happened to be dangerous for the management of Enron based on the fact that their performance rating and bonuses were linked to meeting earnings goals. A clear example was the portion of unrealized gains of Enron’s profit before tax which was about 50 percent of $1, 41 billion in 2000 profits which were originally reported. Secondly, there was the problem of minimal disclosure of its off-the-book entities which made Enron’s accounting statements to paint a picture that did not adequately reflect the investors’ risk off-the-book entities. Examples of undisclosed off the book entities were in 1999 when Enron entered into business with LJM Cayman, L.P. (LJM). The purpose was to transfer asset and liability to her partners. However, at the time of Enron’s collapse its debt profile was $38 billion among all its partners but only $13 billion was carried in its balance sheet. Thirdly, the problem of relatives doing business with Enron in an unhealthy manner was also an ethical issue that affected the company. The true accounting position of Enron could not be ascertained by stakeholders due to those unethical issues in the company. Stakeholders suffered a great loss at the time the true accounting position of Enron was revealed.
Salaudeen et al., (2015) critically explained the accusation levied against Afribank Plc and Cadbury. According to them the Board of Directors of the Afribank Plc and the company’s Auditors (Akintola Williams Deloittee) were accused of falsification of accounting reports and cosmetic accounting. They noted that the bank had over two hundred and fifty (250) branches in Nigeria. It was discovered that there was a wide discrepancy between audited and management figures which resulted from huge non-performance risk assets. The license of Afribank Plc was revoked by the Central Bank while the asset and liability of the bank were acquired by Mainstreet Bank Limited Consequently, the Auditors paid a penalty of twenty million naira (N20,000,000.00) for failure to handle the accounting report of the client (Afribank Plc) with due care.
In the same study carried out by Salaudeen et al., (2015), the accounting failure of Cadbury Nigeria Plc was analyzed. The Securities and Exchange Commission (SEC) discovered the following flaws in the accounts of Cadbury Nigeria Plc: a decline in the company’s profitability, non-compliance with corporate governance codes; and inadequate disclosure and deteriorating cash flow with respect to 2005 annual reports and accounts. Investigations revealed that the accounts were been overstated for the accounting period 2002 and 2006. Saludeen et al., (2015) concluded that corporate failure was a combination of failed corporate governance and unethical practices on the part of professional accountants.
The growing interest in professional code ethics and accounting quality is basically to increase transparency, enhance the quality of the accounting report and restore stakeholders’ confidence (Sarbanes-Oxley Act 2002). Salaudeen et al., (2015) noted that in order to restore investors’ confidence, ethical practice should be the watchword while ensuring that the information contained in the accounting report should be reasonable, well organized, unbiased and dependable.
Professional code of ethics is a compendium of principles, rules and regulations that guides the professional conduct of the accountant. These ethical codes are inclusive of objectivity integrity, professional competence and due care, professional behaviour and confidentiality (Otalor & Eiya, 2013). Ogbonna (2010) believed that lack of ethical compliance in an organization may lead to its failure or collapse in the long-run. She stressed that a sound organization was an indication of its compliance to an ethical code of conduct, which would result the in improved quality of accounting reports. Generally, information about the accounting position of organizations is communicated to stakeholders through the accounting statements (Akenbor & Tennyson, 2014). Against this backdrop, one question becomes imperative, “How does compliance with ethical codes of conduct affect accounting report quality?”
In other to enhance the quality of accounting reports, which could serve the interest of various stakeholders, the United State Congress did not only enact the SOX Act (2002) but also formed the Public Company Accounting Oversight Board (PCAOB) mainly for ethics education (Kermis & Kermis, 2016). Similarly, in Nigeria, the Securities and Exchange Commission (SEC) was saddled with the responsibility of issuing the Code of Best Practices of Corporate Governance in 2003. It was later reviewed in 2008 with the aim of improving accounting reporting quality (Shehu & Musa 2014), with professional bodies being responsible for the professional code of conduct. They noted that SEC use the codes to monitor the activities of the capital market in order to prevent its collapse.
Given the scandals that eroded the confidence of stakeholders in accounting records prepared by management and attested to by the auditors, professional code of ethics and accounting record quality automatically becomes very relevant. Therefore the need to restore stakeholders’ confidence in accounting reports while taking cognizance of stakeholders’ perception of ethics and accounting quality in Western Delta University necessitated this study.

