Whistleblowing and management accounting: An approach

In this paper, we consider the licensing of and codes of ethics that affect the accountant not in public accounting, the potential for an accountant not in public accounting encountering an ethical conflict situation, and the moral responsibility of such accountant when faced with an ethical dilemma. We review an approach suggested by the National Association of Accountants for dealing with an ethical conflict situation including that association's position on whistleblowing. We propose another approach based on the work of De George (1981), in which both internal and external whistleblowing are possible alternatives, for use by management accountants in an ethical conflict situation. Finally, we consider the implications of our analysis for management accounting. While most of the analysis centers on management accountants, we note the likely applicability of the analysis to accountants in the public sector. Dr. Stephen E. Loeb is Professor and Chairman of Accounting and the Ernst and Young Alumni Research Fellow at the University of Maryland at College Park. He is the author or co-author of a number of articles relating to accounting and ethics that have appeared in journals such as The Accounting Review, the Journal of Accounting Research, the Journal of Accountancy, and The Government Accountants Journal. Dr. Loeb is co-editor of the Journal of Accounting and Public Policy.Dr. Suzanne N. Cory is Associate Professor of Accounting at California State University, San Bernardino. A good deal of the work on this paper was done while Dr. Cory was a faculty member at The George Washington University.We are indebted to Lawrence A. Gorden, Allen G. Schick, Jere Francis, Lee Preston, Stanley W. Davis and two anonymous reviewers for their comments on earlier drafts of this paper. Any errors are our own.