Ethical Education in Accounting: Integrating Rules, Values and Virtues
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Ethical Education in Accounting: Integrating Rules, Values and Virtues Dome`nec Mele´ ABSTRACT. Ethics in accounting and ethical educa- tion have seen an increase in interest in the last decade. However, despite the renewed interest some important shortcomings persist. Generally, rules, principles, values and virtues are presented in a fragmented fashion. In addition, only a few authors consider the role of the accountant’s character in presenting relevant and truthful information in financial reporting and the importance of practical reasoning in accounting. This article holds that rules, values and virtues are inter- connected. This provides a sound approach to ethics in accounting, in which character and practical reasoning are crucial. Consequently, ethical education in accounting has to simultaneously include the knowl- edge of proper rules and principles and their correct application; values (understood as moral goods) and virtues, whose acquisition, in the view of the author, should be encouraged. KEY WORDS: Codes of conduct, connection of virtues, ethical education in accounting, ethics in accounting, ethical theories, natural law, values, virtue ethics. Introduction Ethics in accounting has seen an increased interest in the last decade, although it is not by any means a new subject. In the USA, public accounting has had some form of ethical standards since at least the beginning of the 20th century (Casler, 1964, men- tioned by Loeb, 1988). Issues regarding ethics in accounting are briefly touched on in some early European textbooks on business ethics (e.g., Azpi- azu, 1964; Baudhuin, 1954). However, specific training on accounting ethics for accounting students or a systematic presentation of this matter had rarely been undertaken until the 1970s (Loeb and Be- dingfield, 1972). In 1978, Loeb edited Ethics in the Accounting Profession, a pioneering monograph on this topic. Since the mid-1980s several institutions related with accounting associations have encouraged ethi- cal education in accounting, starting in 1986 with the report of the American Accounting Association Committee on the ‘‘Future Structure, Content, and Scope of Accounting Education’’ and continuing, in 1987, with the National Commission on Fraudulent Financial Reporting (Treadway Commission). Since then many other institutions have adopted a similar focus (Armstrong et al., 2003, note 1). Nowadays, accounting ethics is part of the cur- riculum in several colleges and business schools, and a number of scholars have written textbooks and casebooks on accounting ethics (Armstrong, 1993; Cottell and Perlin, 1990; Duska and Duska, 2003; Gowthorpe and Bake, 1998; Maurice, 1996; Mintz, 1997; among others). Thus, considerable steps have been made in ethical accounting education, but, after the well-known recent accounting scandals, it seems absolutely essential to pay increasing attention to ethics in accounting and to improve ethical education for accountants. In line with this, this Journal of Business Ethics 57: 97 )109, 2005. 2005 Springer DOI 10.1007/s10551-004-3829-y Dome`nec Mele´ is Professor and Director of the Department of Business Ethics at IESE Business School, University of Navarra, Spain. He also chairs the bi-annual ‘International Symposium on Ethics, Business and Society’ held by IESE. He has Doctorate degrees in Industrial Engineering from the Polytechnic University of Catalonia, and Theology from the University of Navarra, Spain. He is the author of three books on economic and business ethics and social ethics (in Spanish) and has edited eight books (in Spanish), which include dif- ferent topics in business ethics. In addition, he has written 20 case studies (IESE Publishing) and numerous articles and chapters related to subject. His articles are published in journals including Business Ethics Quarterly, Journal of Business Ethics, Business Ethics: A European Review and Philosophy of Management. paper aims to contribute to a better understanding of accounting ethics and to provide some insights on ethical education in accounting. First, this article examines some relevant current approaches in accounting ethics and ethical educa- tion in accounting and the corresponding role given to rules and principles, ethical theories, values, and virtues. Second, it presents an approach in which rules, values and virtues are presented in an inter- related consistent manner. Finally, some implications of this approach for ethical education in accounting are discussed. Ethics for professional accountants: only a set of standards for moral behavior? Accountants can perform their work in many dif- ferent areas, including auditing, managerial accounting, tax accounting, financial planning, consulting and, of course, simply preparing accounts. In each of these spheres, ethical issues appear (Armstrong, 2002), and accountants perceive that opportunities exist in their work to engage in unethical behavior. 