Bookkeeping Ethics – JSS3 Business Studies Lesson Note (Second Term)

Bookkeeping ethics are the morals and principles that govern how a bookkeeper behaves and handles money. They are summed up in three values: transparency, accountability and probity (TAP).

Behavioural objectives

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

1. explain the meaning of ethics in bookkeeping;
2. explain the terms transparency, accountability and probity (TAP);
3. state the need for TAP;
4. mention the attributes of TAP.

What is bookkeeping ethics?

Bookkeeping ethics are the morals and principles that guide a bookkeeper’s behaviour and conduct when recording and handling money.

• Ethics: the morals and principles that govern a person’s behaviour or conduct.
• Public interest: a bookkeeper has a responsibility to act in the interest of the public, not only the employer.
• Professional conduct: a bookkeeper must behave ethically and professionally at all times.

What are the qualities of an ethical bookkeeper?

• Honesty: records only what truly happened, with no false entries.
• Accuracy: enters figures carefully and corrects mistakes openly.
• Confidentiality: does not pass on the business’s financial information to unauthorised persons.
• Objectivity: does not allow friendship or pressure to change the records.
• Competence: keeps skills up to date and does the work properly.

What are examples of unethical bookkeeping behaviour?

• Falsifying records: changing figures to hide a shortage or theft.
• Stealing: taking money from the cash box or the bank account of the business.
• Padding expenses: recording expenses that never took place.
• Mixing funds: using business money for personal needs without proper record.
• Disclosing secrets: sharing the business’s financial details without permission.

What are transparency, accountability and probity?

Transparency, accountability and probity (TAP) are the three values that guide honest handling of money and responsibility.

• Transparency: honesty and trustworthiness in the way business is done, with nothing hidden.
• Accountability: readiness to account for all the transactions that take place during business operations.
• Probity: being upright, having high morals and integrity in handling responsibility and funds in one’s custody.

How does each TAP value show in bookkeeping?

Why is TAP needed?

TAP is needed because it builds trust and prevents the misuse of money in government and private business.

1. Integrity: it promotes integrity.
2. Public trust: it makes the public trust those in government and the private sector.
3. Openness: it institutes openness in all forms of business transaction.
4. Less corruption: it reduces corruption.
5. Rule of law: it institutes respect for the rule of law.
6. Less waste: it reduces the waste of taxpayers’ money.
7. Informed citizens: it keeps the citizens of a country well informed about government action.
8. Good governance: it institutes good government and good governance.
9. Accepted standard: it establishes a known and acceptable way of doing business.

What are the attributes of TAP?

There are seven attributes of TAP: truthfulness, openness, fairness, impartiality, due process, respect for the rule of law and free flow of information.

1. Truthfulness: the public should be told the truth on any issue, especially contentious ones, at all times.
2. Openness: every action taken must be open to public debate and criticism.
3. Fairness: an organisation must not be seen to favour any person, group or entity.
4. Impartiality: everybody must be treated fairly and equally to avoid favouritism.
5. Due process: the laid-down procedure for carrying out any action, especially government contracts, must be followed.
6. Respect for the rule of law: what the law says must be obeyed to the letter, no matter who is involved.
7. Free flow of information: information on any action must be made available to those who want to find out what has happened.

Evaluation

1. What is ethics in bookkeeping?
2. Explain the meaning of TAP.
3. State three reasons why TAP is needed.
4. Mention five attributes of TAP.
5. Give two examples of unethical bookkeeping behaviour.

Assignment

Answer the five questions below in your exercise book.

1. ______ is honesty and trustworthiness. (a) Probity (b) Transparency (c) Achievement (d) Accountability.
2. The readiness to give reasons for any action is ______. (a) probity (b) accountability (c) trustworthiness (d) achievement.
3. Being upright and having high morals is ______. (a) probity (b) accountability (c) transparency (d) achievement.
4. One of these is not a reason for TAP: (a) Promotion of integrity (b) Reduction of corruption (c) Respect of rule of law (d) Making super profit.
5. Which one is not among the attributes of TAP? (a) Corruption (b) Openness (c) Fairness (d) Truthfulness.

Reference

WABP Business Studies JSS 2 by Egbe T Ehiametalor, page 97.