Through the Ethics Looking Glass: Another View of the World of Auditors and Ethics

Most people are familiar with the traditional view of the role of ethics in the auditing profession – the need for auditors with integrity and objectivity. This essay addresses a second dimension of ethics in the auditing profession – the demand for auditors to assess the integrity and ethical values of clients. This second dimension is a difficult task for auditors in practice and demands a deep and robust understanding of ethics, ethical infrastructures, and the products of those infrastructures. The essay proposes how educators and researchers might facilitate that understanding.     

The Impact of Business Education on Moral Judgment Competence: An Empirical Study

Recent highly publicized ethical breaches including those at Enron and WorldCom have focused attention on ethical behavior within the accounting profession. At the heart of the debate is whether ethical attitudes of accountants are to blame. Using a nationally representative sample of accounting practitioners and a multidisciplinary student sample at two Southern United States universities, we compare sample responses to 25 ethically charged vignettes to test whether they differ. Overall, we find no significant difference – even for a specific “accounting tricks” vignette, which resembles the Enron and WorldCom situations. We do find, however, that the practitioners were more accepting of vignettes that involved physical harm (PH) to individuals and those that were legal (but ethically questionable). We postulate that accounting practitioners may apply a legalistic framework to their assessment of the acceptability of each vignette. Focusing on an “accounting tricks” vignette, we also find no significant difference between auditors and institutional practitioners compared to all other types of accountants in the sample. We conclude that ethical attitudes of accounting practitioners do not differ significantly by specialty area. Tisha L. N. Emerson is an Assistant Professor of Economics at Baylor University in Texas. In addition to business ethics, Professor Emerson has published articles in the areas of environmental economics and economic education. She teaches courses in environmental economics, international trade, intermediate microeconomics and microeconomic principles. Stephen J. Conroy is an Associate Professor of Economics at the University of San Diego in California. In addition to business ethics, Professor Conroy has published articles in the areas of economic development and demography, economics of education and economics of aging. He teaches courses in managerial economics at both the graduate and undergraduate level, as well as undergraduate courses in urban and regional economic development, intermediate microeconomics and principles of micro- and macroeconomics. Charles W. Stanley is an Associate Professor of Accounting at Baylor University in Texas. In addition to business ethics, Dr. Stanley has published articles in the areas of financial accounting, managerial accounting, auditing, accounting systems, tax, and professional ethics for accountants. He has also authored several on-line continuing education courses for CPAs including one that meets the Texas State Board of Accountancy requirements for continuing education by Texas CPAs. He teaches courses in auditing, ethics, financial accounting and managerial accounting in the MBA program at Baylor.     

电子商务对会计和审计的影响

作为一种全新的商业运作模式,电子商务对传统经济的会计和审计领域将产生重大冲击。分析电子商务对会计和审计所产生的影响,面对电子商务浪潮,传统的会计和审计应抓住机遇,迎接挑战。     

In Search of Instruments. Business and Ethics Halfway

Business ethics has gradually acquired a stable status, both as an academic discipline and as a practice. Stakeholdership is recognised as a guiding concept, business has widely accepted that it has a license to operate to win from society at large, and operational instruments such as codes of ethics and forms of ethical auditing and accounting take shape more and more. Yet lacunae remain. Three are mentioned explicitly. Business ethics has to improve its relations with business law, the concept of competition deserves much more ethical attention than it has received up to now, and the shifting relations between the market, governmental agencies and civil society require the elaboration of an institutional business ethics.     

公司治理质量与外部独立审计效率

本文主要考察了公司治理质量对外部独立审计效率的影响。运用主成分分析技术构建公司治理指数,并以此作为公司治理质量的衡量指标,考察了公司治理质量对审计师的选择、审计收费和审计意见的影响。我们发现,公司治理质量越高的公司,越倾向于选择高质量的审计师;同时,也愿意支付更高的审计费用;但在其他条件一定的情况下,相对于公司治理质量高的公司,公司治理质量差的公司更容易获得标准无保留的审计意见,从而影响审计独立性和审计质量的提高。     

Ethical Ideology and Ethical Judgments in the Portuguese Accounting Profession

The purpose of the present study is to examine the attitudes of Portuguese chartered accountants with respect to questions of ethical nature that can arise in their professional activity. Respondents were asked to respond to the Ethics Position Questionnaire developed by Forsyth (Journal of Personality and Social Psychology 39(1), 175–184, 1980), in order to determine their idealism and relativism levels. Subsequently, they answered questions about five scenarios related to accounting practices, with the objective of measuring their ethical judgments. Based on the idealism and relativism levels of our respondents, they were classified into one of four groups, representing different ethical ideologies (absolutism, exceptionism, subjectivism, and situationism). The results indicated that age was the major determinant of relativism. Contrary to previous research, older respondents revealed themselves significantly more relativistic than younger ones. Gender seems to be the most important determinant of ethical judgments; against expectations, men evidenced significantly stricter judgments than women in two of the five scenarios. Findings also indicated that respondents’ ethical judgments did not differ significantly based on their ethical ideology, supporting the idea that ethical ideology is not an important determinant of ethical judgments.     

