Influence of a State Board of Public Accountancy on Ethics
Neal R. VanZante, and Allen Francis Ketcham
AUGUST 2005 - Effective
July 1, 2005, Texas State Board of Public Accountancy (TSBPA)
Rule 511.58 requires that individuals who initially apply
to take the CPA examination must have completed three semester
hours of ethics education. The course must be taken at a recognized
educational institution and must include ethical reasoning,
integrity, objectivity, independence, and other core values.
In addition, the course content and instructor must be preapproved
by the TSBPA. Texas is the first state to establish such a
requirement. As such, the TSBPA deserves praise for trying
to emphasize ethics to potential CPAs.
ethics rules, including Rule 511.58, serve as a strong signal
that the board desires to go beyond its past interpretation
of its obligation to protect the public interest. Whereas
past ethics rules have focused on ensuring that CPAs were
familiar with the state’s Rules of Professional conduct
and the penalties for failing to follow them, Rule 511.58
attempts to ensure that CPAs are, in fact, ethical individuals.
511.58 requires a stand-alone ethics course approach, in
contrast to accrediting bodies’ recent preference
for the “ethics across the business curriculum”
method, where each professor is responsible for teaching
ethics in each class. That method distributes the responsibility
for teaching ethics throughout the business curricula. Furthermore,
business textbooks sometimes insert undemanding and even
erroneous information about ethical systems, if they cover
ethics at all. According to Mary A. Boose and Peter Dean
(“A Proposition for Effective Integration of Ethics
Across the Business Curriculum,” International
Business & Economics Journal, 2002), “[A]ny
approach that attempts to satisfy the ethics component for
accrediting bodies by distributing responsibility for teaching
ethics throughout the business curricula trivializes ethics.”
Most business-faculty members are not trained in ethical
theory and, therefore, cannot be considered prepared to
teach ethics. Expecting business faculty to somehow be ethics
“experts” is unfair, and akin to asking every
member of the business faculty to teach political theory
or categorical logic. The board’s decision to go against
the popular trend is praiseworthy.
November 2002, the TSBPA amended Rule 511.58 to provide
for the new ethics course requirements without seeking guidance
or input directly from Texas educational institutions. The
board then allowed comments for a two-month period and responded
to input. Based on comments from educators (particularly
those at public universities) regarding how long it takes
to develop a new course, the board extended the original
2004 implementation date to 2005. At an October 2003 meeting
of the Texas Society of CPAs’ Relations with Educational
Institutions Committee, many participants were still unaware
of the new rule. Thus, on April 20, 2004, the TSBPA sent
a letter to the presidents of all Texas universities explaining
the ethics course requirements and the approval process.
Because offering a new course requires revisions of curricula
as well as approval by the TSBPA and the Texas Higher Education
Board (which can take up to 18 months), many Texas universities
have been forced to rush their ethics course offerings.
In addition, decisions must be made quickly on whether to
require an additional three credit hours for students pursuing
a CPA, to eliminate another course from the accounting curriculum
requirements, or to require students to use the ethics course
as an elective.
TSBPA has muddied the waters by inconsistent approval criteria,
by conflicting information to universities seeking course
approval, and through incompatible scrutiny of course syllabi.
The course approvals thus far reflect the inconsistency.
For example, while some courses have been approved with
little discussion, others have apparently been closely examined;
some have been rejected because of the specific textbooks
and course materials used. While some “philosophy
approach” courses were rejected with a recommendation
that a “business course approach” be resubmitted,
other such courses have had little difficulty gaining approval.
the board’s criteria for acceptable course material
vary. Material found acceptable at one meeting was not necessarily
accepted at another, but later became acceptable again.
