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What constitutes professionalism? (7)
A professional:
*Communicates Freely
*Thinks rationally, logically, & coherently
*Appropriately uses technical knowledge
*Integrates knowledge from many disciplines
* Exhibits ethical professional behavior
* Recognizes the influence of political, social, economic, legal, and regulatory forces
*Actively seeks additional knowledge
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McDonald's FOUR criteria to be considered a professional:
(Different from professionalism answer)
1. Specialized knowledge base (fin reporting rules, audit standards, etc --not part of society's general knowledge.
2. Complex Skills - (also requires use of judgement if acctg related)
3. Autonomy of Practice - independence or self sufficiency. "Independence of mind" SOX; PCAOB
4. Adherence to a code of ethical behavior AICPA, Association of Certified Fraud Examiners
Notice nearly all of his definitions emphasize ethics
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In accounting we are most concerned with what type of ethics?
Normative Ethics
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Normative Ethics
- Normative ethics=
- What are the rules and standards, whether professional, that guide our decision making?
(Normative Ethics is the study of ethical action. Distinct from meta-ethics)
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Merchant and Van der Stede articulated 4 basic paradigms for ethical decision making. What are they?
1.Utilitarian
2. Rights and Duties
3. Justice model
4. Virtues model
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Utilitarian Model of ethics
- The end justifies the means.As long as you have a successful or favorable outcome, any method of achieving it is justified.
- It would be ok to increase a company's stock price even if you engages in profit manipulation, as long as the end result was worth it.
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Rights and Duties school of ethics
- Rights and Duties-
- **Every person for himself.
**-all individuals have rights. Others have the duty not to interfere with these rights.
**If a manager has a right to earn a bonus every year, others have a duty not to interfere with this,even if manager acts in unethical ways to obtain the bonus and vice versa- mgr shouldn't interfere w/employees right to bonus.
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Justice model of ethics
- All people should be given what they deserveWeighs a person's actions against the results of those actions.
- "What do people deserve?" is key
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Virtues Model of Ethics
- People should do what is right, moral, and virtuous.Managers should look inward to determine what is right and moral and to determine the rightness of their actions.
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Langenderfer and Rockness 8 steps for dealing with an ethical dilema
- 1. Identify the facts
- 2. ID the ethics issue and the stakeholders
- 3. Define the norms, principles, and values related to the situation
- 4. ID the alternative courses of action
- 5. Evaluate the consequences of each possible course of action
- 6. Decide on the best course of action consistent w/norms, principles, and values.
- 7. If appropriate, discuss the alternative w/a trusted person8. Reach a decision as to the appropriate course of action.
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If your company has an ethics policy:
Generally follow the policy first. Sometimes some issues have no one right answer.
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Mintz and Morris's 10 step process (p9) for making ethical decisions
- 1. Frame the ethical issue
- 2. Gather all the facts
- 3. ID the stakeholders and obligations
- 4. ID the relevant accounting ethics standards involved
- 5. ID the operational issues
- 6. ID the accounting and auditing issues
- 7. List all the possible alternatives you can or cannot do
- 8. Compare/weigh alternatives
- 9. Decide on a course of action
- 10. Reflect on your decision
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