Improving Ethical Education in the Accounting Program: A Conceptual Course

Abstract

INTRODUCTION The role of accountants is critical to society. Accountants serve as financial reporters and intermediaries in the capital markets and owe their primary obligation to the public interest. The information they provide is crucial in aiding managers, investors and others in making critical economic decisions. Accordingly, ethical improprieties by accountants can be detrimental to society, resulting in distrust by the public and disruption of efficient capital market operations. The numerous incidents of unethical behavior in the accounting profession stress the need for increased ethics in accounting education. Students are graduating with accounting degrees who are not familiar with professional codes of ethics, and who do not have the ability to detect nor address ethical accounting dilemmas. Lam & Samson (2005) noted that cleverness and creativity have replaced the traditional honesty and integrity which have characterized accountants of the past. Employers are no longer satisfied with just hiring competent accountants, but are looking for those who know the importance of, and are equipped with skills necessary to make ethical decisions. Therefore, in order for professional accountants to fulfill their role in society, they must not only have intellectual and technical expertise but also moral expertise (Mintz, 1995). However, obtaining moral expertise may be a challenge since accounting curricula may be focusing mostly on the technical aspect of the profession and pushing instruction in ethical behavior by the wayside (Madison, 2002). In the past, a common argument for not including an accounting ethics course involved not having room in an already crammed accounting curriculum. However, having adequate room in the curriculum is no longer a valid argument with the adoption of the 150-hour rule by all but four states. The 150-hour rule provides an opportunity to improve weaknesses in accounting education and better prepare students for careers in the accounting profession. In an attempt to restore the reputation of the accounting profession, the National Association of State Boards of Accountancy (NASBA) proposed that CPA candidates be required to not only take a business ethics course but also an accounting ethics course. However, as a result of numerous responses against mandating a separate ethics accounting course, this proposal was not adopted. While the AACSB only requires that ethics be incorporated into accounting courses, students and administrators agree that there should be more ethics in the accounting curriculum. Kerr & Smith (1995) reported that accounting students are seeking ethical and moral direction and that a lack of ethics can be damaging to the accounting profession and society. The numerous accounting scandals in the early 2000s are evidence of this prophecy and the need for increased ethics in the accounting curriculum. The current mortgage and financial meltdown may eventually also be attributed to accounting and ethical failures. Bernardi and Bean's (2006) survey of advanced accounting students reported that the accounting students were in favor of NASBA's proposal for a separate accounting ethics course by a two-to-one ratio. Furthermore, a survey of 122 accounting administrators from the largest accounting programs in North America reveals that while ethics education has increased substantially in the accounting curriculum over the last twenty years, department chairs would like to see more time allotted to ethics (Madison & Schmidt, 2006). The state of Texas has taken the lead in recognizing the importance and necessity of ethics in the accounting profession. Effective July 1, 2005, those applying to take the CPA exam in Texas must have completed a pre-approved 3-hour accounting or business ethics course. The state of Maryland has also more recently adopted an ethics requirement. Effective, January 1, 2008, those applying to take the CPA exam in Maryland must have completed a 3-hour course in business or accounting ethics, the philosophy of ethics, or a course that examines the framework of ethical decision-making. …

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