The Challenges and Opportunities of Incorporating Accounting Ethics into the Accounting Curriculum

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INTRODUCTION

The accounting scandals in the early 2000s have had a devastating effect on the reputation of the accounting profession. The public perceives the scandals as a lack of ethics in the profession. Who is to blame for this demise? Russell and Smith (2003) point their fingers at academia. They noted:

   If we are looking for a primary contributing cause of corporate
   malfeasance at firms such as Enron, Equity Funding, WorldCom,
   Sunbeam, Arthur Andersen, and HealthSouth, we need to look no
   further than the classrooms of colleges and university accounting
   programs that have not significantly adapted their methods of
   instruction or approach to accounting and management education over
   the last 5060 years (p.1).

Since the Bedford Committee report was issued in 1986, the American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), the Accounting Education Change Commission (AECC), and the National Commission on Fraudulent Financial Reporting (NCFFR) have all called for increased ethics coverage in the classroom. Yet, even subsequent to the accounting scandals in the early 2000s, meaningful changes have not been made to incorporate ethics into the accounting curriculum (Blanthorne, Fisher & Kovar, 2007).

The National Association of State Boards of Accountancy (NASBA) made a proactive attempt to address the ongoing ethics deficiency in the accounting curriculum in its exposure draft of proposed changes to Rules 5-1 and 5-2 of the Uniform Accountancy Act. This exposure draft once again ignited discussion regarding ethics in the accounting curriculum and sparked much attention within the accounting profession, having received more responses than any other Uniform Accountancy Act exposure draft. A major proposal of the draft suggested that the 150-hour curriculum should emphasize ethical conduct and professional responsibilities of CPAs by requiring three credit hours of business ethics and three credit hours of accounting ethics. As a result of the comments received, the exposure draft was tabled by NASBA's Board of Directors and a task force was established to revisit alternative measures for consideration regarding the 150-hour education rules and exposure draft. After almost three years of discussion, the three additional hours of accounting ethics was not approved. While the draft received much criticism for imposing cost and restrictions on accounting programs, the cost of not increasing ethics in the accounting program may result in serious consequences for the profession.

Accounting programs should ensure that students have the rudimentary tools they need to succeed in the accounting profession. Accounting curricula, however, are being criticized for not focusing enough on values, ethics and integrity (Albrecht & Sack, 2000). Past incidents of unethical behavior in the accounting profession echo the need for ethics in accounting education. During the first few years of their careers, accountants can expect to face ethical challenges. How will they react if they have not been taught to handle such situations? Chan and Leung (2006) reported that students may have the ability to determine what is ethically right or wrong, but may fail to behave ethically due to an inability to identify ethical issues. Accounting educators must no longer argue that restrictions on programs, costs and the lack of resources prohibit a course in accounting ethics. Clearly, the most severe threat to the accounting profession deserves more attention (Bean & Bernardi, 2005).

Many accountancy programs continue to struggle with how to effectively include ethics into their curriculum. For instance, Blanthorne et al.'s (2007) study of accounting professors and their teaching of ethics reported that 98.1% favor its inclusion in at least some accounting courses. Although the favored approach was integration into other accounting courses, the time spent covering ethics was not optimal since it equated to less than one three-credit hour course (48 hours). …