Creative accounting practices and the unethical auditor Essay

Creative accounting practices and the unethical auditor - Essay Example The occurrence of creative accounting practices threatens society’s trust in the profession, and also means lack of the trust in the published financial data and the profession reports that, as a result, make the expectation gap wider between the profession and consumers and interested persons. The auditor’s mistakes in facing the risk of the creative accounting practices, such as discovering and reporting them, leads to very public prosecution, which reduces credibility even more. The auditor is responsible for the risk of the creative accounting practices of the financial data-discovering and reporting. It will be argued that the response to creative accounting cannot just come through increasing regulation and rules for the profession. That the obstacles and the challenges that led to the failure of the profession in reducing the risk of creative accounting practices demands increase in effectiveness of the professional individual. A greater part of the response should be through seeking ways to change the individual professional’s ethical and moral approach to auditing, before there can be any effective regulation. This way the credibility of accounting information can be increased and the expectations and credibility gap narrowed and trust in the profession can be strengthened. Unethical accounting or auditing can lead to destructive results for a Company. A horrible example of Enron’s fraud was a serious impact for employees of the company and shareholders. There were huge losses of billions of dollars and thousands of jobs were lost. Therefore, the US government made numerous attempts to prevent the occurrence of such cases. Corporate America should have changed something in their policies, otherwise failures are unavoidable. In the field of auditing it was relevant to avoid intentional preparation of the wrong financial documents. The companies very often do not pay a proper attention to ethical behaviour of their employees. Concerning