Does Selection-Socialization Help to Explain Accountants' Weak Ethical Reasoning?

Recent business headlines, particularly those related to the collapsed energy-trading giant, Enron and its auditor, Arthur Andersen raise concerns about accountants' ethical reasoning. We propose, and provide evidence from 90 new auditors from Big-Five accounting firms, that a selection-socialization effect exists in the accounting profession that results in hiring accountants with disproportionately higher levels of the Sensing/Thinking (ST) cognitive style. This finding is important and relevant because we also find that the ST cognitive style is associated with relatively low levels of ethical reasoning, regardless of gender. This finding implies a need for emphasis on the ethical training of accountants. The results also suggest that accounting firms should consider recruiting accountants with cognitive styles associated with relatively higher levels of ethical reasoning.     

No Need to Compromise: Evidence of Public Accounting's Changing Culture Regarding Budgetary Performance

McNair (1991) discusses the "proper compromises" made by junior auditors in large public accounting firms by arguing that the conflict between high-quality and low-cost auditing leads to "ethically ambivalent" behavior. Specifically, McNair provides evidence that success during the early stages of a public accounting career requires auditors to complete quality audits in an unreasonably short period of time. Completing quality audits within insufficient time constraints puts junior auditors in the following dilemma: report time truthfully and fail versus underreport time and succeed. We reevaluate this conflict approximately one decade after McNair's study and provide evidence that pressures toward "ethical ambivalence" have been reduced in public accounting firms.     

Ethics-Related Responses to Specific Situation Vignettes: Evidence of Gender-Based Differences and Occupational Socialization

This research presents findings from a study of gender-based differences in an ethical decision situation. The study focuses on gender as it relates to situational factors and accounting experience. The primary element of interest is how the gender of the actor (the person described in each vignette) influences the evaluation/assessment of the ethical/unethical decisions. While previous research has provided evidence of ethical differences relating to the gender of the responding subjects, limited evidence has been presented relating to situational issues that may influence assessments of ethical decisions.This research uses four accounting environment vignettes to survey the responses of accountants and accounting students to the ethical/unethical nature of the actions that are taken. In addition, how likely the accountants believe they are to take the same actions is also surveyed. The subjects are a representative sample of practicing accountants in the U.S. and senior/graduate accounting majors at a state university in the southwestern United States.The survey finds that occupational socialization is occurring up to a point. When specific rules are violated or tested, males and females behave similarly, thus illustrating that they have learned from their environment – occupational socialization. Alternatively, when gray areas are involved, they either tend to behave differently or assess the behavior of others differently, pointing to evidence of gender socialization.     

An Analysis of Materiality and Reasonable Assurance: Professional Mystification and Paternalism in Auditing

Critical analyses of the audit profession have become more common in recent years. Many of these analyses focus on the entire audit profession in developing their criticisms and concerns. In this paper, the scope of analysis is narrowed to examine in depth the auditing profession's use of the concepts of reasonable assurance and materiality in audit performance and audit communications. Reasonable assurance and materiality are the terms that auditors use to describe the scope of their responsibility to the public. Similarly, reasonable assurance and materiality are the key determinants of audit effort. An overview of official guidance, practitioner reports, and academic research reveals that these two key concepts are not well specified nor are they consistently applied in audit practice. These findings are evaluated from two competing perspectives on professions – the traditional, functionalist perspective and the critical theorists' perspective. Evaluation from the latter perspective leads to a conclusion that the profession's use of these key terms to guide practice and communication leaves the profession open to charges of mystification and unjustified paternalism.     

