SBR syllabus

Consequences of Unethical Behaviour in Corporate Reporting

Management is responsible for preparing truthful, fair, and transparent reports. Unethical behaviour can have wide-ranging negative consequences:

For the Business:

• Loss of investor trust – stakeholders rely on truthful information to make decisions.
• Falling share price – when misstatements are revealed, markets react badly.
• Legal action – fines, penalties, and lawsuits for breaching standards or regulations.
• Audit challenges – risk of qualified or adverse audit opinions.
• Reputational damage – long-term harm to brand and stakeholder relationships.
• Regulatory consequences – e.g. being investigated, fined, or suspended from trading.

For Management:

• Disqualification from directorship or executive roles.
• Loss of ACCA membership or other professional body sanctions.
• Criminal prosecution in cases of fraud or deception.
• Loss of employment and professional credibility.
• Named in audit reports or press, leading to career-damaging publicity.

For Stakeholders:

• Investors: base decisions on false data – potentially large financial losses.
• Employees: may face job losses if business collapses due to scandal.
• Lenders/creditors: give funding based on inaccurate risk assessments.
• Public: trust in corporate reporting and the profession declines.

Ethical behaviour protects everyone. Unethical choices may provide short-term gains, but they almost always lead to long-term damage.