Accountingand finance are related to the Bible in one way or the other. Some ofthe biblical concepts can be applied in this field because they teachand guide us towards doing what is moral and abstain from variousvices.
Severalcompanies, like Enron and WorldCom collapsed because of the financialmalpractices for individual benefits. The leaders were heldresponsible for the financial crimes they committed. The Bible warnsagainst such fraud meant for personal gains. In Proverbs 28:20, Godwarns that although the faithful people will be blessed, those whowant to be rich through dishonest means must be punished. Thisapplies to the top management of firms, like Enron who manipulatedthe financial statements for their sake but later faced heavier courtpunishments.
Inthe book of 2ndKings22:7, the Bible maintains that the accounts would have been kept ifthe contractors were not honest. Thus, the reports should be retainedto curb fraud. Most big companies, like Enron, fell because ofimproper reports that were kept by its top management. Similarly, inLuke 16:2, the owner tells his steward to draw an account. This isafter he heard that the steward was wasting his money and the onlyway he could monitor his performance was through the illustratedreports (Buys and Cronje, 2013).
InMicah 7:5-6, the Bible warns against trusting neighbors or beingconfident of our friends. This is the logic behind the use ofinternal controls in accounting. It implies that even the auditorsshould have the desired health skepticism. In 2ndChronicles 24:11-12, the Levites used to check the amount of money inthe chest when it was brought to the royal office of control. Butwhen taking it away, the secretary to the king had to come with thechief priest’s representative as they had the duo custody ofassets. Consequently, this is a very precise cost of control that theLevites had put in place to ensure that their funds were properlykept. Similarly, in 2ndCorinthians 8:16-20, Paul sent Titus and his two brothers to theCorinthians to pick some funds. He explains that by sending the threeof them, there would not be complaints regarding the administrationof such massive funds. The three men reduce the chances of fraud thatcan be committed by anyone of them. When the funds are properlyadministered, it pleases God and men (Blue and White, 2008).
TheBible covers the aspects of managerial accounting through theapplication. This can be related to the real-life situations in thefield of accounting and finance, especially, in the budgetingprocess. For instance, in Luke 14:28-29, it states that whoever whowants to build a tower should first find out if the costs availableare enough to complete it. This is applicable in the budgetingprocess and the forecasting of cash flows. Any company should come upwith a budget that shows how its funds will be allocated to differentinvestment projects (Lemler, 2005).
Whenmaking the financing decisions about the products, a company maydecide to drop or retain others. Because I belong to the Catholicfaith, the book of Ecclesiastes 7:22-23 teaches us that if you havecattle, they need to be looked at wisely. If they happen to makeprofits, they should be kept. This is the same approach that isadopted in finance when making the investment decisions of anyprojects. Those projects with a positive NPV are maintained becausethey add to the profits of the company.
Blue,R & White, J.L. (2008). Faith-BasedFamily Finances,Retrieved fromhttp://files.tyndale.com/thpdata/firstchapters/978-1-4143-1576-8.pdfon August 17, 2016.
Buys,P & Cronje, C. (2013). A Reflection on Historical BiblicalPrinciples in Support of Ethical Stewardship. StudiaUbb. Philosophia, 58 (3),229-240, Retrieved fromhttp://uir.unisa.ac.za/bitstream/handle/10500/13065/14Buys_Cronje_229_240.pdfon August 17, 2016.
Lemler,B. (2005).TheConcept of Cost Considered from Biblical and Business Perspectives: AFaith Integration Exercise for Accounting, Economics and FinanceCourses,Retrieved from http://www.cbfa.org/Lemler.pdfon August 17, 2016.