关于雷曼破产事件审计问题的探析

2008年9月,雷曼兄弟向美国联邦破产法庭递交破产申请,引起世界金融界的一场轩然大波,其高管粉饰报表行为和外部监管失灵等问题一直是学术界关心的重要话题。本文以2010年3月美国联邦破产法庭对雷曼兄弟破产事件调查结果为契机,针对雷曼管理层如何利用对商业不动产的不合理估计,以及如何大量采用REPO 105交易方式严重粉饰财务报表进行剖析,着重分析了安永会计师事务所在给雷曼兄弟提供相关审计服务时所存在的问题,认为审计师缺乏应有的职业谨慎以及审计程序履行不到位是关键所在;注册会计师在提供审计服务时只有秉持重视审计目标,保持应有职业怀疑,以及坚持"实质重于形式"的三项基本原则,才能在市场中占有一席之地。     

Auditors' ability to discern the presence of ethical problems

Recently, society and the accounting profession have become increasingly concerned with ethics. Accounting researchers have responded by attempting to investigate and analyze the ethical behavior of accountants. While the current state of ethical behavior among practitioners is important, the ability of accountants to detect ethical problems that may not be obvious should also be studied and understood. This study addresses three questions: (1) are auditors alert to ethical issues; (2) if so, how important do they perceive them to be; and (3) what factors affect their sensitivity threshold and their perceptions of the importance of the issues? Most of the prior research in accounting ethics presents subjects with scenarios that contain an obvious ethical issue, and subjects realize that they are participating in an ethics study. In the present study, the ethical problems are integrated into general accounting situations in order to discover the sensitivity of accounting professionals to them. This study defines ethical sensitivity as the ability to interpret a given situation and to realize that a moral problem exists. CPAs responded to an experimental instrument comprised of three auditing scenarios taken from the 1989 Trueblood cases, adapted to deal with different ethical problems — tax evasion by a client, auditor independence, and a client's ethical problem which does not directly affect the audit. The accounting and/or auditing problems presented in the three cases were also different with the information relating to the possible ethical problem embedded in the situation. Multiway contingency tables were used to analyze the data. Factors useful in predicting whether a subject will mention an ethical issue include the nature of the ethical issue, the issue's severity, and the subject's age. Employment position, expertise (measured by two proxies), prior exposure to a similar ethical issue and education level (undergraduate versus graduate) were not significant. The ethical issue itself was also a significant factor in determining the absolute importance given to the ethical issue.     

An Examination of Differences in Ethical Decision-Making Between Canadian Business Students and Accounting Professionals

This study investigates the differences in individuals' ethical decision making between Canadian university business students and accounting professionals. We examine the differences in three measures known to be important in the ethical decision-making process: ethical awareness, ethical orientation, and intention to perform questionable acts. We tested for differences in these three measures in eight different questionable actions among three groups: students starting business studies, those in their final year of university, and professional accountants.The measures of awareness capture the extent to which respondents felt that a particular action was unethical according to each of several ethical criteria. We found few differences between the two student groups on these measures, suggesting that their education had minimal effect on raising their awareness of the ethical issues in the vignettes. Indeed, overall, the graduating student's scores were marginally lower than those of the entry-level students. However, the professionals viewed some actions as significantly less ethical than did the graduating students.The measures of ethical orientation capture the weight respondents placed on each of the criteria above in their evaluation of the overall morality of an action. The differences between the three groups were generally small, and were a function of the vignette, consistent with Jones' (1991) model of issue-contingent ethical reasoning.The measures of intention capture the extent to which a respondent perceives that s/he would perform the action. There were significant differences between the groups in three of the eight vignettes, driven by a difference between the professionals and the other two student groups. The awareness measures were strong predictors of intention. We discuss the implications of these findings for professional training and future research.     

高职院校会计电算化专业审计学课程改革探讨

随着我国新会计准则和新审计准则的颁布实施,对审计人员的知识结构和职业判断力提出了更高的要求。高职院校应从人才培养方向、会计电算化专业的专业定位、审计学学科的属性、审计学教学目标的定位入手,改革审计学课程的教育教学方法,加强实训教学。     

Some Evidence on the Ethical Disposition of Accounting Students: Context and Gender Implications

Research into the ethical disposition of students hasbeen popular in recent years. However, research intothe ethical disposition of accounting students inparticular has been sparse. Because of the uniquecharacteristics of those who choose to enter the fieldof accounting, generalizing findings of businessstudents to accounting students may not be valid. Consequently, additional studies of accountingstudents are useful.This study investigates context (academic vs.business)-based and gender-based differences inaccounting students ethical intent. We find mixedsupport for gender-based mean differences; theseresults are consistent across context. With regard tocontext we find a greater variability in respondentsbehavioral intent in an academic context relative toa business context. We also find gender-baseddifferences in how ethical issues are grouped (thatis, the perceived cognitive structure of ethicalissues). Implications of these findings are discussedwith particular interest relative to education.     

