Ethical standards in accounting assist a business in reducing business liability. Furthermore, accounting involves accessing the financial information of an entity or an individual. However, it contains the potential and possibilities for abuse of information and manipulation of numbers to enforce earnings management and enhance company perceptions. Additionally, accounting ethics involves following specific guidelines, and rules to prevent misuse of financial information or management position. Contrarily, liability claims are setbacks to a business that threaten the success of a business. A business should have good insurance protection in place to cater for a range of potential liability risks.
THE ADVANTAGES OF ETHICAL STANDARDS IN ACCOUNTING
Ethical standards in accounting prevent the misuse of information of a client by an accountant or auditor. Moreover, accounting ethics involves the setting of guidelines and rules that accountants should follow. Consequently, these rules create fear in the minds of accountants ensuring that they conduct their duties responsibly to prevent financial setbacks to a business. Additionally, a business that pays attention to accounting ethics performs better than other businesses. It builds a good image for the company to the customers and other parties. Furthermore, accounting ethics assists in reducing business liability by ensuring that a business is liable for any legal actions.
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STRATEGIES FOR LIMITING AND REDUCING BUSINESS LIABILITY
Fundamentally, structuring a business properly helps in reducing business liability. This may involve seeking guidance from a business lawyer to determine the appropriate structure for a business. Moreover, it is important to purchase insurance to limit its exposure and limit other setbacks to a business. Furthermore, the business should identify risks and implement procedures to minimize them in advance. A business requires ethical standards in accounting to ensure it is liable for any legal actions.
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