Learning Objectives
Define Professionalism and Ethics;
Describe the attributes that distinguish a profession from
a non profession;
Argue the case for the need for professional and ethical
behaviour by accountants;
Discuss whether the pursuit of professionalism is in the
public interest or the accounting professions self interest;
Identify some of the ethical issues confronting
accountants;
Briefly describe some of the various theoretical
approaches to ethics;
Evaluate the claim that ethics plays no part in theory
development.
Professions
“A community of people bounded by the
activities they perform, founded on a
common theoretical background acquired
through education”
Characteristics that differentiate professions
from non professions include:
• Professional Authority (self regulation)
• Codes of ethics
• Theory
• Culture
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Role of Professions
Evolutionary role to serve in an area
deemed important by society
Degree of exclusivity
Heavily reliant on ethical conduct
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Ethics
Ethics can be said to be
concerned with the
general well-being,
prosperity, health and
happiness and the
things that promote or
prevent them.
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The need for ethical behaviour by
accountants
Professions are distinguished from other fields by a
determined focus on ethics
Accountants are potentially quite powerful.
Decision makers rely on accounting information when
allocating resources.
If accountants provide false or misleading
information this will damage the profession and the
decision makers.
The stability of markets requires reliable
information.
Threat of increased regulation.
Being seen to serve the public interest also has self
interest benefits for the accounting profession.
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Ethical Issues Faced by
Accountants
Adherence & interpretation of accounting
standards
Exercise of judgment when standards are not
clear.
Operating in the public interest, not just the
organisation’s or managements interest.
Maintaining high levels of competence.
Keeping confidence of clients.
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Professional Ethics
Code of Ethics for Professional
Accountants
The public interest
Integrity
Objectivity
Professional Competence and Due
Care
Confidentiality
Professional Behaviour
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Purpose of Codes of ethics
make explicit those
values which may be
implicitly required
indicate how
members should react
to one another
provide an objective
base for sanctions
against people who
violate the rules
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Benefits and costs of unethical
behaviour
Conscience driven costs
Society imposed costs
Loss of freedom of choice
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Some schools of ethical thought
Fundamental principles and rules or rights
and duties
Deontological ethics
Means, methods and the role of the agent
Virtue ethics
Ends or consequences
Teleological
Social contract
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Deontological ethics – Kant
Categorical imperative
‘So act that the principle of your act can be willed as a
law of nature for all mankind’
One must never treat another person as a means but
always as an end
The focus is on respect of persons and on
reasons, motives and intentions, not
consequences
Happiness only accidentally connected to
morals and ethics
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“Do as you would be done by”
Budhism – ‘Harm not others with that which pains
yourself.’
Hinduism – ‘This is the sum of duty: do nothing to others
which if done to you would cause you pain.’
Islam – ‘Not one of you is a believer until you wish
everyone what you love for yourself.’
Judaism – ‘ What is hurtful to yourself, do not do to
others. That is the whole of the torah, and the remainder
is but commentary. Go and learn it.’
Taoism – ‘Regard your neighbours gain as your gain
and regard your neighbours loss as your loss.’
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Virtue ethics
The questions in virtue ethics is “What is the
best sort of life for human beings to live?”
We should be focusing on strategies for
encouraging desirable character traits such as
honesty, fairness, compassion and generosity.
A person who is virtuous is motivated to do the
right thing and who cultivates that motivation in
daily conduct.
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Virtue ethics – Aristotle
The goal of society is the happiness for all citizens
– happiness is the pursuit of excellence.
Excellence in the following virtues
Courage, temperance, generosity, magnificence, high
mindedness, gentleness, friendliness, truthfulness,
wittiness, modesty.
If everyone strived for excellence in these by
inspecting, strengthening and preserving them
then society would work well together.
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Virtues – St Thomas Aquinas
Divided the virtues into:
Religious
• Faith
• Hope
• Charity
Intellectual
• Prudence (wisdom)
• Justice
• Temperance
• Fortitude
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Teleology – Mill and Bentham
Morality best described by the utility principle
‘Act so as to produce the greatest happiness for the
greatest number of people’
A cost benefit analysis
Problems:
How does one measure the good?
What happens to the minority
How do we know what will be the outcomes?
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Social Contract
Hobbes
Bases social and political order on a social contract
The contract is designed to overcome the natural brutish state of
life
Locke also used a social contract but considered that life
was more pleasant and the social contract brought great
benefits to social life.
Business operates within a social contract, i.e.
businesses are permitted by society to operate if they
benefit society and do minimum harm to society. This
contract is regulated through the laws that society
develops and through the market.
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Social Contract – Rawls
Identified principles for just society based on
what we would ask for if we had no idea where
we would be in society
Each person should have an equal right to the most
extensive liberty compatible with the same liberty for
all.
Social and economic inequalities are arranged so that
they are both
• To the greatest benefit of the least advantaged
• Attached to offices or positions open to all under conditions
of fair equality of opportunity
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Kohlberg & Rest
Based on empirical study identifying 3 levels of moral
development
Preconventional – punishment-obedience to deference.
Conventional – living up to expectations of other and a law and
order orientation.
Post conventional – social contract orientation stressing
tolerance and consensus developing further into principles
chosen for logical comprehensiveness, universality and
consistency.
Rest developed a questionnaire which enabled the
calculation of a score which measure post conventional
thinking in ethical decision making.
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Table 1
Six Stages in the Concept of Cooperation
Stage 1 The morality of obedience. Do what you are told.
Stage 2 The morality of instrumental egoism and simple exchange.
Let’s make a deal.
Stage 3 The morality in interpersonal concordance. Be considerate,
nice and kind: you’ll make friends
Stage 4 The morality of law and duty to the social order: Everyone in
society is obligated to and protected by the law.
Stage 5 The morality of consensus-building procedures. You are
obligated by the arrangements that are agreed to by due process
procedures.
Stage 6 The morality of nonarbitrary social cooperation. Morality is
defined by how rational and impartial people would ideally organise
cooperation. (Rest 1994)
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Table 2
Four Psychological Components Determining
Moral Behaviour – Rest (1994)
1 Moral sensitivity
• (Interpreting the situation)
2 Moral judgment
• (Judging which action is morally right/wrong)
3 Moral motivation
• (Prioritising moral values relative to other values)
4 Moral character
• (Having courage, persisting, overcoming distractions,
implementing skills)
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Ethics and Theory development
Ethics are inherently implicated in theory
development:
Theories are built on premises and assumptions
which in turn are affected by peoples ethical views:
Eg Normative theories were developed due to perceived
‘wrongs’ cause by historical cost accounting
Positive theories are based on the notion of self interest
which is conceptually similar to ‘ethical egoism’
Standard setters face dilemmas of whether to pursue
‘representative faithfulness’ even if it has negative
consequences for some preparers of accounting
information.
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Learning Objectives – recap
Define Professionalism and Ethics;
Describe the attributes that distinguish a profession from
a non profession;
Argue the case for the need for professional and ethical
behaviour by accountants;
Discuss whether the pursuit of professionalism is in the
public interest or the accounting professions self interest;
Identify some of the ethical issues confronting
accountants;
Briefly describe some of the various theoretical
approaches to ethics;
Evaluate the claim that ethics plays no part in theory
development.
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