CPAs About Serving the Public Interest
2005 - A continuing deluge of articles, editorials, and speeches
addresses the need of ethics education in the curriculum of
accounting majors. One must wonder, however, if teaching ethics
at the college level is too late. Have we become immunized
against ethical behavior? Are the primary criteria for behavior
whether or not one will be better off, and the chances of
being caught? As youngsters, do we learn at the dinner table
that the family vacation was funded by expense-account padding?
And do we hear our parents talking about overstating their
tax deductions? Are simple laws, such as speed limits and
parking rules, expected to be ignored in our society? Do our
baseball heroes cork their bats and use steroids? Do our political
leaders question “what the definition of ‘is’
is”? Are cheating on school exams and plagiarizing papers
via the Internet common occurrences? Are examples of child
abuse prevalent among those supposedly dedicated to religious
the answer to these questions is yes, then how can we expect
those who choose accounting as a career to be exceptions
to the rule? Are they a higher caliber of individual than
those who choose a religious life? Did the decision-makers
at Enron and WorldCom not know that what they were doing
was wrong? Did they need a course that would have taught
them not to conduct business the way they did? We read that
the guards at the Abu Ghraib prison in Iraq were not trained
in the Geneva Conventions. Did the guards need a course
to learn that the way they treated the prisoners was wrong?
best, one can only hope that education can help. Accounting
students should be well grounded in ethics; however, society’s
attitude must also change. Perhaps a sound basic foundation
in ethics, which teaches methods of measuring the consequences
of decisions in ethical terms, can help.
taxation, there is a difference between tax evasion and
tax avoidance. Surely no one would suggest that each of
us should pay taxes by deciding what our fair share should
be. So we learn that minimizing our taxes is acceptable
as long as we do not violate the law.
the attitude toward teaching “ethics” in most
curricula consists primarily of learning rules. Acting ethically
then becomes merely not violating particular rules. An auditing
course may go further, listing the AICPA rules of professional
conduct, but still say little about how protecting the public
interest is a CPA’s responsibility. Some legal discussions
may occur in a business law course, or a tax course may
include some discussion of tax ethics. With the ethical
compass that this attitude fosters, one is able to work
at WorldCom and rationalize capitalizing line costs to apply
them against future revenues. Shoehorning
an accounting treatment into a GAAP principle is considerably
easier for auditors than asking themselves whether stakeholders
are receiving a fair picture of the company: “After
all, everyone manages earnings.”
National Association of State Boards of Accountancy (NASBA)
responded to the recent scandals by forming a task force
to investigate the extent of education in protecting the
public interest. The American Accounting Association (AAA)
agreed to cosponsor a survey of educators on the issue of
ethics education on campus. The following results were obtained:
46% of the schools offered a separate course in ethics.
68% of those offered the course in the school of business.
18% offered the course in the accounting department.
56% indicated that the course provided separate coverage
for protecting the public interest.
Where offered, 51% stated it was a requirement for accounting
Where offered, 45% stated it was a requirement for other
90% indicated that protecting the public interest was
covered in the auditing course.
those survey participants that opted to identify their affiliation,
a syllabus of the courses was obtained. Some institutions
had a good, solid ethics course, but most courses designated
as ethics courses were related to business law, included
only a brief look at ethics, and, with a few exceptions,
did not provide adequate coverage of ethics, values, and
appropriate professional conduct.
the results of this survey and the audit and accounting
failures of the past few years, it appears that a contributing
factor may be a failure in the effectiveness of ethics education.
An individual’s value system is affected by numerous
influences long before college and is probably already well
formed by that age. There must, however, be an appreciation
of the foundation for ethics and values in philosophical
thought, as well as a general understanding of expected
business and professional behavior, including the responsibility
to protect the public interest. It is apparent that most
individuals will receive little or no education in this
area in an institution of higher learning.
Role in a Solution
should recognize a need for education in the broad philosophical
concepts of ethics. This should be followed by the application
of these principles in the world of business and accounting.
This education should begin as early as possible in a student’s
methods are in use by those few schools that attempt to
provide this education. The education is either presented
in separate courses or integrated throughout the business
education. The advantages and disadvantages of these methods
are discussed below.
The perception is fostered that ethics is a consideration
in all aspects of accounting and business. The program can
be implemented without significant additional resources.
Instructors may lack expertise in ethics education.
Compliance is difficult to measure.
The preliminary philosophical basis of ethics and values
can be taught in the liberal arts program by professors
that have the appropriate expertise. This can be followed
by one or two courses in business- and accounting-related
ethics issues. Compliance is easy to measure.
The program must be implemented slowly due to the need
to change the curriculum and add business or accounting
courses in what is often already a full curriculum.
writer believes that the best method for ethics education
is to require undergraduate students to complete a liberal
arts ethics course in the first two years of college, followed
by a business ethics course in the junior or senior year,
and an accounting ethics course that is part of the additional
30 hours in the 150-hour program.
effective integrated program has merit, but there remains
a need to provide recognition of underlying concepts, which
is best handled in the liberal arts department. Some institutions
have taken the integrated approach, and one hopes that they
have identified ways for their business and accounting faculty
to effectively bring ethics and the concept of protecting
the public interest into the classroom.
writer believes that state boards of accountancy should
mandate extensive ethics education as a component of the
150-hour requirement. Ethics education must be reinforced
and strengthened, and the concept of protecting the public
interest must be a vital component. To accomplish this goal,
nine semester credit hours of ethics education should become
a requirement for taking the Uniform CPA Examination. Three
credit hours in ethical foundations should be required in
the liberal arts program; three credit hours in business
ethics should be required in the business program; and three
credit hours should specifically address ethical issues
courses in ethics education are preferable, but for institutions
that integrate ethics into their accounting and business
curricula, a separate three-credit-hours liberal arts course
in ethical foundations should be required. In addition,
these institutions should incorporate a minimum of 90 class
hours in business ethics, with a minimum of 45 of these
class hours in ethics issues in accounting. These hours
should be identified in the syllabi, and a proportionate
portion of the grade for the course should be based on ethics
tests, papers, and discussions.
J. Mastracchio Jr., PhD, CPA, is an associate professor
of accounting at the University at Albany and a partner in
the CPA firm of LCS+Z.