ETHICAL OBLIGATIONS AND DECISION-MAKING IN ACCOUNTING, 6E- Chapter 1

Integrity according to Mintz

a fundamental trait of character that

enables a CPA to withstand client and competitive pressures that might otherwise lead to the subordination of judgment

Golden Rule

Do unto others as you would

wish them to do unto you

Telos

Greek for the attainment of good life

Eudaimonia

Greek for happiness

Arete

Greek for virtue

Ethikos

Greek word we derive ethics from

Ethos

Greek for character, ethikos is derived from this word

Moralis

Latin for customs, morals come from this word

Mores

Latin for manners, morals, or ethics

Moral

The Western tradition of ethics

moral philosophy

Gaa’s and Thorne’s definition of ethics

the fi eld of inquiry that concerns the actions of people in situations where these actions have effects on the welfare of both oneself and others

Morals

are concerned with principles of right and wrong; customs established by a group of individuals; represent what a person, group, or society believes people should do; expressed in the form of general rules and statements

Ethics

are related to right and wrong conduct of an individual in a particular situation; defines the character of the individual; guiding principles which help the individual or group decide what is good or bad; are abstract and need context to decide what is right or wrong

Moral principles

Always tell the truth

Do not cheat

Treat others fairly

Be kind to others

Ethical guiding principles

Truthfulness

Honesty

Integrity

Fairness

Respect

Loyalty

Values

basic and fundamental beliefs that govern our actions and represent the intention behind purposeful action; are the foundation of the choices we make

Examples of values in the Accounting Profession

independence, integrity, objectivity, professional skepticism, due care

Laws

are a collection of rules and regulations that come with penalties and punishments if not followed

Laws vs Ethics

a collection of rules and regulations vs a collection of societal orprofessional norms of behavior

Ethical legalism

holds that if an intended action is legal, it is, therefore ethical

Moral Point of View

ethical decision making requires that a decision maker be willing, at least sometimes, to take an action that may not be in his/her best interest

Virtues

attitudes, dispositions, or character traits that enable us to be and to actin ways that develop this potential; i.e. Honesty, courage, compassion, generosity, fi delity, integrity, fairness, self-control

The Josephson Institute of Ethics identifies Six Pillars of Character that provide a foundation to guide ethical decision making

trustworthiness, respect, responsibility, fairness, caring, and citizenship

Teleology

an act is considered morally right or acceptable if it produces some desired result such as pleasure, the realization of self-interest, fame, utility, wealth,

Consequentialism

Teleologists assess the moral worth of behavior by looking at its consequences, and thus moral philosophers often refer to these theories as this; a theory about outcomes, not motives or intentions

Two important teleological philosophies

egoism and utilitarianism

Egoism

defines right or acceptable behavior in terms of its consequences for the individual

Egoists

they believe that they should make decisions that maximize their own self-interest, which is defined differently by each individual

Ethical egoism

claims that the promotion of one’s own good is in accordance with morality; it may or may not be moral to never promote it based on the version used; there are conditions in which the avoidance of personal interest may be a moral action

Ethical egoist

ranks as most important duties that bring the highest payoff to oneself; the conclusion is what brings the highest payoff to me will not, necessarily, bring the highest payoff to those helped

Enlightened egoism

emphasizes more of a direct action tobring about the best interests of society

Enlightened egoists

take a long-range perspective and allow for the well-being of others because they help achieve some ultimate goal for the decision maker, although their own self-interest remains paramount; i.e. may abide by professional codes of ethics for advancement within the firm

Rational egoism

also called rational selfishness; claims the promotion of one’s own interest is always in accordance with reason; the principle that an action is rational if and only if it maximizes one’s self-interest; i.e. Ayn Rand human survival

Utilitarianism

is concerned with consequences and seeks to make decisions that bring about the greatest good for the greatest number of people affected by a decision

Utilitarians

Identify the various courses of action that they could perform

they determine the utility of the consequences of all possible alternatives

then select the one that results in the greatest net benefit

requires that people look beyond self-interest to consider impartially the interest of all persons affected by their actions

Rule-utilitarians

claim that we must choose the action that conforms to the general rule that would have the best consequences; actions are justified by appealing to rules