1.1    Background of the Study

The definition of ‘ethics’ has been given by different scholars in literature. Fisher and Lovell (2003) views ethics as the branch of philosophy that concentrates on formal academic reasoning about what is right and what is wrong. Hornby (2010) defines ethics as those moral principles that governs the behaviors of human. The similarity in both definitions is the yardstick of measuring morally acceptable behavior. Babayanju, etal, (2017) differentiated between value and ethics, while the formal are beliefs about what is right and wrong that guides the daily activities of humanity, the latter provides tenets and standards, which are obtained from the theories of ethics, for thinking about the issue. The concept of ethics is interdisciplinary. Virtually every profession has some ethical principles governing its operations. In the accounting world, there are accounting ethics; in the business environment, there are business ethics, in the medical line, there are medical ethics, in engineering, there are engineering ethics, in the legal world, there are legal ethics and the like. The usefulness of ethics in each of these professions is to create a template for acceptable professional behavior that will guide members in the aspect of performing and discharging their duties to their clients in particular and public in general.

As a result of lack of authenticity in the financial information prepared by accountants exerted pressure on the Congress of United States to promulgate the Sarbanes-Oxley (SOX) Act in 2002 (Enofe, etal, 2015). These act encapsulated the establishment of Public Accounting Oversight Board, to ensure that accountants are well-grounded in ethics education in order for them to able to make reasonable ethical decisions when faced with unpleasant choices. The pervasiveness of corruption in the private and public sector coupled with high rate of fraudulent practices have propelled accounting practitioners to comply thoroughly with codes of professional conducts. To buttress this, Ogbonna and Appah (2011) maintained that corrupt activities in the business world have gained roots, it is therefore imperative for accountants, who are saddled with the responsibility of preparing financial reports, to comply totally with codes of ethical accounting standards to produce accurate, timely, effective, comprehensive, relevant and authentic financial reports.

Financial reporting is the fulcrum of the art of decision making. Various stakeholders of an organization need financial report in order to assess the performance, profitability, viability and progress of such organization. The financial reports prepared by the accountants are expected to meet the criteria of a good financial report, in order to ensure that ‘all and sundry’ comprehend the report content (Gois, 2014). To this end, an accountant is liable to the outcomes of his moral choices both for his one life and the lives of other individuals. Catacutan (2006) posits that an accountant who is involved in fraudulent activities destroys his moral being, reputation and endangers the interests of other stakeholders dependent on him.

The essence of preparing and publishing financial reports is to provide stakeholders (such as shareholders, debenture-holders, board, staff, investors, capital provides and the general public) with the necessary information for assessing the performance of an organization. Providing quality financial reports is desirable because it allows stakeholders to make investment, finance, dividends and resource allocation decisions that will enhance the corporate performance of a firm. The quality of financial reporting shows the extent to which the financial reports of a firm are presented with every iota of honesty.

The obligations of  an accountants goes beyond his immediate clients but also to shareholders, debenture-holders, creditors, employees, suppliers, government, accounting profession and the public at large (Appah, 2010; Abiola, 2012). There is need for accountants to behave ethically based on the stipulated codes of accounting conducts. Professional ethics is pertinent to accountants and those who rely on the information provided by the accountants because ethical behaviors involves taking the moral point of view (Klai & Omri, 2011; Enofe, etal, 2015). The development and enforcement of professional ethics in the accounting world will most likely result to enhancing the quality of financial reporting.

1.2  Statement of Problem

Accountants from time to time are confronted with ethical dilemmas. Accountants in the course of their operations, encounter situations where they are enticed to choose between right and wrong. The accountants’ claim to professionalism is premised on their compliance with ethical principles and the will that they would not allow their responsibilities to public interests to mix with personal interests (Babajanyu, etal, 2017). Every profession has its stipulated ethical standards governing members’ behaviors. The reason for this, as espouse by Ogbonna and Appah (2011), is because of the incessant occurrences of corporate scandals in the Nigerian business environment. Lack of ethical considerations can deter an organization to achieve its goals and objectives. Joseph and Dike (2014) corroborates that failures of some organizations in the corporate scene is traceable to the inability of accountants of such organizations to comply with codes of conduct premised in the content of financial reports and their skepticism by end users. The cases of business failures and scandals have led to greater scrutiny of financial reports provided by accountants.