Now Is the Time for Ethics in Education

By Amy Haas

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JUNE 2005 - Recent corporate accounting scandals have brought ethics back into the limelight. The sight of CEOs and CFOs parading into courtrooms has raised public awareness and concern about ethical behavior in management and accounting. The Wall Street Journal reported an increase in accounting fraud classes in colleges. In July 2004, PricewaterhouseCoopers LLP held training sessions on ethics for accounting professors. According to Brent Inman, partner in charge of U.S. recruiting at PricewaterhouseCoopers, “Accounting and ethics are intertwined,” the challenge being to integrate ethics into the accounting curriculum. The author’s survey of undergraduate accounting programs in New York indicated that only two-thirds included ethics in their introductory accounting course. The passage of the Sarbanes-Oxley Act and SAS 99, Consideration of Fraud in a Financial Statement Audit, underscore that ignoring ethics in accounting education is no longer an option.

“Given the current ethical climate in business as reflected by the plethora of news stories in the media, the course in business ethics is becoming more important to our graduate and undergraduate business school programs.” This statement from a 1989 Journal of Business Ethics article indicates that the ethical issues in accounting education are not new. In 1986, the Bedford Committee recommended that ethical standards be an integral part of accounting education. Similarly, the Treadway Commission in 1987 called for greater emphasis and inclusion of ethics in every business and accounting course. The American Assembly of Collegiate Schools of Business (AACSB) and the AICPA recommended that accounting students receive ethics education at the general education level, the business administration level, and in every accounting course. According to a survey by Robert J. Warth, as reported in the October 2000 CPA Journal (“Ethics in the Accounting Profession: A Study”), most CPA firms rely on colleges to teach the ethical behavior expected in the profession. In their 2000 study Accounting Education: Charting the Course through a Perilous Future, Albrecht and Sack recommended that accounting education should focus more on ethics, values, and integrity.

Despite widespread agreement that ethics should be an integral part of accounting education, implementation has not been successful. Several surveys conducted in the late 1980s found little integration of ethics into the accounting curriculum. A 2003 survey by the American Accounting Association (AAA) found that only 46% of schools offered a separate course in ethics. The majority of those courses did not provide adequate coverage of ethics, values, and appropriate professional conduct, as reported in the January 2005 CPA Journal (“Teaching CPAs About Serving the Public Interest,” by Nicholas J. Mastracchio, Jr.).

A 1993 study (Frances McNair and Edward E. Milam, “Ethics in Accounting Education: What Is Really Being Done,” Journal of Business Ethics, October 1993) reported that the average time covering ethics in an accounting course was a little over three hours. A 2002 review of websites and curricula of accounting programs found that new courses are being offered on corporate governance, fraud detection, and professional responsibility. Recent corporate events have also heightened student interest in accounting and an understanding of its importance.

Is Teaching Ethics Effective?

Many studies have concluded that ethics education does have a positive effect upon students. Paul M. Clikeman and Steven L. Henning (“The Socialization of Undergraduate Accounting Students,” Issues in Accounting Education, February 2000) surveyed college sophomores and found no significant differences between accounting and other business majors in their willingness to “manipulate earnings.” A resurvey of these same students as seniors indicated that accounting majors were less willing to manipulate earnings than were other business majors, suggesting that accounting education does promote fundamental ethical awareness of professional responsibility. Despite evidence that ethics education can be effective, many accounting programs continue to avoid teaching ethics. Considering the current climate, educators can no longer continue this inertia.

The Goals of Ethics Education

Ethics education, as defined by Langenderfer and Rockness, is more than studying the code of professional conduct, but rather a process whereby individuals become more consciously involved in making ethical decisions (Harold, Q. Langenderfer and Joanne W. Rockness, “Integrating Ethics into the Accounting Curriculum: Issues, Problems, and Solutions,” Issues in Accounting Education, Spring 1989). Cheryl R. Lehman (“Accounting Ethics: Surviving, Survival of the Fittest,” Advances in Public Interest Accounting, 1988) concluded that one of the main goals of ethics education should be to encourage students to recognize social responsibilities within their profession. Stephen E. Loeb (“Teaching Students Accounting Ethics: Some Crucial Issues,” Issues in Accounting Education, Fall 1988) listed the development of abilities needed to deal with ethical conflicts and uncertainties as key objectives in educating accountants.

