Ethics education in accounting: An investigation of the importance of ethics as a factor in the recruiting decisions of public accounting firms

In recent years, significant attention has been directed to the role of ethics in the business environment and to the ethical development of business students. This study explores the importance of ethical behavior as a factor in the recruiting decisions of public accounting firms. Factors related to the ethical behavior of entry-level employees were compared with other personal characteristics that are traditionally viewed as important to public accounting firms (e.g., personality, appearance, academic performance, etc.). Recruiters from both Big-Six and non-Big-Six firms indicated strong views on the importance of the students' ethical propensities. In fact, ethics received the highest rating by the public accounting firms regardless of their size. The results of this study provide strong evidence for accounting educators to continue to stress to their students the importance of ethical behavior and to continue their efforts to more fully integrate ethics education into the accounting curriculum.     

An Empirical Analysis of the Positive Impact of Ethics Teaching on Accounting Students

Recent releases from the International Federation of Accountants (IFAC) highlight the importance of ethics education. Academic institutions employ varying methods and place varying levels of emphasis on ethics teaching during a business/accounting degree. This paper attempts to evaluate whether teaching ethics to final year accounting students is beneficial. At the commencement of a semester, one class of 155 students was given five ethical scenarios on which to make an ethical decision. All students were then subject to three different methods of ethical instruction. Several weeks later, the class was again given the original five ethical scenarios and asked to re-complete. In all five instances, the mean responses were more ethical after the instruction methodologies. The subjects also verified that the combined effect of the methodologies had impacted positively on hypothetical ethical decision-making. Hence, it appears that ethics education is beneficial, and the challenge is to find the optimal method(s).     

Accounting Education Lags CPE Ethics Requirements: Implications for the Profession and a Call to Action

Abstract

The accounting profession in the USA has experienced a crisis of legitimacy in the aftermath of a barrage of business scandals. Recent legislation has forced reforms reinforcing the need for additional ethics education. At the same time, the external pressure on university accounting degree programs has been to maintain the status quo of inadequate ethics in the curriculum, even while ethics courses in state CPE programs have grown dramatically. This creates a problem of bad pedagogy in that these new CPE ethics courses, focused on rote delivery of professional codes of conduct, are not grounded in conceptual frameworks which should be provided by university accounting programs. This state of affairs is circular in that it perpetuates inadequate ethics education for the profession. We propose that this deficiency be remedied by the requirement of a stand-alone ethics course delivered early in the accounting curriculum as a foundation for other degree requirements and subsequent CPE courses. The first step in this direction should be the creation of a White Paper that recommends specific content for such a course.     

Improving Ethical Attitudes or Simply Teaching Ethical Codes? The Reality of Accounting Ethics Education

ABSTRACT

Ethical instruction is critical in accounting education. However, does accounting ethics teaching actually instil core ethical values or simply catalogue how students should act when confronted with typical accounting ethical dilemmas? This study extends current literature by distinguishing between moral/ethical and legal/ethical matters and then re-evaluating the effectiveness of ethics training. A cohort of final-year accounting students with significant ethical training evaluated ethical scenarios. Half were moral (non-legal) and half contained legal as well as moral components. After further ethical instruction they re-evaluated the scenarios. Ethical attitudes towards legal/moral issues improved, but attitudes towards moral-only issues did not. This questions previous studies which purport to demonstrate the effectiveness of ethical instruction and queries the benefits of accounting ethics education. Are fundamental ethical principles being ignored in an effort to prevent more obvious accounting wrongdoings? Accounting ethics training needs to be reassessed if true ethical improvement is to be achieved.     

The Perceived Importance of an Ethical Issue as a Determinant of Ethical Decision-making for Accounting Students in an Academic Setting

In this study, we investigate the impact of an ethical decision-making construct, the ‘perceived importance of an ethical issue’ (PIE) for accounting students in an academic setting. One objective was to test the measure of this construct for generalizability in gauging ethical decision- making. The other objective was to draw inferences on the PIE construct for pedagogical purposes. Using tests of validity, the measure reasonably captured the ‘perceived importance of an ethical issue’ construct. In addition, the PIE construct was significantly related to both ethical judgment and behavioural intention. Implications for accounting educators and ethics training in business are discussed.     

Relocating accounting and business ethics: reflections on a business ethics retreat in Scotland's National Park

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This paper describes an accounting and business ethics course that was developed at Glasgow University's Department of Accounting and Finance and recounts an attempt to increase the effectiveness of aspects of the course through relocating the places where it took place. In particular the paper provides some reflections on an ethics retreat in Loch Lomond National Park in Scotland. The paper provides an account of the weekend and describes the activities in which the students participated. It provides some reflections on the weekend and considers how successful the retreat was in promoting the goals of the course. The paper concludes with a call for further thought and discussion on the role that place could play in making accounting and business ethics education more effective.     

