Recent corporate accounting scandals have brought ethics back into the limelight. The sight of CEOs and CFOs parading into courtrooms has raised public awareness and concern about ethical behavior in management and accounting. The Wall Street Journal reported an increase in accounting fraud classes in colleges. In July 2004, PricewaterhouseCoopers LLP held training sessions on ethics for accounting professors. According to Brent Inman, partner in charge of U.S. recruiting at PricewaterhouseCoopers, "Accounting and ethics are intertwined," the challenge being to integrate ethics into the accounting curriculum. The author's survey of undergraduate accounting programs in New York indicated that only two-thirds included ethics in their introductory accounting course. The passage of the Sarbanes-Oxley Act and SAS 99, Consideration of Fraud in a Financial Statement Audit, underscore that ignoring ethics in accounting education is no longer an option.
"Given the current ethical climate in business as reflected by the plethora of news stories in the media, the course in business ethics is becoming more important to our graduate and undergraduate business school programs." This statement from a 1989 Journal of Business Ethics article indicates that the ethical issues in accounting education are not new. In 1986, the Bedford Committee recommended that ethical standards be an integral part of accounting education. Similarly, the Treadway Commission in 1987 called for greater emphasis and inclusion of ethics in every business and accounting course. The American Assembly of Collegiate Schools of Business (AACSB) and the AICPA recommended that accounting students receive ethics education at the general education level, the business administration level, and in every accounting course. According to a survey by Robert J. Warth, as reported in the October 2000 CPA Journal ("Ethics in the Accounting Profession: A Study"), most CPA firms rely on colleges to teach the ethical behavior expected in the profession. In their 2000 study Accounting Education: Charting the Course through a Perilous Future, Albrecht and Sack recommended that accounting education should focus more on ethics, values, and integrity.
Despite widespread agreement that ethics should be an integral part of accounting education, implementation has not been successful. Several surveys conducted in the late 1980s found little integration of ethics into the accounting curriculum. A 2003 survey by the American Accounting Association (AAA) found that only 46% of schools offered a separate course in ethics. The majority of those courses did not provide adequate coverage of ethics, values, and appropriate professional conduct, as reported in the January 2005 CPA Journal ("Teaching CPAs About Serving the Public Interest," by Nicholas J. Mastracchio, Jr.).
A 1993 study (Frances McNair and Edward E. Milam, "Ethics in Accounting Education: What Is Really Being Done," Journal of Business Ethics, October 1993) reported that the average time covering ethics in an accounting course was a little over three hours. A 2002 review of websites and curricula of accounting programs found that new courses are being offered on corporate governance, fraud detection, and professional responsibility. Recent corporate events have also heightened student interest in accounting and an understanding of its importance.
Is Teaching Ethics Effective?
Many studies have concluded that ethics education does have a positive effect upon students. Paul M. Clikeman and Steven L. Henning ("The Socialization of Undergraduate Accounting Students," Issues in Accounting Education, February 2000) surveyed college sophomores and found no significant differences between accounting and other business majors in their willingness to "manipulate earnings." A resurvey of these same students as seniors indicated that accounting majors were less willing to manipulate earnings than were other business majors, suggesting that accounting education does promote fundamental ethical awareness of professional responsibility. …