“I am only one, but still I am one; I cannot do everything, but still I can do something; And because I cannot do everything, I will not refuse to do the something that I can do” (Brown, 2008, p. 1). The world we live in comes in diverse and multifaceted societies. The United States is considered to have violent societies in the industrialized world. One set of apprehensions has to do with crime and destructive behavior – rioting, shooting or mugging. However, concerns for the moral improvement of professionals deal with different issues. Professionals, by virtue of having made it through years of schooling and supervised work, usually have average impulse control, self-discipline, self-regulation abilities, ego strength, and social skills (Rest & Narvaez, 1994).
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The United States has a long tradition of creation of wealth through stakeholders. For more than a decade, however, the public has shown a rising sensitivity to unethical behavior due to the pursuit of power and money. Public trust in the services offered by professional accountants has declined in recent years due to occurrences of unethical behavior in the profession (Spiceland, Sepe, and Tomassini, 2004). The unethical behavior of managers is an issue that is likely to stay in the public eye for quite some time.
A 1987 popular movie portrayed the dishonest dealings of people involved in securities trading based on nonpublic information. The primary character was portrayed by actor Michael Douglas, who, in a dramatic scene says, “Greed is good!” The connotation is that greed is an acceptable motivation and that people in business will do anything to make money, which includes engagement to unethical behavior.
Accountants have significant role in the public eye. In performing their task they are asked to take certain roles. They accept at the same time the resulting obligations and moral responsibilities by accepting certain roles. Accountants can be found performing daily tasks in situations governed by a complex set of rules, principles, and practices (Riahi-Belkaoui, 2004). In performing their roles, accountants face formal or legal rules of behavior, but also moral elements created by specific situations.
According to Theodore Roosevelt, “To educate a person in mind and not in morals is to educate a menace to society.” The societies are governed with values by which people live. The system of values is referred to as philosophy. The principles and rules people use to decide what is right or wrong are referred to as moral philosophy. Ethics is the study that is concerned with the nature of ultimate value, and the standards by which human actions can be judged right or wrong (Rainbow, 2002).
Society has higher expectations ethically of professionals and, as a consequence, the law holds them to a higher standard of due care. One of the characteristics that differentiate a profession from an occupation is the code of ethics that guides the profession. It is true that ethical standards cannot be codified to cover every situation. However, if professionals desire to strive for the higher levels of ethical behavior, there needs to be a more effective understanding and application of clear and uniform standards of right and wrong.
Various accounting organizations promote high standards of ethical behavior. One of which is the American Institute of Certified Public Accountants (AICPA), which is a professional organization that serves certified public accountants who work for public accounting firms or other organizations. The code of the American Institute of Certified Public Accountants (AICPA) emphasizes the obligations of the certified public accountants to serve the public interest, and their responsibility to act with integrity, objectivity, independence and in professional care. Specific responsibilities of the accounting profession are expressed in the various codes of ethics promulgated. According to Zucker (1986), the basis upon which the accounting profession was founded and continues to exist is public trust, which is the degree to which the public has confidence in the services provided by the accounting profession.
There are various categories of ethical perspectives or models of ethical thinking that are applicable to accounting. Two well-known frameworks of ethical system theories are utilitarian and the deontological. Accountants can best understand these ethical views by comparing and contrasting the fundamental moral principles of each ethical theory, and determining which ethics system is most appropriate for the accounting profession.
Utilitarian Ethics
Utilitarianism is an ethical system that is most often attributed to philosophers such as John Stuart Mill and Jeremy Bentham. Utilitarianism is the ethical principle that considers an action to be morally right or wrong based solely on the consequences that result from performing it. The right action is the one that brings the best consequences or the greatest amount of utility. It advocated the rule and goal of “the greatest happiness of the greatest number”. Maximizing the happiness within the society is believed to be the most ethical thing to do. It is thus frequently considered as consequentialism since it believes that outcomes can be predicted and because it judges actions based on their outcomes. John Stuart Mill says:
Utility, or the Greatest Happiness Principles, holds that actions are right in proportion as they tend to promote happiness, and wrong as they tend to produce the reverse of happiness. Happiness is intended to be pleasure, the absence of pain, and the privation of pleasure.
Utilitarianism is an ethical theory of conduct where, under any given circumstances, an action is objectively “right,” if it will generally produce the greatest amount of happiness, taking into account all whose happiness is affected by the conduct. Under this system, the merits of an action are evaluated by considering the total benefits and the total cost created by the action for human society (Darwall, 2003). The rules ensure the greatest good for the most people and speed-up the decision-making process. The rules do not guarantee a positive outcome all the time, but generally following the rules generates positive outcomes.
