Embracing Ethics and Morality

An Analytic Essay for the Accounting Profession

William Stephens, DBA, and Carol A. Vance, CPA, and Loyd S. Pettegrew, PhD

In this era after the financial and accounting failures of Enron, WorldCom, AOL, Global Crossing, Tyco, Lehman Brothers, Washington Mutual, and AIG, the discusion concerning the root causes of such failures must be redoubled—and the accounting profession stands at the center of this discourse. Were the failures due to incompetent accounting and auditing practices? Did the profession provide inadequate accounting and auditing rules for a complex business environment? Was there too much emphasis on short-term results and performance rewards at the expense of sound accounting principles? Could the failures have resulted from the profession's reluctance to take responsibility for detecting fraud? Or was it simply what baseball philosopher Yogi Berra once said when asked to explain his team's lack of success, “We made too many wrong mistakes” (Yogi—It Ain't Over, McGraw-Hill, 1989)? In this article, the authors join analysts like Paul F. Williams and submit that the underlying explanation for these accounting failures was a moral and ethical problem and that to ignore this underlying issue is to seriously miss the point (“You Reap What You Sow: The Ethical Discourse of Professional Accounting,” Critical Perspectives on Accounting, vol. 5, no. 1, pp. 995-1001, 2004). If the accounting profession is willing to settle for a rules-based approach of legislative fixes, without looking at a failed moral and ethical underpinning, any efforts to regain a preeminent professional status will fail. The authors offer a prescription that the accounting profession can use to regain its moral foundation and reestablish ethical practices.