and Ethics for CPAs in a Changing World
J. Hall C. Thorp
2005 - Enron, MCI-WorldCom, Tyco: these and many other familiar
names have been tainted by allegations of ethical misconduct.
CPAs are held to very high standards of ethics, and hear
various definitions of values. What do personal values have
to do with ethics? How do they affect accountancy? Values
and ethics are often used synonymously and simultaneously,
but what do they have in common, and how do they differ?
are core principles that define for individuals what are
ideal personal standards. Values are in hierarchies that
are unique to each individual and culture. As a result,
values are personal standards that help people determine
the relative value, worth, and importance of standards to
values have to do with ideals, we often develop values from
something outside of ourselves. For example, religious standards
or cultural ideals often define for individuals what a desirable
state is. From such ideals, mankind has developed values
to reconcile the variance between an ideal state and a current
condition. Differing ideals explain why values are in unique
hierarchies across various cultures.
word “ethics” is derived from the ancient Greek
“ethos,” meaning moral character. A related
term, “mores,” from which the word “moral”
is derived, means social guidelines. Ethics, however, is
the implementation of what a group’s value system
defines as good or bad, and the behavior necessary to fulfill
ideal states. When an individual’s conduct is consistent
with her group’s values, then she has acted ethically.
Being ethical is not about acting out of one’s own
values. The values of a group to which the individual belongs
define whether she has acted ethically. As such, ethics
arise out of societal values.
to David Malloy, the fundamental question of what individuals
require from themselves in ethical dilemmas is “What
should I do?” Malloy further states, “While
ethics tells us what we ought to do, it does not explain
why we do it. Why we behave … is based upon what we
researcher Ronald Scott emphasizes that ethics is typically
discussed in three areas of investigation: metaethics, normative
ethics, and applied ethics. Each area has a unique perspective
on ethical applications, and each discipline assumes that
a consistent and fair application of authority is possible,
and that an individual’s judgment is required. Scott
provides a comparison of man versus machine by placing both
in the midst of an ethical dilemma. The results reveal that
robots, when placed in changing circumstances, can never
be trained to act in an ethical manner. Even robots with
artificial intelligence have no values.
and ethics are similar in that they complement each other.
Because ethical behavior flows out of values, when a person’s
ethical behavior is rewarded externally or by internal satisfaction,
the values of that person are confirmed. Such confirmation
further solidifies the value as a desired state, in turn
further compounding the relative hierarchy of that particular
value. Ethical behavior is then solidified as a given value’s
hierarchical position is confirmed or elevated.
Kohlberg’s research of values and ethics development
proposes that values and ethics are developed from a person’s
interaction with the environment. He further proposes that
people continually construct their own interpretations of
values because their interaction with a changing environment
results in changes over time. This
is an important thing for CPAs to remember: As they are
exposed to a work environment, they must be aware that they
are bringing in their value system, while simultaneously
exposing themselves to a different, perhaps conflicting,
and ethics are dissimilar in that ethics has to do with
behavior and values have to do with beliefs. Ethics are
public while values are private; ethics are seen by others,
while values are only perceived by others based upon a person’s
ethics. Values are the cause, while ethics are the effect.
In this manner, values and ethics are very distinct from
each other. A person’s ethical behavior may actually
be in conflict with his values, creating what psychologists
call cognitive dissonance. While this incongruence results
in discomfort to the individual, others witnessing unethical
behavior may conclude that the behavior is reflective of
the person’s values.
between values and ethics is important for CPAs because
merely trying to influence ethical behavior in others, without
considering the importance of consistency between values
and ethics, may produce results inconsistent with the cause.
Eventually, values and ethics become aligned again, with
values creating good or bad ethical behavior. Even when
an individual’s unethical behavior stops, one must
be careful to realize that the underlying values of the
person may or may not have changed. If the underlying values
have not changed, then the unethical behavior is likely
to repeat itself.
values can change over time, and values provide the basis
for ethical behavior, it is clear that achieving and sustaining
ethical behavior can result only when consistency between
values and ethics is developed. CPAs facing ethical dilemmas
should be very aware of the important relationship between
values and ethics, and strive for continual improvement.
Hall C. Thorp, a partner of Trinity Research, LLC,
a working-capital consulting firm with offices in Raleigh
and Rocky Mount, N.C., is also a doctoral student at Regent
University, Virginia Beach, Va.