At one point, the board’s qualifications committee
required a matrix showing ethics coverage, but later dropped
that requirement. Although these apparent inconsistencies
are understandable because the approval criteria have evolved
over time, they have added confusion about what the board
is attempting to accomplish at a time when universities
have been rushing to satisfy the requirements. In addition,
while any change of instructors requires new board approval,
there is no evidence that instructors’ specific qualifications
have been reviewed.
example of inconsistent information being provided is the
aforementioned letter to the presidents of all Texas universities
from TSBPA Executive Director William Treacy. The letter
states that any “upper-division” ethics course
offered through the business or liberal arts department
could be presented to the board for consideration. Based
on that statement, many universities developed upper-division
courses. The list of approved courses as of February 2005,
however, includes freshman- and sophomore-level courses
as well. Inspection of individual course syllabi adds little
evidence of consistency, with the possible exception of
the appearance of the key words suggested by the rule itself.
Rule’s Content Requirements
TSBPA rules are very specific. If the requirements are specific
concerning what is to be taught, then those requirements
must be logically coherent, and the topics must not set
up internal contradictions. If ethics education is limited
to a familiarity with the rules of conduct and penalties
associated with deviating from the rules, there really are
no logic problems. Nonetheless, any governing body directing
that specific ethical notions be taught must first understand
the foundations and logic of what they are requiring.
has underlying assumptions that inform any particular ethical
system. Each ethical system is built on its own foundational
assumptions, referred to as “groundings.” Authors
of models for ethical decision-making frequently group ethical
systems (such as those of Bentham, Kant, and Aristotle)
into a hybrid or merged unit that they refer to as “synthetic,”
“integrated,” or “blended,” thereby
attempting to manufacture one generic decision-making method.
They see this as a way to organize different ethical systems
into one simple, usable entity. The
authors of these hybrids assert that the problems introduced
by grouping systems are insignificant, but in many cases
they are not. Although well intended, such synthesizing
efforts do damage to ethical judgments by adding confusion
and error. If the originating fundamental assumptions in
which each system is grounded are contradictory, then the
ethical systems cannot be merged.
new ethics requirement for Texas accounting students is
a good example of confusion in the ethics component in curricula.
Board Rule 511.58(10)(c) states that “The course must
be taken at a recognized educational institution and should
include ethical reasoning, integrity, objectivity, independence
and other core values.”
reasoning. According to law, the Texas-mandated
course in ethics includes “ethical reasoning.”
This dilutes the Texas law into a tautology. Tautological
definitions are common errors, akin to requesting a flower
arrangement that includes flowers. It presupposes that one
already knows what ethics means.
problem is best analyzed by a series of questions. First,
does the term “ethical reasoning” mean all ethical
reasoning, or just some subset? If the answer is all, then
a foundational moral philosophy course would be most appropriate.
If the answer is some, then a simpler survey course in accounting
ethics could suffice. But this raises a second question—“Which
ethical reasoning?”—which leads to seven additional
questions that need to be answered:
Is the ethical reasoning teleological, as in the Aristotelian
Is the ethical reasoning causal rather than purposeful,
as contemporary determinists such as B.F. Skinner argue?
Is the ethical reasoning consequentialistic, as utilitarian
Is the ethical reasoning nonconsequentialistic, as duty
ethicists such as Kant contend?
Is the ethical reasoning relativistic, as cultural relativist
Is the ethical reasoning objective, as in Plato’s
the ethical reasoning based on moral sentiment, as the
Humeians have long insisted?
after it is understood exactly what the law requires from
the new course can universities then adequately follow what
is legally being required of them. The TSBPA must be clear
as to what reasoning they require in the new law.
Integrity is related to character and is further associated
with the self, preservation of identity, strong positions
of attitudes, and moral obligations. Modern moral theories,
the most representative of which are utilitarianism and
Kantian moral theory, do not concern themselves directly
with virtue and character. For example, utilitarianism is
completely impartial and neutral as to personal moral commitments,
and therefore does not allow for integrity. Both utilitarianism
and Kantian moral theory are about “what to do,”
and virtue ethics is about “how to live.” Integrity,
a how-to-live trait, is a concern of virtue ethics, so this
requirement implies a rejection of utilitarianism and Kantian
moral theory, and approval of virtue ethics.
