Accountability, Ethics, and the Business World

The activities of business and the financial services industry, and their decision-making processes are predominantly motivated by profit maximisation criteria, which can often lead to highly questionable decisions being made (Paterson et al., 2016). Indeed, we do not need to dig too far into the financial services world and the activities of business to find examples that demonstrate a distinct lack of consideration for society, the environment or human life, as well as activities that demonstrate questionable moral or ethical behaviour. The collapse of Enron, for example, was an outcome of unethical behaviour by the management and the accounting firm (Arthur Andersen), which resulted in great losses suffered by all of its stakeholders. Questionable business and accounting decisions are not restricted to the private sector but are also found within the public and third sectors. Cooperatives and family businesses are also not exempt from questionable business behaviour.Within the public sector, the MHB Bank of Vietnam, which is part of the fully state-run Bank for Investment and Development of Vietnam, was exposed to fraudulent activities amounting to millions of dollars by three senior bankers and six securities officials (Channel News Asia, 2016). Petrobras, one of the largest state-owned oil organisations of Latin America also suffered from fraudulent activity of around $400m involving 35 members of which several were chief executives (Leahy, 2016; Guardian, 2014). The CEO within Age UK, a charity providing services and support for older people in the South Tyneside community, was charged with defrauding more than £700,000 from the organisation12 Contemporary Issues in Social Accounting(Cooney, 2015). The Co-operative Bank in the UK has been involved in a seriesof scandals including alleged drug-taking by former chairman Paul Flowers(Goodway, 2013). Family businesses, despite being run with a more hands-on andinclusive management style are also vulnerable to fraud. For example, Parmalatsuffered four decades of fraudulent activity by Calisto Tanzi which ultimatelyled to its collapse (Guardian, 2004). Such scandals have led to growing demandfor accountability across all sectors. Indeed, calls for these organisations to beheld accountable for their actions, and for policies to be adopted to help preventunethical actions that affect a wide range of stakeholders, feature highly in themedia.The concepts of ethics and social accountability have grown considerably inrecent years in both the educational and professional contexts. This can be attributedto philosophers and scholars within accounting and finance successfullyconnecting ethical theory to real world problems (Paterson et al., 2016). Within thischapter, we introduce you to two interrelated concepts: social accountability andethics and their importance to everyday life. We begin by first considering whataccountability and business ethics are and why they is important. Following thiswe introduce a discussion on the codes of conduct that facilitate social ethics andaccountability. The chapter includes examples of important issues that requirecareful reflection and consideration when determining approaches to businessactivity and ensuring professional integrity. This is followed with a discussionon the limitations of ethics and codes of conduct.