1.2 Statement of the Problem
Extant literature showed with evidence the relationship between ethics and accounting reporting quality and other related works. For example Bakhtiari and Azimifar (2013) carried out a study on the impact of professional ethics on accounting reporting quality; Enofe et al., (2015) examined the effect of accounting ethics on the quality of accounting reports of Nigeria firms; Akenbor and Tennyson (2014) researched into Ethics of accounting profession; Ogbonna and Appah (2011) investigated Ethical compliance by accountants on the quality of accounting reporting and performance of quoted companies in Nigeria; Otalor and Eiya (2013) researched into Ethics in accounting and the reliability of accounting information and Salaudeen et al., (2015) researched into Unethical accounting practice and accounting reporting quality: Evidence from Nigeria. However, investigation into stakeholders’ perception of ethics and accounting reporting quality had not received serious empirical considerations. Therefore this research attempted to contribute to the unresolved issues of how some fundamental ethical principles (professional competence and due care, integrity, confidentiality and objectivity) influenced accounting reporting quality from stakeholders’ perception.
Accounting scandals in the accounting profession which resulted from corporate failure in several companies shook stakeholders’ confidence in accounting reporting quality. The scandals created serious doubts in the minds of stakeholders about the quality of the accounting report (Ogbonna &Appah, 2011; Okafor, 2011; Otalor & Eiya, 2013). They also brought to question the position of ethics in quality accounting reporting. Similarly, the credibility of Auditors, Management, Analysts and the regulatory bodies was also brought to question. Ogbonna and Appah, (2011); Salaudeen et al., (2015) were of the opinion that Enron, WorldCom and other corporate failures resulted from unethical practices on the part of the management (directors) in collusion with the accountants (auditors). This argument is consistent with Idialu and Oghuma (2007) assertion that global accounting failure resulted from unethical fraudulent practices.
These unethical practices, according to Butt (2016); Okafor (2011); Robideaux, Robin and Reidenbach (1989) included corporate fraud, greed, deceitful acts on negotiated terms, services that misled, self-judgment with over confidence, polices that are inappropriate or ambiguous that can result in lies in other to get the job done, racial discrimination, poor performance and lack of concern in the attainment of organizational goals, disloyalty, engaging in bigotry or sexual stereotyping and engaging in stereotyping and humiliating tactics. Salaudeen et al., (2015); Enofe et al., (2015) argued that other unethical practices included widespread corruption in business places and non adherence to ethical codes of conduct by professionals. Wijekoon and Azeez (2015) attributed the recent corporate failure to weak corporate governance mechanism which helped in defrauding the companies through earnings management. Ogbonna and Appah (2011) argued that non compliance with professional ethics was responsible for the low quality of accounting reports. Akenbor and Tennyson (2014) observed that falsification of accounting records and embezzlement to mention but a few were violations of ethical standards by professional accountants with respect to accounting report.
Some prior studies such as Choi and Pae (2011); Ogbonna and Appah (2011); Bakhtiari and Azimifar (2013); Enofe et al., (2015); Saludeen et al., (2015) deeply examined some unethical issues on ethics and accounting reporting quality. The unethical practices ranged from conflict of interest, earnings management, acceptance of gift, lack of objectivity to insiders dealings, etc (Enofe et al., 2015). There is still the need to have a look at professional code of ethics and accounting reporting quality especially from the perception of stakeholders.

1.3 Objectives of the Study
The major objective of this research was to examine professional code of ethics and accounting quality in Western Delta University. The specific objectives were to:
1. Ascertain how integrity affects accounting recording quality in Western Delta University.
2. Evaluate the extent to which objectivity affectsaccounting reporting quality;
3. Determine how professional competence and due care affect accounting reporting qualityin Western Delta University.
4. Assess the extent to which confidentiality influences accounting reporting quality.

1.4 Research Questions
The following research questions were raised since accounting scandal is still a recurring decimal in the business world:
1. To what extent does integrity affect accounting reporting quality in Western Delta University.?
2. What influence does objectivity has over accounting reporting quality in Western Delta University.?
3. Does professional competence and due care affect accounting reporting in Western Delta University.?
4. To what extent does confidentiality influence the quality of accounting report in Western Delta University?

1.5 Hypotheses
The following hypotheses were formulated for this study:
H01Integrity has no significant effect on accounting quality.
H02Objectivity has no significant effect on accounting reporting quality.
H03Professional competence and due care has no significant effect on accounting reporting quality.

1.6 Significance of the Study
The essence of this research work intended firstly, to add to existing body of knowledge by providing a fresh insight into as well as adding to the existing body of knowledge on the subject matter. Secondly, the study may help management in formulating policies that will enhance the quality of accounting reports. When policies are well implemented, they may help forestall the scandals that could result from failed companies and thereby make it possible for the accounting profession to rebuild stakeholders’ confidence. Thirdly, regulatory bodies like the Central Bank of Nigeria (CBN), Corporate Affairs Commission (CAC), Nigerian Stock Exchange (NSE), Securities and Exchange Commission (SEC), Accounting Reporting Council of Nigeria (FRCN) and other accounting regulatory agencies will find the results of this study quite helpful, since this research work would assist them in formulating and implementing policies that would further enhance accounting reporting quality taking cognizance of several ethical issues that address other sectors in the economy. Fourthly, researchers and consultants will find this study relevant, particularly researchers in ethics, accounting reporting and management related discipline, considering that one of the perceived issues in recent times is accounting quality.

1.7Scope of the Study
This research examines Accounting and Ethics. The emphasis was on Western Delta University. This study comprises Five (5) respondents (Accounting Professionals in Bursary Department) drawn from Western Delta University. The reason for this choice was based on the fact that it is convenient to the researcher.