Book Keeping & its Ethics – JSS2 Business Studies Lesson Note (Second Term)

Bookkeeping ethics are the standards of honest and responsible conduct expected of people who look after money in public and private organisations. In Nigeria these standards are summed up as TAP: transparency, accountability and probity.

Behavioural objectives

By the end of the lesson, students should be able to:

1. Define bookkeeping and state why records are kept.
2. State what TAP stands for.
3. Explain transparency, accountability and probity.
4. Give reasons why the public and private sectors need TAP.
5. List the attributes of TAP.
6. Describe the problems that result from a lack of TAP.

What is bookkeeping?

Bookkeeping is the systematic recording of the money transactions of a business in books of account.

• Receipts: proof that money was received or paid.
• Cash book: a book that records money coming in and going out.
• Ledger: a book that groups records under separate accounts.

Why do businesses keep books?

Businesses keep books so that the owner and others can know the true financial position of the business.

• Profit or loss: records show whether the business is making a gain or a loss.
• Debts: records show money owed to the business and money the business owes.
• Control: records make it easier to notice missing money or goods.
• Tax: records help a business work out and pay the correct tax.
• Decisions: records help the owner plan purchases, sales and spending.

What are bookkeeping ethics?

Bookkeeping ethics are the moral rules that guide a bookkeeper in recording and handling money.

• Honesty: record only what really happened.
• Accuracy: enter the correct amounts and dates.
• Confidentiality: do not share the financial secrets of the business with outsiders.
• Integrity: never change or destroy records to hide a fault.
• Keeping documents: keep receipts and invoices as proof of each entry.
• Separating money: do not mix the owner’s personal money with business money.
• Reporting errors: tell the right person about a mistake as soon as it is found.

What is TAP?

TAP stands for transparency, accountability and probity, the three values used in Nigeria to fight corruption and protect money.

• T: Transparency.
• A: Accountability.
• P: Probity.

What is transparency?

Transparency is being open, truthful and clear, with no hidden agenda.

• Open records: accounts can be checked by those with a right to see them.
• Trust: people believe an honest and open person.

What is accountability?

Accountability is being responsible for your actions and being able to explain them.

• Answerable: you must give reasons for what you did with money.
• Correcting errors: you must put right any fault that results from your decisions.

What is probity?

Probity is being upright, with high moral standards and strong honesty in your position.

• Integrity: you do the right thing even when nobody is watching.
• Care of money: it covers the money in your custody and your office.

How do the three values compare?

Why do we need transparency, accountability and probity (TAP)?

The public and private sectors need TAP because it makes management honest and protects money.

• Public integrity: it promotes honest conduct among public officers.
• Rule of law: it helps to keep laws and rules respected.
• Proper business: it ensures government and private businesses work properly.
• Less corruption: it reduces bribery and corruption in every field.
• Good governance: it supports good government.
• Investment: it encourages foreign direct investment (FDI).
• Less waste: it reduces the waste of taxpayers’ money.
• Informed citizens: it keeps Nigerians informed about government actions.

What are the attributes of TAP?

The attributes of TAP are the qualities that the public sector, private sector, government and businesses must show to be above board.

• Truthfulness: saying and recording only the facts.
• Openness: not hiding information that people have a right to know.
• Fairness: treating everyone justly.
• Impartiality: not taking sides or favouring friends and relatives.
• Due process: following the correct rules and steps in every action.
• Respect for the rule of law: obeying the law and its procedures.

What are the problems of a lack of TAP?

A lack of TAP leads to dishonest handling of money and poor public services.

• Bribery: more cases of giving and taking money to get favours.
• Embezzlement: officials steal money placed in their care.
• Diversion of funds: public money goes into private pockets.
• Poor infrastructure: roads, water and electricity are not maintained.
• Fraud: more cases of cheating for gain.
• Disregard for law: rules are ignored.
• Nepotism: jobs and contracts go to relatives and friends.
• Wasted funds: taxpayers’ money is spent on things that are not needed.
• Perverted justice: the justice system is made unfair.
• Secrecy: government is not conducted openly.

Evaluation

1. Define bookkeeping.
2. What does TAP stand for?
3. Explain accountability in your own words.
4. What does probity mean?
5. Give four reasons why the public and private sectors need TAP.

Assignment

1. List the six attributes of TAP, then explain how a lack of TAP can affect roads, water and electricity in Nigeria.