1.1. BACKGROUND OF THE STUDY
The broad objective of financial reports or financial statements is to communicate economic forecast and information about the resources and performance of a reporting firm (Alexander & Britton, 2012). This information is intended to assist users in making well- reasoned investment, credit, and financial decisions about providing resources to the firm (Arowoshegbe, Uniamikogbo, & Atu, 2017). Due to this fact, it is perceived that the preparers and auditors of financial statements did a quality work as their reports are taken by stakeholders to be truthful. It, therefore, becomes imperative for firms to provide high-quality financial information that will aid decision making of investors and other users of financial information (IASB, 2008). The quality of financial reporting can be measured in terms of its features, such as relevance, faithful representation, understandability, comparability, and timeliness of the financial reports (Beest, Braam & Boelens, 2009). Past studies have indicated that these qualities are found in financial statements when preparers of financial reports uphold high ethical standards in relation to their duties. Ethical accounting practices are governed by several ethical standards issued by accounting bodies and agencies globally and locally. Globally, the International Federation of Accountants (IFAC) set out the code of ethics for professional accountant which includes integrity, objectivity, and professional competence and due care, confidentiality and professional behaviour.
These codes of ethics can be applied to both professional accountants in public practices and professional accountants in business (IFAC, 2014). In Nigeria, various bodies and agencies regulate the operations of accountants as well as their ethical dealings and practices. These bodies include – the Companies and Allied Matters Act 2016 (as amended), Financial Reporting Council (FRC), Institute of Chartered Accountant of Nigeria (ICAN), the Association of National Accountants of Nigeria (ANAN), as well as the Chartered Institute of Taxation of Nigeria (CITN). Numerous ethical issues have been listed out, ranging from conflict of interest, insider dealings, acceptance of gi, Professional behaviour (Enofe, Edemenya & Osunbor, 2015; Fatoki, 2015) despite the profession having global and local bodies regulating the code of ethics. Ethics is generally concerned with the rightness or wrongness of an act. It deals with human conduct in relation to what is morally good and bad, right and wrong (Rush, 2013). Researchers sometimes confuse ethics with morality. Ngamen (2014) made a clear distinction between ethics and morality opining that ethics is particular or specific in nature, while morality is general in nature. Dierent professions (Law, Medicine, Engineering, Architecture, etc.) have their respective code of ethics, which are particular to the profession.
Generally, according to worlds’ practice, if an individual commits an offence or crime, for example, in a case of murder, it is generally known that the accused will be prosecuted and if found guilty, will be made to face the full wrath of the law. Looking at the strength of agencies and regulating bodies in the accounting profession, it is quite sad that the profession’s end products (financial statements and reports) still lacks public confidence due to the failure and ultimate collapse of some major firms. Eron, WorldCom, and Global Crossing in the USA; Paramalot in Italy; and Cadbury, NAMPAK and Afri-Bank in Nigeria have been noted as classical examples. Reportedly, these firms were consistently audited by reputable firms who were also indicted, of which one of the big four audit firms was listed (Yunanda & Majid, 2011; Salaudeen, Ibikunle & Chima, 2015). More recently, an educational sector in Nigeria – the Joint Admission Matriculation Board (JAMB) in July 2017 announced the remittance of N5bn to the Federal Government which happens to be the highest so far in the last 40 years of its existence (Punch Newspaper, September 14, 2017 (http://www.punchng.com/buhari-orders-probe-of-ex-jamb-nimasas-heads/)).This incited questions on previously remitted amounts and consequently led to the probe of previous management. Not quite long, the same educational sector (JAMB) reported that a snake swallowed N36 million of its revenue (Vanguard Newspaper, February 17, 2018 (https://www.vanguardngr.com/2018/02/snake-allegedlyswallows-n36-million-jamb-oice-vault-nigerians-react/)). It is quite sad that the ethical accounting practices are not carried out to the latter with the utmost standards. Behaving ethically in accounting is more important than auditing because accounting system prepares financial statements for auditing (Mahdavikhou & Khotanlou, 2011). In other words, accountant’s obligations go beyond their immediate client. Therefore behaving ethically is an essential and expected trait (Carrol, 2010). Professional ethics is important to accountants and those who rely on information provided by accountants because ethical behaviour entails taking the moral point of view. Internalizing and trying to make professional ethics in accounting profession leads to promoting the quality of financial reporting.