One of the major problems of utilitarianism is the ambiguity of the statement, “The greatest good for the greatest number of people.” For example, there are ten units of pleasures to be distributed to ten people. The easiest way to give them out is giving each a unit of pleasure. But suppose four people passionately love the “units of pleasure” and the other six do not care about the “units of pleasure”. Then would it make sense if two units of pleasure will be given to the four people who passionately love them, and none to the five or six people who do not care? So the problem of fairness is present, as well as the problem of how things should be distributed. Ultimately, when goods are maximize, some people get much and the others get a few or nothing at all.
For example, an accountant takes a company’s money for a few days and deposits it in his own account before putting it in the account of the company, thereby personally gaining the interest on the business’s money. It might be in his best interest, but in the best interest of the greater number of people. It is an unethical action since it will clearly harm more people more that it will help; the action is unjustified since it can harm others. Another example is the act of bribery, which is generally wrong. Bribery could be considered a general guideline by the utilitarian ethical system. If paying a bribe generated a contract which would keep a firm in business and people gainfully employed, a utilitarian may conclude that bribery is justified. The utilitarianism recognizes this subjection, and assumes it for the foundation of that system, the object of which is to rear the fabric of felicity by the hands of reason and of law. Ethical systems which attempt to question this way of living, “deal in sounds instead of sense, on impulse instead of reason, in darkness instead of light” (Alexander, 2007, p. 1).
Furthermore, in utilitarianism, the decision of which things should be counted as “good” is also dilemma. The system assumes that what people prefer is what is good, thus the good can only be judged by demand. Utilitarianism asserts that one should always act so as to produce the greatest ratio of good to evil for everyone (Tsalikis and Fritzsche, 1989). An act will be considered ethical if it produces a greater balance of good over evil in any given situation; the question then lies with whose good is trying to be promoted. Therefore, some will argue that this system supports egoism, because most likely a person will promote the good of the individual. The ultimate goal, though, was not the happiness of the individual, but the happiness of society (Rossouw, 1998).
Deontological Ethics
Deontological ethics is the ethics of duty and obligations. One of the most significant insinuations of deontology is that a behavior of the person can be wrong even if it results in the best possible outcome, and an act can be considered righteous even if it results in a negative outcome.
According to Reindenbach, Robin, and Dawson (1991), deontologists have a duty to satisfy legitimate claims. These claims are determined by applying logic to an ethical principle, bearing in mind that one owes many diverse duties to others. Deontology is referred to as non-consequentialism, ethical formalism, or ethics of respect-for-persons (Ferrell & Fraedrich, 1997). The deontology principle states that decisions should be judged on the circumstances in which they are made, rather than by their consequences. It means, specifically, ethics based on duty in spite of consequences.
There are many variations of deontology. The most significant attempt to construct a deontological approach to ethics is found in Immanuel Kant’s Groundwork of the Metaphysics of Morals. He begins this work by observing that only a good will is unconditionally good. For Kant, it is impossible to conceive anything in the world, “or even out of it, which can be taken as good without qualification, except a good will”. So what about intellectual qualities such as intelligence or good judgment or qualities of character, such as perseverance or courage? Kant’s answer has no basis for these good qualifications. Although such qualities are considered good in many situations, they can also be used for evil purposes as well.
Deontologists hold that some choices cannot be justified by their effects; no matter how morally good their consequences, some choices are morally prohibited. On deontological accounts of ethics, one cannot make certain wrongful choices, even if by doing so the number of wrongful choices will be minimized-others will be prevented from engaging in similar wrongful choices. Deontologists believe that what makes a choice right is its conformity with a moral norm. Such norms are to be simply obeyed by each moral agent; such norm-keepings are not to be maximized by each agent. In this sense, for deontologists, the right has priority over the good. If an act is not in accord with the right, it may not be undertaken, no matter the good that it might produce-this includes even a good consisting of acts in accordance with the right. “Correct decisions include all choices where the voluntary actions of any one person can be harmonized in reality with the voluntary actions of every other person” (Kant, 1965, p. 1). Kant explains that this idea is according to the universal law of freedom. The formality of this approach may be considered a weakness, but it is, in fact, strength; it permits for considering all possible conditions. Furthermore, it is transformation into positive law is the core of the art of legislation. Ultimately, deontology promotes a duty of making the best moral decision. Kant gives several formulas to help decide what makes-up this duty.