1 Codes of conduct for accountants give guidelines for proper behavior in the profession. For accoun- tants, as in any other profession, codes are the most concrete cultural form in which professions acknowledge their societal obligations (Abbott, 1983). Codes, and possibly some procedures for reinforcing them, are a public commitment of the profession and a basic element in achieving social recognition of, and public trust in the profession. Codes of conduct contain a set of principles and rules, which specify what society expects to be considered in decision making. According to Bowie and Duska (1985), from a practical perspective, codes of conduct are useful in several ways: (1) motivating through the use of peer pressure; (2) providing a stable and permanent guide to right or wrong rather than leaving the question to continual ad hoc deci- sions; (3) giving guidance, especially in ambiguous situations, guiding the behavior of the employees and controlling the autocratic power of employers over employees; (4) helping to specify the social respon- sibility of business itself; (5) contributing to the interest of business itself, for if businesses do not police themselves ethically, others will do it for them. Although some ethical standards with sound foundations could easily be recognized in most codes of conduct for accountants, in practice, the rules are often applied in a mechanical way. There also exists the risk that people might confuse ethics in accounting with a set of rules, legal standards or other regulations. Adams et al. (1995) believe that, in today’s legalistic society, the question of ‘‘what is the right thing to do?’’ is often confused with ‘‘what is legal?’’ While they refer to accountants in the USA this statement could readily be extended to many other countries. Velayutham (2003) points out that the focus of codes of ethics has been to progressively replace the ‘‘true and fair view’’ requirement by ‘‘compliance with accounting standards’’. Thus, codes have moved from focusing on moral responsibility to a public good to that of a technical specification for a product or service. In this way, technique has sup- planted character. Velayutham adds that the term ‘‘code of ethics’’ is now misleading, and it would be more appropriate to talk about ‘‘code of quality assurance’’. On the other hand, Lere (2003), an Accounting Professor, suggests that it is often rare to have a sit- uation where codes of ethics impact on decision making. While enforcement provisions can increase the likelihood that an individual will select (forego) the action that a code of ethics indicates to be ethical (unethical), there are limits as to how effective enforcement provisions can be. Another fault of codes and rules appears when questioning whether the best ethical behavior is al- ways to follow the established rules. Adams et al. (1995) have studied several cases regarding auditing client confidentiality in which disclosure could be the best ethical behavior, in spite of the applicable rules, which state that a Certified Public Accountant (CPA) member acting in public practice shall not disclose any confidential information without the specific consent of the client. A survey among CPAs showed that a substantial percentage (between 30% and 47%) thought that the best ethical behavior would be not following the rules of the code for these specific cases. 2 The range and limitations of these codes could be understood from what Louis Vlasco affirmed in 1983, as chairman of the National Association of Accountants (NAA) of the USA, when he presented the association’s code of conduct: 3 98 Dome`nec Mele´ ‘‘I make no claim that the NAA standards, in and of themselves, are the ultimate solution to all ethical dilemmas that management accountants may face. In the future, however, if a management accountant is asked, for example, to recalculate certain figures to make his or her division appear to be more profitable than is warranted, that accountant has somewhere to turn for guidance. He or she will be able to point to the standard that explicitly states that management accountants have a responsibility to communicate information fairly and objectively.’’ 4 Summarizing, codes of conduct have a role to play, although ethics in accounting cannot be reduced to simply what codes of conduct state. In fact, text- books in accounting ethics usually include some relevant codes of conduct, or significant excerpts, with the corresponding rules and principles, but generally they agree that ethical education in accounting should be more than just knowing and applying rules. As, Loeb and Rockness, two experts in ethical education in accounting, recognized: ‘‘our (the authors) collective experience indicate that both college students and practicing accounting profes- sionals are interested in accounting ethics education that moves beyond the rules of a code ethics and the code’s corresponding official interpretation.’’ (Loeb and Rockness, 1992, p. 488) Principles and moral reasoning In some fields of professional activity there is a tendency to emphasize basic principles from which Download 195.26 Kb. Do'stlaringiz bilan baham: |
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