Accountants have a significant responsibility to the public. This responsibility exists because outside shareholders, creditors, employees, and others rely on financial statements in making various business decisions. Business organizations employ internal accountants to prepare financial statements. These statements are then audited by a firm of independent CPAs. Both the internal accountants and the external auditors have a responsibility to perform their tasks with integrity and due care.
Various accounting organizations promote high standards of ethical behavior. One example is the American Institute of Certified Public Accountants (AICPA), which is a professional organization that serves CPAs who work for public accounting firms or other organizations (such as corporations). Its Code of Professional Conduct emphasizes the obligation of CPAs to serve the public interest, and their responsibility to act with integrity, objectivity, independence, and due professional care.
In a given situation, formalized codes of ethics can often help in deciding the proper course of action. However, some situations are sufficiently complex that the codes do not provide clear guidance. Fortunately, ethicists have developed frameworks for examining ambiguous ethical situations. Two of these frameworks, utilitarianism and deontology, are briefly described next.
Utilitarianism judges the moral correctness of an act based solely on its consequences. According to this perspective, the act that should be taken is the one that maximizes overall favorable consequences (net of unfavorable ones). Consequences not only to the actor but to all parties should be considered.
The proponents of deontology assert that the consequences of an act do not exclusively dictate moral correctness. They believe that the underlying nature of the act itself influences its correctness. However, within deontology are two different perspectives. Some deontologists feel that the nature of an act is the only thing to be considered in assessing its moral correctness. For example, they believe that killing and lying are morally wrong under any circumstances. Other deontologists assert that the nature of the act and its consequences in a particular situation should both be considered.
To illustrate these approaches, imagine you are in the process of filling out an expense report after having just completed a business trip. Your employer does not reimburse child-care costs while away from home, yet most of your colleagues (including your immediate supervisor) feel that child care is a legitimate expense. They recoup this expenditure by overstating the cost of meals (most restaurants provide you with a blank receipt). Is it ethically correct for you to overstate your meal cost? Many deontologists would assert that the act of lying is ethically wrong, and that falsifying an expense report is the equivalent of lying. Utilitarians, on the other hand, would examine the consequences of the action, and it is not clear that their analysis would reach the same conclusion. An assessment would need to be made of how you versus the shareholders would be affected by the falsification.
To develop a strong personal code of ethics, each of us must understand how we think about ethical situations. We suggest that you consider how utilitarianism and deontology can be used to analyze ethical situations, and that you assess which of those approaches, if either, is consistent with your own moral framework.