Smith versus Friedman: Markets and ethics

This paper addresses the issue of ethics in modern business thought from the perspective of the father of modern economics Adam Smith using both An Inquiry Into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments. The foundation of modern business thought is represented by the Chicago/Austrian School of economic thought using Milton Friedman as a basis and examples from the popular business press and from the work of accounting scholars to illustrate the pervasiveness of this idea of market solutions to ethical problems.It is contended that modern business theory, as represented by this neoclassical economic paradigm, has established a moral code for business based on efficiency of outcome and the assumed link of efficiency to self-interested behavior. The result is markets as the arbitrators of ethical outcomes, and profit maximization as the ultimate moral code.     

The Ethics Development Model Applied To Declining Ethics in Accounting

This paper presents the Ethics Development Model (EDM) as a lens by which to view declining ethics in accounting and other business professions. The paper also provides a background on fraud (one type of ethical breakdown) and its causes. The EDM comprises personal ethical understanding, application of ethics to business situations, ethical courage and ethical leadership. The model is applied to declining ethics, teaching styles and educational responsibility .     

Ethical climate in Chinese CPA firms

Much concern has been expressed in recent years regarding the state of business ethics in the People’s Republic of China, and it has been suggested that unethical behavior is common both in the business community and in accounting firms. Despite such concerns, very little empirical research has been done on ethics in the Chinese public accounting profession, and no previous study has examined the ethical culture or climate in Chinese CPA firms. The current paper reports the results of a preliminary study of the ethical climate in local and international CPA firms operating in China, and the influence of ethical climate and personal ethical orientations on decision-making. Contrary to expectations, the perceived ethical climate in local firms was not more negative; however, auditors employed by local firms judged questionable actions as more ethical and indicated a higher likelihood of committing similar actions. Consistent with our hypotheses, perceptions of the ethical climate in one’s organization had a significant effect on intentions to commit ethically questionable acts. In addition, high relativists (who tend to reject broad moral principles in favor of situational analysis) were significantly influenced by the perceived organizational ethical climate, but low relativists were not similarly influenced.     

Is it Shameful to be an Accountant? GenMe Perception(s) of Accountants' Ethics

The function that accountants fulfil in the economic system is dependent on their ability to maintain the perception of high ethical standards. Building on the idea that birth cohorts, otherwise known as generations, are a useful proxy for the socio‐cultural environment of different time periods, we focus on the so‐called ‘GenMe’, that is, students and young workers born in the 1980s and 1990s. In particular, combining the accounting and business ethics literature, the purpose of our paper is to contribute to an increased awareness of the GenMe perceptions of accountants, with special attention given to ethical aspects. We believe that the perceptions of this age group are particularly crucial for the future of the accounting profession as it is these young people who will either become professional accountants or the accountants' future clients. Using an extensive database of 1,794 questionnaires, results show that the impression of the accountant as a corrupt professional is not dominant among GenMe and seem to suggest the existence of a multifaceted perception of accountants' ethics. Specifically, the factors that contribute to influencing GenMe perceptions of accountants' ethics are level of education, having attended an accounting course at high school level, gender, and belonging to the accounting profession. Finally, our study indicates that there is room for improving public perceptions of accountants' ethics through university courses in ethics, continuing education programs, and focused communication strategies by accounting firms and professional bodies.     

Ethics and management accounting: Teaching note for a video case, “the order: A progressive disclosure vignette”

Prior accounting literature has recognized the need for integrating ethics with accounting education (Langenderfer & Rockness, 1989; Loeb, 1988), and suggested that films and video cases are very useful for discussing ethics in the classroom (Homer & Steneck, 1989). This teaching note discusses a widely circulated video case on ethics in management accounting. The teaching note presents a framework for analysis and shows how the Standards of Ethical Conduct for Management Accountants issued by the Institute of Management Accounts can be applied to the case in resolving ethical problems. Additionally, it discusses how changes in the case regarding performance measures, budgeting, incentive policies, and the type of information used could influence the company's ethical environment. Although this teaching note is specific to the case, the general approach outlined herein may be used for other ethics cases in management accounting.     

Ethics and professionalism: Bringing the topic to life in the classroom

Much attention has been focused in recent years on the benefits of enhancing student understanding of ethical perspectives and professionalism in the workplace. An ongoing challenge for accounting educators is the need to address ethics in a way that will hold student interest, especially when most students have yet to experience an ethical situation in a work setting. We have developed a classroom game that incorporates the Institute of Management Accountants’ (IMA’s) Statement of Ethical Professional Practice, a newly revised model of ethical conduct. In this game, students identify how the IMA’s standards and principles are either upheld or violated in mini-case scenarios from workplace settings. The game facilitates student reflective thinking – a learning process where an individual addresses a problem that has many reasonable solutions rather than just one answer. The approach was introduced in managerial and cost accounting courses and has been employed also in an intermediate accounting setting. Feedback suggests that the game holds student interest, fosters reflective thinking, and can be used across multiple courses.     

