EFFECT OF ETHICAL ACCOUNTING PRACTICES ON ORGANIZATIONAL PRODUCTIVITY IN NIGERIA

CHAPTER ONE
INTRODUCTION
1.1   BACKGROUND TO THE STUDY
In recent years, widespread moral lapses and corporate financial scandals have brought the topic to the forefront. Corporations are rushing to adopt codes of ethics, strengthen ethical and legal safeguards, and develop socially responsible policies. Every decade sees its share of corporate, political, and social villains, but the pervasiveness of ethical lapses in the early 2000s was astounding.
Over the years the term ethics in organizational performance has long been associated with management scholars and business leaders around the world. There is a broad agreement that as a matter of corporate policy, every organization should strive to be committed in a manner that is ethically transparent. The concept of ethics simply deals with how decisions affect other people and the organization. One of the unique features of most recognized trades and vocations including the highly regulated accounting profession is the existence of code of ethics which are the hallmarks of global best practices. Society evaluates the performance of professionals on the basis of both moral and technical codes. Adherence to these codes by the practitioners of the profession inspires confidence in the work of the professional by shareholders who depends on the auditor’s opinion as a means of evaluating the integrity of financial statements. The huge and embarrassing corporate failures and high profile frauds in the last two decades have called to question the integrity of the accounting profession both within and from outside the profession, leading to increased demands for ethics within the auditing profession. While the inherent risks in the marketplace, the potential for business failure, or the possibility of human mistakes cannot be entirely eliminated, the principle of professional ethics requires a professional accountant to conduct themselves honestly, and in accordance with applicable professional standards.
Traditionally, the key feature of a profession is anchored on the grant of a special franchise by society who expects the practitioners of that profession to accept responsibility to provide a degree of regulation and enforcement through expert advice and persuasion thus, relieving the society of the burden of providing that control by other means (Mautz, 1988). A profession is distinguished by the general belief in its ability to deliver unique, specialized and restricted services to the public and the development of internal rules aim at guiding, directing and regulating members’ professional conduct. The current business environment has put professional services firms at a crossroads. The values of individuals and the integrity of the organizations they belong to are being tested.  Behaving in an ethical manner is seen as part of the social responsibility of the organization, which itself depends on the philosophy that organizations ought to impact on the society in ways that go beyond the usual profit maximization objective.
Generally, accounting ethical practices revolve around the principles of independence, objectivity, integrity, confidentiality, professional behavior, competence, and due care. Failure on the part of the practicing accountants or auditors to exhibit due care and diligence in carrying out their responsibilities and lack of integrity impinges on the credibility of the accountancy profession. Accountants and the accounting profession facilitate capital accumulation. It has been argued that the role they play in similar exercises is unethical, for example, accountants give advice on mergers but fail to consider the implication of the exercise on employees. Moreover, we easily hear today of illegal and unethical accounting practices in many business organizations, such practices as we know occur throughout the world. This, therefore, reminds us of the challenges that organizations face as the first quarter of this millennium advances with its hydra-headed challenges. There is a great concern for the quality of ethical conduct in all types of the organization all over the world in which Nigeria is no exemption.
There is no gainsaying, that many modern organizations are today faced with numerous challenges such as illegal and unethical business practices in a number of business transactions, Organizations are constantly striving for a better ethical atmosphere within the business climate and culture. Businesses must create an ethical business climate in order to develop an ethical organization. Otherwise saying, companies must focus on the ethics of employees in order to create an ethical business. Most organizations have come up with codes of ethics in dealing with ethical issues challenging them.
Ethical accounting practice is characterized by honesty, fairness, and equity in an interpersonal, professional and academic relationship and it respects the dignity, diversity and the right of individuals and groups of people. Legan. (2000). Therefore, ethical practices spring virtually from every decision, thus organization stability and survival depend on the consistency of quality of the ethical financial decision made by managers. Managers are challenged and encouraged to have an obligation on organization performance and society at large, to support and assist the society to imbibe the good ethical culture for the interest of all. An organization forms when individuals with varied interests and different backgrounds unite on a common platform and work together towards predefined goals and objectives thereby increasing a firm’s productivity. To some managers, however, unethical accounting behavior has come to stay and hardly can a growing firm exist in perpetuity without any form of compromise in this volatile world. Most organization management can equally not distinguish between what is moral and immoral business practices.
1.2. STATEMENT OF PROBLEM
It has often been suggested by some that the expression of business ethics is an oxymoron.it employs contradictory terms because business seeks to optimize or maximize gains from its operations while ethics implies a very different basis for business practices. However, although the more cynically minded would seriously subscribe to this view, there has been a very dramatic upturn in an interest in ethical considerations by business leaders and professional business organisations partly as a result of the demands of societies which have had to bear the cost of spectacular corporate collapses and the unscrupulous business activities of a minority of business practitioners.
