The overemphasis within accounting ethics education on developing ethical reasoning skills (the “why”) to analyze dilemmas may be failing to engage students in the action process (the “how”) because of the clinical nature of moral reasoning methods, such as utilitarianism, Kantian rights, and justice. What is needed is a hands-on approach that builds moral strength and leads to carrying through the analysis with ethical action. Accounting ethics education must evolve to focus more attention on developing skills to act on one’s values when ethical conflicts or dilemmas exist in the workplace.

Goals of Accounting Ethics Education

Almost 30 years have passed since Steven Loeb described what the goals of accounting ethics education should be (“Teaching Students Accounting Ethics: Some Crucial Issues,” Issues in Accounting Education, vol. 3, 1988, pp. 316–329):

  • Relate accounting education to moral issues.
  • Recognize issues in accounting that have ethical implications.
  • Develop “a sense of moral obligation” or responsibility.
  • Develop the abilities needed to deal with ethical conflicts or dilemmas.
  • Learn to deal with the uncertainties of the accounting profession.
  • “Set the stage for” a change in ethical behavior.
  • Appreciate and understand the history and composition of all aspects of accounting ethics and their relationship to the general field of ethics.

More recently, Tara Shawver studied the effectiveness of a professional responsibility capstone course in meeting Loeb’s goals (“An Exploratory Study Assessing the Effectiveness of a Professional Responsibility Course,” Global Perspectives on Accounting Education, vol. 3, 2006, pp. 49–66, Shawver tested whether case analyses, research papers, class discussions, and exams teach accounting students to relate to the goals by using James Rest’s Defining Issues Test, which assesses the effectiveness of these ethics interventions by posing eight hypothetical ethical challenges. She found that “each course component is an integral part of an accounting professional responsibility course and in some way contributed to the effectiveness of teaching accounting ethics.” Interestingly, role-playing exercises were omitted, despite their simulation of real world occurrences in accounting.

Accounting students typically know the right thing to do, but when faced with ethical dilemmas they have difficulty actually doing it. Students are exposed to philosophical reasoning methods almost from the first day of class. Mary Gentile coined the phrase “ethics fatigue” to describe the extent of time devoted to teaching theories of ethical reasoning and analyzing ethical dilemmas. She suggests that “some students find such approaches intellectually engaging: others find them tedious and irrelevant. Either way, sometimes all they learn is how to frame the case to justify virtually any position, no matter how cynical or self-serving” (Educating for Values-Driven Leadership, Business Expert Press, 2013).

Giving Voice to Values

In this author’s opinion, the goals of accounting ethics education must be broadened to better represent the desired end result. In particular, accounting students should be taught techniques to act on what they know is right in the face of counter-vailing pressures. Internal accountants and auditors, as well as external auditors, face these pressures when top management (or clients) want to put the best possible face on the financial statements without due regard for financial reporting standards. The resulting pressures challenge accounting professionals to voice their opinions in a way that alters the outcome. Gentile calls this “Giving Voice to Values” (GVV) (Giving Voice to Values: How to Speak Your Mind When You Know What’s Right, Yale University Press, 2010).

Traditional ethics education focuses on the why, but not the how. It limits the discussion to the following issues:

  • Who are the stakeholders potentially affected by my decisions and actions?
  • What do I owe to them in my role as an accountant or auditor (professional obligations)?
  • What are the ethical issues in this situation (ethical reasoning)?
  • Based on my analysis, what is the most ethical decision to make (ethical decision making)?

Accounting students typically know the right thing to do, but when faced with ethical dilemmas they have difficulty actually doing it.

This analysis falls short because it fails to consider how best to implement ethical decisions by voicing and acting on one’s values. In contrast, the GVV technique provides a pathway to values-driven decision making by considering the following:

  • Whom should I go to for support?
  • What should I say to convince them that my position is the most ethical one?
  • How will I respond to the reasons and rationalizations I am likely to hear from my superiors? Examples include—
    • It is standard practice to follow orders/be a team player.
    • A loyalty obligation exists to management and the company (or firm).
    • The item in question is not material.
    • This is a one-time request.
  • What else do I need to do to ensure my position is heard and acted on?

This last step might entail approaching the audit committee for guidance or going to the external auditors and, perhaps, the SEC, as discussed below.

Serving the Public Interest

As part of developing a sense of moral obligation or responsibility, accounting students should be taught about the public interest obligation of accounting professionals and the expectations for ethical leadership. In return for the monopoly granted to the profession under the Securities and Exchange Act of 1934, CPAs are expected to protect the public interest by acting as independent watchdogs over publicly traded corporations. Auditors serve as gatekeepers by protecting the interests of investors and creditors through monitoring management’s behavior and providing an independent opinion based on the accuracy and reliability of the financial statements. The importance of driving home the public interest obligation of accounting professionals is consistent with their moral obligations and is the basis for the trust society places in them.

Much has occurred in the accounting profession since Loeb identified the goals of accounting ethics education, including expanded ethical obligations to avoid subordinating one’s judgment to an employer when differences of opinion exist on financial statement matters. These are detailed in the Revised AICPA Code of Professional Conduct. In particular, steps must be taken to deal with ethical conflicts that arise (section 1.000.020) and to discuss matters of concern within the entity to ensure every effort has been made to avoid compromising one’s integrity and objectivity (section 1.130.020)—two values that, along with independence, form the foundation for the rules of conduct. Voicing and acting on those values is essential to carrying out one’s professional responsibilities.

