Exploring Ethical Decisions

Internal Auditor, Dec, 1999 by Rose Marie L. Bukics

Cases in Accounting Ethics and Professionalism -- Third Edition by Steven M. Mintz

AVE YOU EVER FACED AN ethical dilemma on the job? Upon reflection, did you regret that you hadn't received more training in the area of ethics and professionalism? Did you lament the lack of a systematic method for analyzing and dealing with such dilemmas?

Cases in Accounting Ethics and Professionalism provides an excellent starting point for working through ethical issues that may arise in the workplace. Twenty-five case studies covering topics that range from client confidentiality and human resources matters to revenue recognition concerns are particularly helpful; in fact, they represent the primary strength of the book. Each of these cases is based on actual situations that may be faced by both internal and external auditors or by management accountants.

The foreword, written by Michael Josephson, President of the Josephson Institute of Ethics, plays an important role in setting the stage for the three chapters that follow it. Josephson stresses the critical role that ethics and professionalism have always played in the training and job performance of auditors. "To an increasing degree, they are held accountable to prevent, detect, and report all manner of actual and potential improprieties," he writes. Also, Josephson explores several changes that have radically impacted the business environment where auditors operate, such as:

* Environmental problems.

* The impact of technology.

* The increasing use of numerical goals as the standard measure of success.

* The global business environment, which places heavy systems design and auditing responsibilities on companies.

According to Josephson these are the primary contributing factors that have raised ethical issues to new heights.

Josephson overlays these changes in the business environment with developments in the accounting profession that have occurred throughout the past decade, from the competition and proliferation of new services, to the increasing legal regulations to which firms and individuals are subject. These two categories of change support the three overall premises of the book:

* Ethical considerations are always present.

* Auditors and accountants need to be prepared to deal with such issues.

* Adequate preparation results in sound ethical decision-making.

Josephson's comments segue neatly into the book's text. The first chapter provides a history of ethics in accounting education and some exploration of topics such as reporting irregularities, opinion shopping, whistle blowing, and the role of the nine new standards designed by the Auditing Standards Board to close the "expectation gap." Although the chapter is brief, it provides useful background information. The chapter also includes excerpts from the Code of Professional Conduct from the AICPA, and reprints of the Standards of Ethical Conduct from the Institute of Management Accountants and the Code of Ethics from The Institute of Internal Auditors.

While this chapter frames the background for the cases that appear later in the book, the discussion of the various topics was so brief and basic that anyone currently working in the profession would not necessarily acquire any new information. However, some internal auditors might find that they can use the chapter as a reference source.

The second and third chapters are also abbreviated. Chapter Two frames the idea of ethical decision-making with a discussion of moral development and an introduction to virtue theory. It also summarizes the ethical reasoning methods of utilitarianism, rights-based theory, and the theory of justice.

In the third chapter, Mintz presents a decision-making process that "incorporates all sources of ethical obligation and provides a practical check on the ethical propriety of decisions." Designed to help readers make well-thought-out ethical decisions, the seven-step process is not unique to Cases in Accounting Ethics and Professionalism and is fairly standard in its approach to decision-making.

The real-world cases, which are probably the most valuable element of the book, allow readers to apply the information gained from the chapters. The cases are divided into four categories:

* External reporting issues.

* Internal reporting issues.

* The international environment.

* Human resources issues.

Each of the cases is followed by several thought-provoking questions that ask the reader to consider the particular facts of the cases within the context of sound ethical decision-making and to reach a conclusion as to how a particular situation should be resolved.

Although Mintz states early on that the purpose of the book is to serve as a basis for graduate or undergraduate courses in ethics and professionalism, this text should not be dismissed as one that is relevant only in the classroom. It could be effectively utilized as an individual reader or as a reference source. The text also has potential for staff training purposes, either at an introductory level or as a refresher program. In fact, more may be gleaned from such a text after a few years of actual work experience.