Today, many African Nations are faced with a crisis that is making the competitive strength of the business organization more challenging. This crisis involves people in business, customers, and at the peak of unethical practices and especially more worrisome is the unethical accounting practices among employees at all levels of the organization. For example, a recent study found that employees theft ranges from stealing company’s product to using company’s service without authorization, such as making personal long-distance calls at work (thereby “stealing” both the call and their productive time, while others, on the other hand, forge checks and commit another type of fraud. Scandals involving the management of organizations have often captured world attention. Most of these scandals are a result of the deteriorating ethical accounting practices of the management of various organizations that have indulged themselves in all sorts of malpractices. There is, therefore, a genuine demand that financial institutions should strengthen ethics, integrity, transparency, accountability, and professionalism, in order to protect public resources and enhance a firm’s performance. Many modern organizations are faced with numerous challenges such as illegal and unethical practices in a number of business transactions. Managers are also faced with the challenge of evaluating the effect of these critical practices on the performance of such organizations. Again, many business managers operate their activities today, without a keen interest in bothering whether their actions are right or wrong and the extent of employees’ understanding of the term ethics while the level of compliance is highly infinitesimal, (Oladunni 2002). The way Nigerian society cares little about the source of wealth tends to make some of these business operators to begin to wonder about the necessity of ethics in an organization. Many executives, administrators, and social scientists see unethical accounting behavior as cancer working on the fabric of society in too many of today’s organizations and beyond. The crises of unethical behavior involve business people, government officials, customers and employees at all levels of the organization. For example, a recent study found that employees accounted for a higher percentage of retail theft than did customers. The study estimated that one in every fifteen employees steals from his or her employer. It is also observed that Nigerians generally have a poor attitude to work, like most other general statements. Also, Oladunni [2002] once observed that it is believed in Nigeria that people have a poor attitude to work or do not like to work, which results in low productivity in some organizations.
1.3. OBJECTIVES OF THE STUDY
This research study revolves majorly; the significance effect of good ethical accounting practices on organizational performances. Other specific objectives include:
·        Investigate the code of ethics guiding the performance of accounting firms.
·        Examine the compliance level of the established code of ethics of accounting firms.
·        Establish whether ethical accounting practices have any relationship with organizational performance.
·        Show-case the necessity of good ethics to the success and eventual institutionalization of an organization.
·        Highlight the consequences of unethical practices on organization productivity
·        Proposes possible solutions to unethical accounting practices in the accounting profession.
1.4. SIGNIFICANCE OF THE STUDY
Ethics are very important in an organization. Ethics are the principles and values used by an individual to govern his or her actions and decisions.  The significance of this study is multi-faceted as it helps in identifying the essence of ethical accounting practices on organizational performance, as this will enhance employees’ performance as things are done correctly in a coordinated member. Moreover, newly established firms and organizations will actually know the place of proper ethical practices in the continued existence of such an organization.
The research of this nature is very important to develop nations like Nigeria that already has a high level of known corruption and sharp business practices, which have permeated all facets of Nigeria’s national life. This study will also be of great significance to policy analysts, auditors, investors, as well certified public accountants since it will assist in analyzing the effectiveness of the professional code of ethics on employee and management of an organization. It will therefore equally be of immense help to the various professional bodies in evaluating the success of its activities with specific reference to the problem of poor ethical accounting practices, elimination of unethical organizational behavior, it would also assist the boards in determining or formulating their future plans. Finally, this study will be of great significance to schools and students, it will serve as a reference point for future researchers who will want to research more on the topic.
1.5. SCOPE OF THE STUDY
This research study propels round the inclusive effect of good ethical accounting practices on organizational performances as far as accounting firms and services industries are a concern in Nigeria. The activities of the accounting professional bodies were put also into consideration. However, the research was limited to accounting firms and services industries operating in Ogun State, due to the schedule of the researcher.
1.6. LIMITATIONS OF THE STUDY
As with all studies, limitations exist and must be acknowledged. Moreover, the outcomes were based on the information solicited from the respondents and such might be subjected to human errors, omissions, and possible misstatements. The limitations of the study are as given below:
a)     Because the sample is chosen from the one state Of Nigeria. That’s why the findings and analysis are varying slightly in an organization to an organization.
b)    Some respondents did not give enough concentration to understand the significant of analysis.
c)     Time constraint: Another major constraint that affected this study was time. This was due to the fact that the study was conducted amidst normal academic studies.  To this end, therefore, it was difficult for the researcher to meet up some of the appointments with respondents.
1.7. DEFINITION OF TERMS
Ethics: Ethics refers to the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong. Ethics sets standards as to what is good or bad in conduct and decision making.
Code of Ethics: A code of ethics within an organization is a set of principles that are used to guide the organization in its decisions, programs, and policies.
Ethical Dilemma: this refers to a situation that arises when all alternative choices or behaviors have been deemed undesirable because of potentially negative consequences, making it difficult to distinguish right from wrong.
A profession: is an occupation that requires extensive training and the study and mastery of specialized knowledge, and usually has a professional association, ethical code and process of certification or licensing.
Accountant: An accountant is any person who possesses a professional license to practice accountancy from a recognized professional body and has legal capacity and authority to carry out the duties of accountants in taxation and audit practice.
Social Responsibility: it is the obligation of organization management to make decisions and take actions that will enhance the welfare and interests of society as well as the organization.
Stakeholder: Any person or group within or outside the organization that has a stake in the organization’s performance.
Whistle-Blowing: this entails the disclosure by an employee of illegal, immoral, or illegitimate practices by the organization.
Ethical behavior: ethical behavior is that which is morally accepted as “good” and “right” as opposed to “bad” or wrong in a particular setting.
Accountability: accountability is concerns with the processes by which “those who exercise power whether as governments, as elected representatives or as appointed officials, must be able to show that they have exercised their powers and discharged their duties properly”
Transparency: It is a metaphorical extension of the meaning a “transparent” object is one that can be seen through. With regard to public services, it means that holders of public office should be as open as possible about all the decisions and actions they take.
Integrity: the concept of integrity has to do with the perceived consistency of actions, values, methods, measures, principles, expectations and outcomes. When used as a virtue term, “integrity” refers to a quality of a person’s character.

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