Ethical actions make a difference only after the accounting professional finds a way to change the hearts and minds of others by effectively voicing his values in the context of his professional responsibilities.

Accounting professionals must make difficult decisions when pressure is exerted to go along with financial statement fraud. It takes courage to stand up for what is right and maintain one’s integrity. A case in point is Cynthia Cooper, who, as vice president of internal audit at WorldCom, knew how to effectively voice and act on her values. Another is Tony Menendez, who fought a nine-year battle with Halliburton to change its improper accounting and turned whistleblower under the Sarbanes-Oxley Act of 2002.

Ethical Leadership

The moral obligations of accounting professionals are enhanced by ethical leadership and values-based decision making. Ethical leadership entails acting on one’s beliefs in a manner consistent with public interest obligations. A case in point is whistleblowing, a moral act when motivated by good intentions.

The Dodd-Frank Financial Reform Act provides a blueprint for reporting wrongdoing to the SEC. First, accounting professionals must follow the prescribed process by going through the internal compliance reporting system as described in section 1.130.020 of the AICPA Code of Professional Conduct. Once all steps have been taken, consideration should be given to the following before blowing the whistle:

  • Is disclosure to the SEC needed to prevent “substantial injury” to the financial interest of an entity or its investors?
  • Does the whistleblower “reasonably believe” the entity is impeding investigation of the misconduct (e.g., destroying documents or improperly influencing witnesses)?
  • Has the whistleblower first reported the violation internally and have at least 120 days have passed with no action?

The goals of accounting ethics education have failed to adequately consider organizational constraints and pressures that may necessitate whistleblowing when all else fails. Acting morally is not an easy step when persistent pressures exist to compromise one’s integrity and to place other interests above the public interest. As future accounting professionals, students need to learn how to act on professional and personal values to effectively counteract those pressures. Developing these skills should be a part of educational interventions.

Revised Goals of Accounting Ethics Education

In this author’s opinion, Loeb’s goals do not go far enough. Ethical decision making is a necessary but insufficient condition to ensure ethical actions are taken. Ethical actions make a difference only after the accounting professional finds a way to change the hearts and minds of others by effectively voicing his values in the context of his professional responsibilities. GVV can help in this regard.

The revised goals of accounting ethics education should be as follows:

  • Relate accounting education to moral issues.
  • Recognize issues in accounting that have ethical implications.
  • Cultivate a sense of moral obligation to the public interest.
  • Develop moral reasoning skills to analyze ethical issues and deal with conflicts or dilemmas.
  • Develop the ability to voice one’s values to counteract reasons and rationalizations.
  • Develop leadership skills to carry out ethical decisions with ethical action.
  • Reflect on one’s actions.

The Exhibit depicts this process. It starts with a discussion of moral issues; issues in accounting with ethical implications include the accuracy and reliability of financial statements and audits of those statements. These issues should be discussed in the context of serving the public interest, a moral obligation for accounting professionals. Moral reasoning skills should be developed to analyze ethical issues through classroom discussions of conflicts or dilemmas using short case studies. The GVV technique should be taught through role-playing exercises to give students a sense of what it takes to express one’s beliefs, find supporters in the organization, and counteract the views of detractors. The experience gained through GVV exercises provides a hands-on approach to accounting ethics education that simulates workplace situations. By following the steps in this model, leadership skills are developed that can help accounting professionals effectively deal with workplace pressures by acting on professional values such as objectivity and integrity. Reflection on the results of one’s decisions provides a feedback loop to sharpen one’s moral reasoning skills and better develop the capacity for values-based action.


Revised Goals of Accounting Ethics Education

Implications for Accounting Educators

Accounting education has been limited, in the author’s opinion, by its overemphasis on developing the intellectual capacities to reason out ethical dilemmas without paying attention to the emotional side of ethical decision making. New methods need to be developed to cultivate the skills necessary to take the high road and act on one’s values. Techniques such as GVV improve after a decision has been made and provide a foundation for effectuating change. As Paul Griseri points out, “effective business ethics teaching should involve a combination of … two aspects of ethical situations—their emotional and intellectual elements” (“Emotion and Cognition in Business Ethics Teaching,” Teaching Business Ethics, August 2002, pp. 371–391,

Accounting educators need to look for new ways to engage students in the learning process and encourage them to be steadfast in their resolve to do the right thing. For example, the financial statement frauds encountered by Betty Vinson at WorldCom and several CFOs at HealthSouth occurred and persisted because the accounting professionals involved did not know how to convince others of the right thing to do. They were instructed to be loyal to top management. They hoped against hope that the pressure would end, so they rationalized their indifference as a one-time event. In retrospect, they did not have the tools necessary to voice and act on their values. Would a more values-based approach to ethics education have made a difference? No one can know for sure, but developing ethical leaders in the accounting profession who will act with integrity influenced solely by the public interest and not subordinate judgment to others, regardless of the costs, is a step in the right direction.

Steven Mintz, PhD is professor emeritus of accounting at California Polytechnic State University, San Luis Obispo, Calif.