Professor Reva Berman Brown (1939–2007) – A Tribute

The purpose of this study is twofold: (1) to determine if an ethics presentation at an Italian university can change students' perceptions of ethics; and (2) to compare the results of this study with previously published results from US students. The ethics presentation, previously developed by Smith, Smith and Mulig (2005) Journal of Business Ethics, 61(2), pp. 153–164, for accounting and business classes, made available on the Internet, was adapted and used in classes in Italy. As in the USA, Italy has faced significant financial scandals and corporate failures in recent years. Both Italian and US penal laws have been changed to prevent future financial frauds, but there are limits to what laws can accomplish. The ethics presentation described in this Teaching Note was an effort to encourage students to consider the importance of ethics. The impact of the presentation on Italian students' perspectives is described. In addition, a comparison is made of the impact of the presentation in Italy and in the USA, which shows that students in both countries regard ethics as a very important topic.     

A rejoinder to commentaries on “Why DCF capital budgeting is bad for business and why business schools should stop teaching it”

This paper examines the effects of exposing accounting graduate students to professional ethics. First, a method of instruction that encourages students to consider the ethical implications of business decisions was developed. This instruction included exposure to Kohlberg's theory of moral development, study of professional codes of ethics, and extensive use of written and video ethics cases. Next, instructional effectiveness was assessed through a pre-post-test with control group design. An accounting-specific test instrument was developed and validated. This instrument contains decision scenarios designed to elicit and identify students' stages of ethical reasoning, Test results revealed that students receiving ethics instruction demonstrated gains in ethical reasoning within the decision context. Appropriately designed ethics modules can thus foster consisitent consideration of ethical issues in decision making.     

Moral will,accounting and the phronemos

This commentary examines the work of Everett and Tremblay (2014) and their contribution to critical accounting. They examine three key ethical dilemmas that confront modern accounting practice. They examine a set of in-depth interviews, the autobiography of the former Vice President of Internal Audit of WorldCom, Cynthia Cooper, and the documents of the Institute of Internal Auditors (IIA) to shed light on accounting and audit ethics. The dilemmas confronting the accounting profession are complex and multi-faceted, which they place in their socio-economic context using ideas from Pierre Bourdieu. I add ideas from Lovibond (2004),MacIntyre (1984) and McDowell (1993) as well as audit work by Jere Francis. My solution involves accountants acting like the phronemos. The phronemos is Aristotle's term for a wise and ethical person who has the capacity to judge and act appropriately. This ideal of the phronemos is used to examine the ethical ambiguities in accounting that involve analyzing the critical role that accounting curricula, education and pedagogy play in making better judgments. This critical accounting focus was also a focus in Chabrak and Craig's work on accounting education. They examined professional credentialing and professional education. Like Everett and Tremblay, they also point us toward the public interest role of accounting and our societal need for better and informed judgments. The comment concludes with the observation that Aristotle's notion of the phronemos is an ideal type that promotes virtue ethics to address the drift in accounting away from ethics and its public interest role.     

Ethics and accounting education in the UK — a professional approach?

Although the expectation of accountants is that they will always employ high ethical standards, empirical evidence suggests that individual accountants are, at best, no more ethically aware than average. This gap between expectation and reality could be the result of inadequate education. Universities cannot be relied upon to teach accounting ethics to prospective professional accountants principally because too few accountants have an accounting degree and because of the surface nature of accounting students' learning. The professional bodies pay only lip-service to ethics education in their syllabi and their treatment of ethics is thus both quantitatively and qualitatively inadequate. Accountants are consequently ill-prepared to face ethical dilemmas.     

Sustainability accounting—a brief history and conceptual framework

Research linking accounting to the emerging concept of sustainability surfaced in the early 1990s and has received continuing attention in academic and professional accounting literature. This paper tracks this brief history through to the release of the Sustainability Reporting Guidelines at the World Summit on Sustainable Development in August 2002, consolidating the various approaches into a sustainability accounting framework. The result is a comprehensive reporting model that presents an enormous challenge to business organisations, requiring a significant commitment of resources to achieve widespread implementation. Failure to meet this challenge enables business organisations to continue to avoid accountability for their continuing unsustainability. The paper concludes with a personal view as to how implementation of the sustainability accounting framework could proceed.     

Accounting ethics education: Integrating reflective learning and virtue ethics

This paper explains the use of reflective learning techniques to create and deliver a new ethics course. Students apply virtue-based reasoning with reflective thinking to resolve conflicts faced by accounting professionals. Teaching techniques include class discussion, minute papers, reflection journals, role playing, and case analysis. Students express their thoughts orally and in written form, interact with other students, receive feedback during and after assignments, and demonstrate what they have learned. Reflective learning helps to transform existing ideas and understandings to come to a new understanding of a situation. As a tool for ethics education in accounting, reflective learning provides the link that may enhance ethical understanding and enable students to apply virtue and reflective thinking to a variety of situations discussed in accounting courses. For students, reflective learning slows down classroom activity giving them more time to process the material, linking it to prior ideas. Instructors benefit from frequent student feedback and greater involvement in the learning process.