Gender Differences in Double Standards

The purpose of the present study is to investigate gender differences in the use of double standards in ethical judgements of questionable conduct instigated by business or consumers. We investigate if consumers are more critical towards unethical corporate versus consumer actions and if these double standards depend on the gender of the respondent. In the first study, we compared evaluations of four specific unethical actions [cfr. DePaulo, 1987, in: J. Saegert (ed.) Proceedings of the Division of Consumer Psychology (American Psychological Association, Washington DC)] instigated by either the consumer or the corporation. In a second study, we investigated the perception of some general consumer and corporate (un)ethical actions in addition to DePaulo’s unethical scenarios. Both researches show that females are less likely to use double standards when it comes to their own (un)ethical behaviour compared to corporate (un)ethical actions. Furthermore, gender differences in the use of double standards depend on the type of unethical behaviour. Limitations and suggestions for further research are discussed.     

The Applicability of a Contingent Factors Model to Accounting Ethics Research

This paper discusses the relevancy of a contingent factors model posited by Jones for conducting accounting ethics research. Using a sample of 37 experienced Australian auditing managers and partners of all of the ‘Big Four’ multinational accounting firms, we find that the contextual model developed by Jones can help guide accounting ethics research by isolating the contingent factors that affect ethical decision making. Moreover, we examine how the factors differ across different accounting settings. Implications for accounting ethics research and accounting practice are then discussed.Jeffrey R. Cohen, PhD is an Associate Professor at the Carroll School of management at Boston College. His research focuses primarily on behavioral ethics issues as well as investigating governance from a behavioral perspective.Nonna Martinov Bennie is a Senior Lecturer at Sydney University. Her research focuses on ethical issues in auditing as well as issues surrounding materiality judgments.     

Ethical Codes of Conduct and Organizational Context: A Study of the Relationship Between Codes of Conduct, Employee Behavior and Organizational Values

Codes of ethics are being increasingly adopted in organizations worldwide, yet their effects on employee perceptions and behavior have not been thoroughly addressed. This study used a sample of 613 management accountants drawn from the United States to study the relationship between corporate and professional codes of ethics and employee attitudes and behaviors. The presence of corporate codes of ethics was associated with less perceived wrongdoing in organizations, but not with an increased propensity to report observed unethical behavior. Further, organizations that adopted formal codes of ethics exhibited value orientations that went beyond financial performance to include responsibility to the commonweal. In contrast to corporate codes of ethics, professional codes of ethical conduct had no influence on perceived wrongdoing in organization nor these codes affect the propensity to report observed unethical activities.     

Student Honor Codes as a Tool for Teaching Professional Ethics

Today's business students have grown up in a society where distinctions between right and wrong have become blurred and where unethical behavior is observed and even expected in high-profile leaders. Especially troubling is the impression educators have that many students no longer view cheating as morally wrong (Pavela and McCabe, 1993). By contrast, the general public is demanding higher ethics of businesspeople. In this environment, educators are challenged to instill ethical norms in business students, especially when recent research indicates that students intending to enter business fields are more likely than any other group of students to engage in cheating and other forms of academic dishonesty (McCabe and Trevino, 1995). One of the major future roles of accounting students depends on their honesty, however. For audits to have economic value, the auditors must be perceived by the public as acting with independence, integrity, and objectivity. Public accountants have adopted a Code of Professional Conduct in order to protect the integrity of the profession. In an effort to teach accounting students the importance of ethical professional conduct, the author has developed a class project wherein groups of students write proposals for a student honor code at Niagara University.     

A Circle of Influence: Are All the Stakeholders Included?

Traditionally, certified public accountants (CPAs) have served a unique role in the world of commerce and the profession of accounting. They perform an attest function and thereby serve as the chief providers of relevant, high quality accounting information to the decision making public. CPAs are licensed practitioners, who as expert independent accountants express opinions about an entity'sfinancial statements. Their license provides them with the exclusive right to perform this attest function. This monoploy relies on the concept of independence that is the normative standard of accountancy. It is this perceived independence of auditors which provides credibility, reliability and trust in the financial accounting information upon which stakeholders depend to make informed decisions. Now, however, we see the environment in which CPAs operate undergoing rapid change. Both the globalization of business operations and technological advances have radically changed how and where accountants work and the speed at which things happen. The very nature of accounting information services is evolving; moving from a concentration on audits to an increasing reliance on consulting and assurance services. New ethical issues have been raised by this confluence of changes in the accounting environment. Noteworthy is that the application of the principle of independence by CPAs has been called into question by no other than the SEC. Are those stakeholders who depend upon the independence of CPAs at risk? The influence of insiders has significantly increased as accounting firms perform multiple tasks for the same clients. This paper discusses the different groups who can potentially impair the independence of auditors and the steps that are being taken to enhance the "independence" of the auditors.