For Kant, all practical judgments are imperatives. The qualified ones are referred to as the hypothetical imperatives and the unqualified oaths are referred to as categorical imperatives. What determines the goodness or badness is whether the decisions accomplish the goal. For example, a person is situated in the fourth floor of the building and desires to go to the cafeteria that is situated in the next building. So what can he do now? One choice is to could jump out of the window. Of course he or she could probably break a leg; such action would be imprudent. So the prudent thing to do is to take an elevator down or walk down the stairs in order to transfer to the next building to the cafeteria.
The deontological theory states that people should adhere to their obligations and duties when analyzing an ethical dilemma. This means that a person will follow his obligations to another individual or society because upholding his duty is what is considered ethically correct. For instance, a deontologist will, all the time, keep his promises to a friend, as well as follow the law. A person who follows this theory will produce very sound decisions that are consistent, since they will be based on the individual’s set duties (Rainbow, 2002).
AICPA Code of Ethics
The AICPA Code of Professional Conduct consists of two main parts: Principles and Rules. The Principles provide the framework for the rules. The Rules provide specific guidance in the performance of professional services of AICPA members. The Principles are set out in six Articles and a Preamble. The Preamble articulates the role that the Principles play.
“aˆ¦Guide members in the performance of their professional responsibilities and express the basic tenets of ethical and professional conduct. The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage” (AICPA, 2008, Preamble).
Article I consist of the responsibilities of the AICPA member. It admonishes members as a group to carry out special responsibility of self governance. Article II states that the accounting profession has a duty to serve the public’s interest. The public to be served consists of clients, credit grantors, governments, employers, investors, the business and financial community, and others who rely on the objectivity and integrity of certified public accountants to maintain the orderly functioning of commerce. Since the public relies on accountants, the accountant has a reciprocal obligation to be dedicated to professional excellence. Article III calls for an accountant to act with integrity. This requires the accountant to be completely honest and without deception. The honesty exhibited by a person acting with integrity can never compromise that obligation of client confidentiality. However, personal gain can never be put ahead of public interest. Persons acting with integrity will never be deceitful. Article II measures integrity in terms of what is right and just. Article IV specifically addresses the two traits of objectivity and independence-the hallmark of an accountant. Objectivity requires a freedom from conflicts of interest, honesty and impartiality. Independence requires freedom that may compromise objectivity. Article V sets out the standards for the services rendered as “due care”. Each person is expected to evaluate his or her own competence and to obtain the advice of others when necessary. Diligence means that the person will be prompt, thorough, careful and timely. Appropriate planning and supervision will be done by one who is diligent. Finally, Article VI states that each person will consider all the ethical principles when deciding to accept or reject a request for services. Last, the second section of the Code of Professional Conduct consists of a series of rules related to each of the above stated principles. The rules are very specific in their application. Rules are thought of as “should not’s”.
Conclusion
The Code of Professional Conduct sets the standards and rules for professional accountants, regarding their moral and professional obligations toward one another, their clients, and society as a whole. Accountants must obey this code.
Having canvassed the two main frameworks of ethical systems, it is not difficult to assess which of the two ethical systems is generally best for the accounting profession. On one hand, the utilitarian perspective about ethics claims that humans are supposed to take those actions that lead to the greatest balance of good consequences versus bad consequences. The utilitarian ethical system is plagued by an indirect and direct paradox. Indirectly, why follow the rules when not doing so produces better consequences? This, however, directly collapses into: do not follow the rules whenever better consequences can thereby be produced. Utilitarian’s will depart from the rules mistakenly, believing better consequences will result.
On the other hand, the deontological perspective is about categorical imperative, moral obligation and duty. It leaves space for agents to give special concern to their friends, families and projects. It places a cap on that duty’s demands. Deontological morality, therefore, avoids the overly demanding and alienating aspects of utilitarianism and accords more with conventional notions of our moral duties. The acts for a deontological system are not morally wrong. Furthermore, deontological system can account for strong, cross-cultural moral intuitions better than utilitarian system.
With a comprehensive set of rules, the AICPA yearns is for its members to follow them. Almost everyone believes that the law or rules has a very important function morally. Not all accounting decisions will turnout the best results, but working towards a good decision with a good result should be goal of all accountants, as well as all people. Thus, deontological ethics is the best choice for the accounting professions, and matches-up with the AICPA’s code of conduct.
