Welcome to ACIS 5024

Ethical Issues in Accounting

Course Organization & Purpose

• Discussion Based; not Lecture Based

• Focuses on the Application of Philosophical Ethics to the Accounting and Business Environments; NOT Professional (CYA) Ethics

The Nurnberg Funnel

The Lecture(The Sage on the Stage)

PowerPoint Lectures

Large Lecture Sections

Students in Lecture

Students in PowerPoint Lectures

No Nurnberg Funnel

Introduction to Concept Mapping Introduction to Concept Mapping

D.P. Tegarden

all materials made available for educational purposes only not to be used for commercial purposes without written permission

Why Concept Mapping?

Rote Learning (Memorization)vs.

Meaningful Learning

Meaningful Learning

• Learning occurs when new knowledge is added to an existing knowledge structure

• Knowledge is constructed; NOT discovered• Three requirements

– Relevant prior knowledge– Meaningful material– Learner must choose to learn meaningfully

What is a Concept Map?

• Tool for organizing and representing knowledge• Directed Graph-based Knowledge Representation

– Concepts• a perceived regularity in events or objects, or records of events or

objects, designated by a label

– Propositions (Linking Words)• statements about some object or event in the universe, either

naturally occurring or constructed• contain two or more concepts connected with other words to

form a sentence

ConceptMaps

Knowledge

Concepts PropositionsContext

Dependent

Teaching

Learning

To Aid

IS

IS

IS

Represent

HierarchicallyStructured

Are

Combineto Form

Crosslinks

MayBe

Labeled

Creativity

Interrelationships

Aids

Neededto Show

ToShow

Are

PerceivedRegularities

Are

Is a Basis For

Events

Objects

WordsSymbols

Different MapSegments

In

With

In

A concept map showing key ideas and principles exhibited in a good concept map.Based on Figure 3.9 from Joseph D. Novak, Learning, Creating, and UsingKnowledge: Concept MapsTM as Facilitative Tools in Schools and Corporations,Mahwah, NJ: Lawrence Erlbaum Associates, Publishers, 1998, p. 32

A Concept map showing that our meanings are a product of our idiosyncratic sequence ofexperiences. Based on Figure 4.1 from Joseph D. Novak, Learning, Creating, and UsingKnowledge: Concept MapsTM as Facilitative Tools in Schools and Corporations, Mahwah,NJ: Lawrence Erlbaum Associates, Publishers, 1998, p. 36.

Meanings

Our CognitiveFrameworks

Our Actions Our Emotions

Concepts

Propositions

Personal Idiosyncratic

Experiences

Derive From

Are

From Our

Related To

Combinedto Form

Comprisedof

Accounting

FinancialInformation

System

FinancialStatements

EarningPower &

Solvency ofthe Firm

Stock & BondMarkets

Investors Creditors Managers Society

ResourceAllocations

Loans Shouldbe Made

ManageOperations

Public Needs

Dividends andCapital Gains

Interest andRepayment of

Principle

PerformanceEvaluations

Investors',Creditors' &Managers'Decisions

CompensationContracts

Is A

WhichProduces

Showing That Impact

WhichHelps

Determine Determine If To Evaluate

In ReturnFor

In ReturnFor

LeadingTo

Impacting

WhichInfluence

That MayInfluence

A Concept map that could be used in an introductoryaccounting course. Based on Figure 3 from Bruce A.Leauby and Paul Brazina, Concept Mapping: PotentialUses in Accounting Education, Journal of AccountingEducation, Vol. 16, No. 1, pp. 123-138, 1998.

Given all of the Accounting Scandals

Is Ethical Accounting An Oxymoron?

The Ethics of a Profession, 1931(A.P. Richardson)

This accountancy is a noble profession, and most of those engage in it are good men. Indeed good preponderates everywhere – overwhelmingly in accountancy. After all the argument and disputation, after all the theory and doctrine, after all the study and analysis, the conclusion of the whole matter is that, that a professional man does not live unto himself alone, and what he does carries an influence far and wide. Every unworthy deed is a power for evil. Every good deed helps the world.

Throughout his entire professional life the accountant has to bear in mind the general nature of his relationship with all clients, and many a question of ethics will engage his attention. It is quite impossible to foresee all the intricate problems which may arise. The best that can be done is to describe as clearly as may be the fundamental principles which leaders of the profession think should underlie all practice.

The Ethics of a Profession, 1931(A.P. Richardson)

Robert H. Montgomery

Accountants and the accountancy profession exist as a means of public service; the distinction which separates a profession for a mere means of livelihood is that the profession is accountable to standards of the public interest, and beyond the compensation paid by clients.

Robert H. Montgomery

In order to tell the truth there must be some detachment from one’s immediate environment; from the opinions of neighbors; from ambition, money, power, fame, comfort, security and ease. Have we the courage to proclaim the truth, or do we shrink from the struggle?

Robert H. Montgomery

The Lawyer’s duty is first of all to his client, and that duty frequently compels him to avail himself of technicalities and other means of enabling that client to evade the Law and its penalties; but the Public Accountant has only one duty to his client and to the Public, and that is to disclose to him or for him ‘the truth, the whole truth, and nothing but the truth,’ so far as his abilities and special training to that end enable him to ascertain it.

Harvey Kapnick

If the accounting profession is to fulfill its public interest responsibilities, its own credibility must be restored. This is essential not only for the survival of the profession, but also for our free enterprise system itself.

Rules are not enough!!!(AICPA, 1989)

1. Rules give only necessary, not sufficient conditions.

2. Rules contain terms that require interpretation.3. We must appeal to idealizations in order to apply

a rule.4. Rules cannot supply the motivation for following

a rule.5. Rules on their own are unmanageable.6. Due diligence is needed for checking that we

have indeed followed a rule.

Last Thought

Reading Assignments

• Ethics R U: Finding Your Moral Compass– Due Thursday

• Saving Adam Smith– Due 9/3

Reminder: Email concept map to me before class and bring a copy with you to class.