Objectivity implies a rejection of moral subjectivity. For
Kant, all subjective rules are reflections of our inclinations,
and therefore are either amoral or immoral. Subjective inclinations
vary from person to person, and any moral rule that varies
in such a manner is relative and merely a person’s
desire. Kant posited that moral laws must be objective in
that they do not vary from person to person. Objective moral
rules are established universally by all rational beings,
and rational beings will agree to them. The TSBPA requirement
implies a bias toward the Kantian moral theory.
Kant saw independence or autonomy in opposition
to heteronomy (i.e., lack of moral freedom or self-determination).
An independent or autonomous person is self-determined,
whereas the heteronymous person’s will is determined
by something outside of the person. Is the autonomous person
what the TSBPA really wants?
heteronymous person is outside of the moral realm. Anyone
with moral sources outside of oneself is never obliged to
follow those moral sources. But following the rules is exactly
what the heteronymous person does. The heteronymous accountant
would not bend the accounting rules and therefore would
not generate a situation such as the accounting irregularities
that led to the suffering of so many innocent investors
and employees of Enron. So, the TSBPA seems to support the
Kantian moral system by asking for moral independence, but
probably is actually asking for the opposite.
values. An interesting observation about the
inclusion of “other core values” in Rule 511.58
is the inconsistency with Rule 523.131, which describes
the requirements of continuing education ethics courses.
Rule 523.131 identifies the core values of the profession
as integrity, objectivity, and independence. It is not clear
what other core values are intended by Rule 511.58. In apparent
recognition of the difficulty of defining “other core
values,” the TSBPA’s Qualifications Committee
adopted the following statement of purpose for board-required
the unethical practices frequently observed in businesses
it is prudent for the Board to require individuals aspiring
to enter the accounting profession to have knowledge of
core values including ethical reasoning, integrity, objectivity,
and independence. By requiring a Board approved 3-semester
hour college ethics course that contains specific components,
the Board has some assurance that universities are providing
a course that meets government, business and public concerns.
it appears that the statement of purpose (which probably
should have preceded adoption of the rules) skirts the issue
of other core values by not attempting to identify them.
In general, the concept of core values conflates the logically
distinct utilitarian and virtue moral systems. Core values
imply a deep commitment to a few strongly held values. But
values are simply the summation of some set of preferred
pleasures. Bentham’s theory quantifies pleasures and
pains with his utilitarian calculus of felicity to see if
some outcome is valued or not. Bentham
valued pleasing and painful consequences according to seven
criteria: intensity of pleasure; duration of pleasure; certainty
of pleasure; immediacy of pleasure; fecundity (i.e., leading
to similar pleasures); purity (i.e., whether pleasure is
mixed with pain); and extent (i.e., number of people affected).
then is “core” in ethics? Only virtues. Virtue
ethics is organized around a core of traits, or virtues,
that make up an individual’s lifetime character. Virtue
ethics is the only ethical system where “character”—meaning
“traits written on the soul”—is a meaningful
concept. So, one’s virtues become one’s character.
Aristotle described 11 virtues as compared to their associated
vices. Because here the TSBPA is referring so clearly to
values, it implies a bias toward utilitarianism.
analysis of Rule 511.58(10)(c) leads to the table shown
in the Exhibit, which shows the different biases that the
board holds for the four ideas they want taught. In the
first case, the board embraces virtue ethics at the expense
of utilitarianism and Kantian ethics, while in the second
and third cases it adopts Kantian ethics at the expense
of utilitarianism and virtue ethics. In the fourth case,
on the other hand, it embraces utilitarianism at the expense
of Kantian ethics and virtue ethics.
rule ignores the inherent conflict between competing ethical
theories. As examined above, accepting and merging different
ethical systems generates logical contradictions. Because
it is the law, it must be taught. But it can be taught only
in a foundations or systems ethics course. In any other
type of ethics course, it would serve only to confuse students.
many educators may support the steps taken by the TSBPA
to promote professional ethics, they may also have legitimate
concerns that the TSBPA has gone too far in dictating specific
ethics educational requirements for CPAs. Although the board
deserves praise for its intentions and actions, those actions
have created a general skepticism on the part of many Texas
accounting educators. The TSBPA should now take appropriate
steps toward clarifying and achieving its goals.
following recommendations would also apply to other state
boards that may be considering similar actions:
The TSBPA should work more freely and cooperatively with
Texas accounting faculty and other interested parties.
