OtherPapers.com - Other Term Papers and Free Essays
Search

How Doe's Ethics Factor into Thinking About Finance as a Method? What Key Questions Do Managers Need to Ask as They Perform a Financial Analysis of a Project?

Essay by   •  April 23, 2012  •  Research Paper  •  2,607 Words (11 Pages)  •  1,915 Views

Essay Preview: How Doe's Ethics Factor into Thinking About Finance as a Method? What Key Questions Do Managers Need to Ask as They Perform a Financial Analysis of a Project?

Report this essay
Page 1 of 11

How doe's ethics factor into thinking about finance as a method? What key questions do managers need to ask as they perform a financial analysis of a project?

The valuation of decisions using such tools as discounted cash flow, asset multiples, book value, market value, among others is known as Finance. Most of the decisions are evaluated and supported by the valuation of different alternatives. In case when one is not engaged in the creation of the financial model it means he/she is engaged in the presentations or helping with the inputs and assumptions or may be executing the plan and being held accountable to someone else's valuation .The method of discounted cash flow or DCF, which is the most common method takes the projected cash flows of a project and converts them in to present day value, while other valuation methods such as replacement value market value, multiples etc exist, the central tool of DCF is used in organizational decision making. The most powerful tool in weighing options the summarization of entire future scenarios in to a single number is Valuation that can help in the simplification of complex decisions.

The process of simplification in valuation sums up and hides many small cha and large judgments and the present value of the future cash flows of the project can be described in the case in billions of dollars in the case of the of Boeing. However, the assumptions and construction of the model express more about the project rather than the statement, "this project will be cash flow positive in year four". Value judgment and the ethics and values of the corporation are reflected in the case of the valuation of the Boeing 777 project. We shall approach finance as a method by deconstructing the most common tool valuation within the organization and our aim remains to get inside finance and see it not just as an important decision making tool, but also as a reflection of the values of the organization.

There are different alternatives for flushing out the ethical dimensions to a managerial decision within the dominion of valuation. In case of a social impact statement, a financial model is created and a separate and distinct section is presented to summarize the ethical dimensions of the decision at hand with the assumption of the valuation itself being devoid of any ethical dimension. The type of discussing and flow of ideas resulting out of this kind of an impact statement is very critical to making of a good managerial decision. Hence going back from the details of the financial valuation model would prove to be helpful in viewing the bigger picture But here we are in the argument that value judgments can be made all along the process of valuation, which is helpful in the examination of the entire process with a good understanding of the value of the organization.

The effective use of financial modeling involves the managers to ask the following questions:

1. What alternatives are not being considered? Are there alternatives that meet the needs of multiple stakeholders or multiple standards of conduct?

2. Have I examined the assumptions to ensure they are in keeping with the values of the organizations? Can I stand by these assumptions to? Am I making these assumptions as transparent as possible to key stakeholders?

3. Does the model take into consideration alternative proprieties and goals?

4. Who is impacted by this model? Have I included these stakeholders in the process?

5. Am I positioning this model as one possible answer? Am I giving the audience enough information to make an informed decision in keeping with their values and the vales of the organization?

What is accounting with and without ethics?

There is a lot of variation in the views and ideas about accounting, a concept, moral or immoral is a widely acceptable phenomenon. For instance,

1. This is accounting and I am filing my numbers into a formula.

2. The faster I compete this accounting review, the better my manager and I look on our timesheets.

3. Outsiders to the company have no interest in what really goes on inside the organization.

4. The less other groups know our inside decisions the better off every one is.

The value and importance is belied by the picture of bean counters that merely take numbers from an organization and applying formulas and structure in communicating an accurate picture in which case, the decisions are made throughout the accounting process. Our aim is to demonstrate the moral implications of accounting and value decisions made throughout the accounting process and in doing so, our view of accounting and the questions we ask change to:

1. Are my actions in line with the standards of accounting? Of my Organization? Of my group?

2. Is accounting seen as giving stakeholders a view of the internal processes of an organization or a specific department?

3. Who are the stakeholders involved in the process and whet other stakeholders should be added? Am I damaging relationships in the completion of these documents?

4. How much transparency is good for the organization and the stakeholders? What information should be passed on to the public?

The idea of accounting ethics therefore refers to the moral and value-based judgments and decisions which an accountant or accounting agency face in their daily practice and because of the nature of their work as communicators of financial information to business managers, shareholders, and the general public, as well bookkeeping and auditing of business entities, they are held to the highest standards of transparency and morality in regards to their research and the information they convey. Accounting can be used as a way to study how and why a business may succeed or fail, but above all it is a public service; those who practice it must make judgments and decisions that can sometimes supersede the interests of their clients in favor of the interests of the public at large.

An opportunity for some kind of manipulation of facts and information misleading, causing someone to invest under false simulations or a fraudulently representation of its shareholders can result from the application of any kind of unethical standards of accounting. Therefore, it is very essential for an accountant or an accounting agency to be trusted by the public whose family business is at stake.

What is finance with and without ethics?

Investment in socially

...

...

Download as:   txt (16.3 Kb)   pdf (174 Kb)   docx (15.3 Kb)  
Continue for 10 more pages »
Only available on OtherPapers.com
Citation Generator

(2012, 04). How Doe's Ethics Factor into Thinking About Finance as a Method? What Key Questions Do Managers Need to Ask as They Perform a Financial Analysis of a Project?. OtherPapers.com. Retrieved 04, 2012, from https://www.otherpapers.com/essay/How-Doe's-Ethics-Factor-into-Thinking-About-Finance/27663.html

"How Doe's Ethics Factor into Thinking About Finance as a Method? What Key Questions Do Managers Need to Ask as They Perform a Financial Analysis of a Project?" OtherPapers.com. 04 2012. 2012. 04 2012 <https://www.otherpapers.com/essay/How-Doe's-Ethics-Factor-into-Thinking-About-Finance/27663.html>.

"How Doe's Ethics Factor into Thinking About Finance as a Method? What Key Questions Do Managers Need to Ask as They Perform a Financial Analysis of a Project?." OtherPapers.com. OtherPapers.com, 04 2012. Web. 04 2012. <https://www.otherpapers.com/essay/How-Doe's-Ethics-Factor-into-Thinking-About-Finance/27663.html>.

"How Doe's Ethics Factor into Thinking About Finance as a Method? What Key Questions Do Managers Need to Ask as They Perform a Financial Analysis of a Project?." OtherPapers.com. 04, 2012. Accessed 04, 2012. https://www.otherpapers.com/essay/How-Doe's-Ethics-Factor-into-Thinking-About-Finance/27663.html.