In Brief

Accounting educators have used ethical decision-making models to teach ethics to accounting students for many years. The traditional models rely on prescriptive reasoning to analyze alternative courses of action and select the best choice, but these models fail to adequately consider organizational variables, including internal policies and practices, the code of ethics, and the role of supporters in the organization who can help strengthen a position. The author proposes a decision-making model that combines the Ethics and Compliance Initiative’s PLUS model, which uses ethics filters to facilitate analysis and incorporates elements of organizational culture, and the virtue considerations of James Rest’s Model of Moral Behavior, which define ethical character, an important factor for accounting professionals, who must serve the public interest.

Accounting educators typically use an ethical decision-making model to teach ethics to accounting students. These models provide a systematic way to think through ethical issues, identify alternative courses of action, evaluate the ethics of each alternative, and decide what to do.

Traditionally, the decision-making models used to teach ethics to accounting students have focused on applying philosophical reasoning methods to the analysis of what should be done. These models tend to downplay or ignore the importance of organizational culture in the decision-making process, including internal policies and practices, the code of ethics, and individuals in the organization who might help resolve the conflict.

Given the added focus on organizational ethics since passage of the Sarbanes-Oxley Act of 2002 (SOX) and the profession’s recognition of the importance of the control environment, accounting educators should look for new ways to incorporate organizational factors to make the ethics curriculum more relevant. Moreover, the AICPA Code of Professional Conduct now addresses ethical conflicts and describes the process to resolve them, including steps internal to an organization.

Ethical conflicts are specifically recognized in the AICPA code (section 1.000.020) as potential obstacles to following an appropriate course of action due to internal or external pressures and conflicts in applying relevant professional standards or legal standards. The following process is outlined to deal with ethical conflicts: 1) consider relevant facts and circumstances, including applicable rules, laws or regulations; 2) identify the ethical issues involved; and 3) evaluate established internal procedures. CPAs are also told to consider consulting with appropriate persons within their firm or the organization that employs them before pursuing a course of action.

It is time for accounting educators to rethink the scope of decision-making models used to teach accounting ethics. If ethical issues that arise in the context of organizational culture are not dealt with properly, then it is less likely ethical conflicts will be resolved. Consideration of the internal systems within organizations is missing from traditional decision-making models and should be given a more prominent role.

Ethical Decision-Making Models

An ethical decision-making model first developed by Bill May at the University of Southern California and included in his book Ethics in the Accounting Curriculum: Cases & Readings (American Accounting Association, 1990) served as a resource for the “Eight-Step Method of Ethical Decision Making” developed by Harold Langenderfer and Joanne Rockness (“Integrating Ethics into the Accounting Curriculum: Issues, Problems, and Solutions,” Issues in Accounting Education, March 1989, This model is summarized in Exhibit 1.

Exhibit 1

Eight-Step Method of Ethical Decision Making

Steps; Descriptive Criteria Identify the facts; Define the scope of the problem. Identify the ethical issues and the stakeholders involved; List the significant stakeholders and the ways in which they could be harmed. Identify the principles, rules, and values related to the situation; Consider how these guidelines and norms influence the individual, the company, the profession, and society in general. Identify alternative courses of action; List the available alternatives of what can and cannot be done. Compare values and alternatives; Determine whether one principle, or value, or a combination lays out a clear course of action. Evaluate the consequences of each possible course of action; Identify the possible outcomes of alternatives, both the positive and negative consequences. If appropriate, discuss the alternatives with a trusted person to help gain greater perspective regarding the alternatives; N/A Make a decision; Balance the consequences against principles and values and select the best alternative.

One shortcoming of this model is that it introduces an organizational perspective at the end, almost as an afterthought, and no guidance is given as to what should be included in the organizational analysis, other than to seek out a trusted person. Discussing an ethical matter with a trusted advisor just before decision making limits its usefulness. Imagine, for example, that an organization pressures an accountant to overlook financial wrongdoing. It seems logical to find out what can and cannot be done right away and determine the key individuals in the organization to ensure that organizational culture is adequately considered in crafting a solution to the ethical problem.