The board recently took the positive step of allowing
a member of the TSCPA’s Relations with Educational
Institutions Committee to become a member of the TSBPA’s
Qualifications Committee. While this TSCPA committee could
have been of invaluable assistance earlier, this is a
step in the right direction. Educators currently teaching
the approved courses would be another source of useful
input to the Qualifications Committee.
The TSBPA should be sensitive to the requirement that
universities must gain approval for new courses from the
Texas Higher Education Coordinating Board, and recognize
that curriculum revisions cannot happen quickly. Allowing
more time for changes to occur is necessary and will lead
to better solutions.
The board might wish to consider encouraging colleges
of business administration to relinquish a course to liberal
arts (as a prerequisite for an additional “business/accounting
ethics” course or thorough integration of ethics
in business/accounting courses), because the subject of
ethics goes well beyond sound business practices and business-dilemma
ethics. Ethics touches every facet of life and should
be taught as an “authentic” subject, and be
under the auspices of philosophy faculty. Without demanding
training, students are ill served in ethics, and flounder
around within business administration’s loosely
defined quandary ethics. In this regard, the board might
seek guidance from philosophy faculty, who would be well
prepared to provide input.
Perhaps most important, the TSBPA should immediately seek
input from and begin working closely with the American
Accounting Association’s (AAA) Professionalism and
Ethics Committee. The mission of this important committee
is to encourage and support accounting-ethics education
and scholarship in universities and, more broadly, to
set a tone for instilling a greater sense of professionalism
and ethical conduct in the practice and teaching of accounting.
A recent example of the efforts of this committee can
be seen in the February 2004 Issues in Accounting
Education, which was devoted to incorporating ethics
in university accounting programs. At a time when discussion
and experimentation about how to best incorporate professional
ethics in accounting programs should be encouraged, the
TSBPA should work with such groups to get more accounting
faculty involved in ethics education.
At least for now, the TSBPA should provide universities
latitude in offering and experimenting with the required
ethics course. One answer might be a requirement that
accounting students take the equivalent of six hours of
ethics. This would be consistent with the similar requirement
that future ethics instructors for Texas’ CPE ethics
courses have earned credit for six hours of ethics, as
well as with recently announced proposed changes in the
Uniform Accountancy Act.
Is Not Everything
of the future of TSBPA ethics requirements, it must be understood
that just because individuals take ethics courses does not
necessarily mean that the individuals will act ethically.
The fact that ethics courses do not create ethical people
should not be overlooked. The public should appreciate that
what ethics courses accomplish is to make clear to students
the intricacies of the many competing ethics systems. With
this powerful information, the future accountant, manager,
CFO, or CEO will be able to rationally “manage”
ethical conflict—an ability to be highly valued.
Note: In the May 2005 CPA Journal (“Improving
Professional Ethics,” page 9), Neal VanZante discussed
the Texas State Board of Public Accountancy (TSBPA) rules
about required CPE courses in ethics. The article’s
conclusion referred to a new TSBPA ethics education rule for
future Texas CPAs. A sidebar referred to a recent National
Association of State Board of Accountancy (NASBA) exposure
draft that would revise the Uniform Accountancy Act to require
six credit hours of ethics courses, or its equivalent, before
individuals are allowed to take the CPA examination.
R. VanZante, PhD, CPA, CMA, CFM, is a professor of
accounting, and Allen Francis Ketcham, PhD,
is a professor of management and marketing and director of
the Manning Center for Professional Ethics, both at Texas