Ethics (ch16/1)

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

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

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)

1.Utilitarian

2. Rights and Duties

3. Justice model

4. Virtues model

• 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.

• 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.

• All people should be given what they deserve
• Weighs a person's actions against the results of those actions.
• "What do people deserve?" is key

• 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.

• 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 person
• 8. Reach a decision as to the appropriate course of action.

Generally follow the policy first. Sometimes some issues have no one right answer.

• 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