A profession’s ability to self-regulate may be ineffective unless individual professionals understand and apply their profession’s ethical standards in actual practice. Ineffective professional self-regulation inevitably leads to government intervention. Linda Kidwell, at Niagara University, has students develop an academic code for their classroom, thus demonstrating that ethical behavior is an integral part of the workplace (“Student Honor Codes as a Tool for Teaching Professional Ethics,” Journal of Business Ethics, January 2001). The goals of ethics education are creating an awareness of ethical dilemmas and providing methods of resolution.


The author surveyed department chairs of 77 colleges in New York State, both public and private, that grant associate’s and bachelor’s degrees in accounting. The questionnaire focused on the introductory accounting course and asked respondents to estimate course time spent on ethics, as well as to list other courses that included ethics.

Forty-one of the 77 programs (53%) sent the surveys responded. Of these respondents, 66% reported discussing ethics in introductory accounting courses (see Exhibit 1). Of the 14 programs that do not currently include ethics in the introductory accounting course, four (29%) plan to do so in the future. The time spent on ethics varied greatly, from a half hour in the semester to integration throughout the semester, but the average was 3.7 hours per semester for a three-hour weekly class (see Exhibit 2). Nearly all respondents (98%) indicated that ethics was discussed in an intermediate, auditing, tax, cost, or advanced accounting course (see Exhibit 3). A few programs included ethics in senior seminars and other electives, such as forensic accounting and accounting in technology.


New York State requires CPA candidates to pass an ethics exam before licensing, as do over half of the other states, and it also mandates an ethics component in the continuing education requirements. The impact of state ethics requirements on accounting programs is a promising topic for future research.

Respondents from programs that include ethics in introductory accounting courses indicated a desire to include ethics from the beginning to the end of business education. Most programs that omitted ethics cited time constraints and the concern that introductory accounting students lacked the degree of competence and sophistication to benefit from the case studies often used to teach business ethics.

Two programs integrated ethics throughout every accounting course. One professor suggested implementing an “across the curriculum” approach to convey the message that ethics is an inherent part of accounting, not just a textbook chapter. According to several respondents, it may not be possible to teach values, but exposing students to common ethical dilemmas and methods of resolution should be an integral part of accounting education.

It is disappointing that only two-thirds of the respondents reported discussing ethics in introductory accounting, because it is a course taken by all business and accounting majors. Although the average of three and a half hours per semester may be acceptable for introductory accounting courses, the cumulative average of nine and a half hours over a four-year degree, as reported in a 2001 Ohio survey, seems inadequate.

That only 24% of respondents required accounting majors to take a course in ethics is another concern. Romal and Hibschweiler (“Improving Professional Ethics,” The CPA Journal, June 2004) concluded that issues such as inertia or lack of faculty expertise add to the difficulty of getting ethics into the classroom. A separate course in business ethics at the junior or senior level assures adequate coverage and demonstrates its importance. In other professions, such as medicine, law, and engineering, separate courses in professional ethics are required. Many respondents, however, indicated that implementing a separate ethics course would be difficult without getting embroiled in college politics.

Emphasizing Ethics

Can accounting programs continue to ignore the unanimous opinion of the AICPA, the AACSB, the Treadway Commission, and the Bedford Committee that ethics be an integral part of accounting education? Many states now require CPAs to pass a separate ethics exam or complete a course in ethics for licensure, as well as include ethics in their continuing education requirements. Many accounting professors structure their courses around the CPA exam, less than 5% of which is devoted to ethics.

Students will grasp the importance of ethics only when educators give it the same priority as other areas of accounting. Academia should accept ethics as a research and teaching specialty equal to other areas of accounting. CPAs should emphasize to faculty and administrators the importance of ethics teaching, such as speaking to students, holding faculty training sessions, or funding faculty curriculum development in ethics. Stressing the importance of the fundamentals, character, integrity, and responsibility should be part of accounting education.

Amy Haas, CPA, is a professor at Kingsborough Community College, City University of New York, Brooklyn, N.Y.




















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