What are the unethical practices noticed in the area of Financial Management?

A sound financial policy and management control is extremely important for good corporate governance. As it assists in noticing of several unethical practices in the area of financial management that exert pressure on the Government and Regulators. Some of the common unethical issues in the financial activities and market are as under: Misappropriation and Diversion of funds: Many business enterprises and corporates avail of loans and do not use the funds for the purpose the loan was availed of but divert the funds for other activities. Though the repayment of the loan is on schedule these activities of the enterprises/corporates are unethical on account of misappropriation of funds. Concealment of facts: For years the real financial positions are concealed but unrealistic financial position is reflected in a systematic manner to appear as realistic figures until brought to notice. Non-compliance of regulatory and legal framework: Banks face many compliance issues due to non-adherence of prescribed rules and regulations. These non-compliances have created avenues for conversion of black money to legal money through banking channels, due to which Banks are facing embarrassment and reputational risks. Money Laundering Activities: This is not only unethical but also criminal and illegal. These activities help conversion of illegal money the legal money, using banks as channels to effect such activities. Lack of internal control: Due to weak internal controls at various levels, sometimes loans become non-performing assets. Unethical practices such as corruption, diversion and misappropriation of funds, loans granted against inferior or under value collateral not only affects the performance of the banks but also increases the levels of the non-performing assets.