Ethics in Accounting: An Indispensable Course?

By Klimek, Janice; Wenell, Kelly | Academy of Educational Leadership Journal, January 1, 2011 | Go to article overview

Ethics in Accounting: An Indispensable Course?


Klimek, Janice, Wenell, Kelly, Academy of Educational Leadership Journal


ABSTRACT

Following the unmasking of billion-dollar earnings manipulations at corporations such as Enron and WorldCom in the early 2000s, the accounting profession has had to reexamine ethics and its implications (Duska & Duska, 2003). Shortly after, the National Association of State Boards of Accountancy (NASBA) proposed adding two required ethics courses to the accounting curriculum (Shawver, 2006). NASBA backed off on the recommendation due to pressure from the accounting profession and accounting educators. While nearly all college accounting programs integrate ethics into accounting courses to meet the public demand for ethical accountants, schools in Texas are required to offer a 3-hour stand alone course. Conflicting research exists regarding whether requiring a separate ethics course instead of integration has a significant effect on accounting students' ethical reasoning abilities. In this paper, the ethical reasoning abilities of accounting students in an Ethics in Accounting course were compared to the ethical reasoning abilities of accounting students who had ethics discussions integrated into their accounting courses instead of a required course. Ethical reasoning abilities were tested using an instrument called the Defining Issues Test-2. The students who took an Ethics in Accounting course before graduation did seem to have higher ethical reasoning abilities than those students who had ethics integrated into their accounting courses. Based on the results of this study, it is recommended that NASBA reconsider its decision to eliminate the requirement of a 3-hour course on Ethics for accounting majors.

INTRODUCTION

It is well known that companies such as Enron and WorldCom engaged in unethical earnings manipulations such as falsely recording expenses as assets and hiding debt in complicated off balance sheet financial arrangements. Such practices led many to unknowingly invest in corporations that were on the brink of bankruptcy. In the aftermath of these companies' failures, the accounting profession has had to reexamine ethics and its implications (Duska & Duska, 2003). In 2002, the Sarbanes-Oxley Act and Statement of Auditing Standard 99 (SAS 99) were enacted to clarify issues related to ethics and fraudulent financial reporting and to help restore investor confidence in financial statements (Shawver, 2006). The Sarbanes-Oxley Act created new standards for corporate accountability as well as suffer penalties for noncompliance including imprisonment for up to twenty years (Klutz, 2006). SAS 99 aimed to further integrate the auditor's consideration of fraud into the audit processes developed for a publicly traded company. In response to the Sarbanes-Oxley Act and SAS 99, accounting profession regulators began to look at enhancing ethics training for current and future accounting professionals (Ramos, 2003).

ETHICS AND ACCOUNTING EDUCATION

The issue of how ethics should be integrated into the accounting curriculum and to what degree state professional boards of accountancy should influence such curriculum decisions is of great interest to the accounting profession. State Boards of Public Accountancy determine the educational requirements needed for a candidate to sit for the Uniform Certified Public Accountant (CPA) examination and CPA licensure. Individual state boards look to the National Association of State Boards of Accountancy (NASBA) for guidance in setting these educational requirements (Mastracchio, 2008).

In 2003, NASBA addressed the ethics content of the education requirement and initially determined that two stand-alone courses should be included. It later developed the Rules 5-1 and 52 Exposure Draft (2005) which suggested the addition of two required 3-hour courses, Ethical and Professional Responsibilities of CPAs and Ethical Foundations and Applications in Business, to the accounting curriculum. Topics to be incorporated into these courses included:

* The nature of ethics

* Differences in rule-based versus principle-based approaches to ethics

* Compliance with fundamental ethical principles of integrity, objectivity, commitment to professional competence and due care and confidentiality

* Professional behavior and compliance with technical standards and laws

* Concepts of independence, skepticism, conflicts of interest accountability and public expectations

* Social responsibility

* Nature of professional fiduciary responsibilities

* Ethical dilemmas and consequences of unethical behavior to the individual, to the profession, and to society at-large

* Corporate governance and public interest.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Ethics in Accounting: An Indispensable Course?
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.