Ethics and Moral Values in the Accounting Profession

Introduction: Ethics and Scandals in Accounting

The important questions to be addressed are taken from the "business ethics/corporate social responsibility literature, oriented towards business enterprises but also of relevance to professional bodies: whether being ethical 'pays' in financial terms; and whether formal codes are useful in promoting ethical behavior" (Cowton, 2009, p. 177).

Accounting Students and Moral Decision-Making

Accountants are charged with carrying out ethical and moral decisions in their everyday work, but judging from some of the scandals in recent years — Enron, WorldCom, Arthur Andersen, and others — not all accountants have kept pace with those ethical and moral obligations. This paper reviews the judgments that accountants should be making based on morality and ethical values, whether the accountant is working for a multinational corporation or for a small business with only a handful of employees.

Deborah Leitsch writes in the Journal of Business Ethics that auditors are being "turned into (financial) enablers," simply because there is "enormous pressure" placed on those doing auditing work to "produce earnings growth" (Leitsch, 2004, p. 313). That situation is not acceptable from a moral or ethical standpoint, Leitsch explains. Notwithstanding numerous studies of ethics in relation to accountants that examined "moral sensitivity," "moral judgment," and "behavioral intentions," there is an ethical aspect that has not received adequate attention: the "moral issue itself" and the "moral decision process" (Leitsch, p. 314).

Leitsch draws heavily on the research of T. M. Jones. Among Jones's findings is that moral intensity influences moral judgment, and that moral issues with "high intensity" will be recognized more often than "low intensity" issues (p. 314). In other words, it can be said with a degree of certainty that the moral decision process will be greatly influenced by the moral intensity of the issue before the accountant. According to Leitsch's application of Jones's theories, moral "intentions" will also be present more frequently when issues of high moral intensity are presented to the accountant.

To verify her findings, Leitsch surveyed 110 accounting students at a college in the northeastern United States. The students ranged in age from 21 to 30. The four scenarios given to the students "depicted a different ethical accounting issue found in the workplace" (Leitsch, p. 315). The issues were: (a) approving a "questionable expense report"; (b) "manipulating company books"; (c) "bypassing company policy"; and (d) "extending questionable credit" (Leitsch, p. 315).

Ethical Guidelines for Accountants

Through her survey, Leitsch measured three values: moral sensitivity, moral judgment, and moral intentions. The results supported Jones's hypotheses. Students viewed Scenario 1 — approving a questionable expense report — as the most unethical action of the four. Scenarios 2 and 3 (manipulating company books and violating company policy) were seen as "more intense than Scenario 1" and more intense than Scenario 4 (extending questionable credit).

Leitsch was pleased that the results supported Jones's theory that individuals tend to perceive some situations as more morally intense than others. She noted that because of the publicity surrounding the Enron and WorldCom scandals, students were expected to find Scenarios 2 and 3 "more unethical" than Scenario 4, which involved extending credit to a customer whose eligibility was in question.

Hands-on experience helps university students learn about ethical accounting practices in concrete ways. Helen Brown-Liburd and Barbara Porco explain in Issues in Accounting Education that their study showed undergraduate accounting students who had interned with a public accounting firm, or who had participated as volunteers or members of Beta Alpha Psi, demonstrated "higher levels of cognitive moral development" (Brown-Liburd, 2011). These findings make clear that students develop a stronger sense of ethical behavior when they engage directly with real accounting situations in the community, rather than simply attending classroom lectures.