Linda Thorne took a different approach in developing an ethical decision-making model. Thorne’s model relies on characteristics of ethical behavior to decide on a course of action, giving the model a distinctively “virtue ethics” feel to it. Her model integrates James Rest’s Four-Component Model of Moral Behavior with the foundation of virtue ethics theory (James R. Rest, “Morality,” Handbook of Child Psychology: Cognitive Development, vol. 3, John Wiley and Sons, 1983). Thorne’s model is described in Exhibit 2 (“The Role of Virtue in Auditors’ Ethical Decision Making: An Integration of Cognitive Developmental and Virtue Ethics Perspectives,” Research on Accounting Ethics, vol. 4, JAI Press, 1998).

Exhibit 2

Thorne’s Model of Ethical Decision Making

The following explains the key elements of Rest’s model and how it links to ethical decision-making as described by Thorne:

  • Ethical sensitivity: Perceiving the ethical issues, problem or dilemma.
  • Prescriptive reasoning: Using ethical judgment to reason through the ethics of alternative courses of action.
  • Ethical motivation: Having the intention to make the right choice after deciding on the ethical response to the dilemma.
  • Ethical behavior: Summoning the courage to make the right choice even in the face of countervailing pressures.

The benefit of using Thorne’s model is its explicit recognition of the role of virtue in ethical decision making. This is important because if an accountant or auditor lacks integrity—a basic virtue—then it is less likely the ethical choice will be made and implemented, because internal pressures overwhelm ethical action and compromise professional judgment.

The drawback of Thorne’s model is that it does not recognize the important role that organizational systems play in carrying out the ethical choice with ethical action. Decision makers should be aware of those within the organization who can help to counteract unethical pressures and strengthen their position early on so they can contribute their knowledge to each step of the ethical analysis.

Ethical Reasoning

Langenderfer and Rockness incorporate principles, rules, and values into their decision-making process, while Thorne takes a more targeted view by relying on prescriptive reasoning to determine what ought and ought not be done. A detailed discussion of these ethical reasoning methods is beyond the scope of this article, but a brief overview is warranted to understand the role of ethical judgment in decision making and how organizational variables fit in.


Teleological ethics relies on an analysis of the outcomes or consequences of each action; the best choice is that which maximizes the benefits while minimizing the harms of alternative actions. Langenderfer and Rockness rely on this consequence-based approach in evaluating the alternatives. One problem with this model is that it is biased toward evaluating outcomes, and does not provide explicit recognition of virtue or the moral duty of decision makers to respect the rights of those affected by the decision. Thorne’s model overcomes this shortcoming by relying on all forms of prescriptive reasoning.


Deontological ethics, or duty ethics, bases moral decision making on foundational principles of obligation. A major approach is rights theory, under which each individual has certain rights that should be respected; similarly, decision makers have an obligation to satisfy those rights. The most important application of deontological ethics is based on the categorical imperative. According to this perspective, ethical actions occur when the reasons for acting are those that would be universally acceptable; in other words, the actor would want others to resolve ethical conflicts using the same or similar approach if they face a similar situation. Deontology is important for accounting professionals, who are expected to exercise objective judgment in deciding the best course of action.

Virtue ethics.

Unlike teleological and deontological ethics, which rely on prescriptive reasoning, virtue ethics deals with developing specific traits of character that are part of the pursuit of human excellence. These include moral virtues that govern behavior (e.g., courage, honor, justice, self-control, truthfulness) and intellectual virtues that deal with thought processes. Moral virtues are acquired through understanding, good judgment, reasoning abilities, and practical wisdom. Intellectual virtues are gained by deliberating about what can and cannot be done.

Ethical reasoning methods are an important part of ethical decision making, but they are insufficient to ensure ethical choices are made, as the organization may not support the ethical decision. Internal systems should be evaluated throughout the decision-making process. For example, an organization that emphasizes “an “end justifies the means” approach to decision making, a drawback of consequence-based reasoning, might undervalue the role of internal systems and place greater emphasis on achieving a specific goal. Imagine the goal is to maximize reported profits, regardless of how that occurs. Knowing that the systems do not support ethical decision making early on might help resolve the conflict.

Accounting professionals have a duty to advance the best interests of investors and creditors, which is why deontology is an important ethical reasoning method. The AICPA Code of Professional Conduct calls for CPAs to act in the public interest by making independent judgments, being objective, and acting with integrity. These principles of professional behavior are virtuous traits of character for accounting professionals that are implemented by being truthful, fair-minded, and courageous (moral virtues), as well as being able to deliberate carefully about what can, should, and should not be done (intellectual virtues). These methods of ethical reasoning should be included in ethical decision-making models.

Following on Thorne’s model, the author and Roselyn Morris developed an Integrated Ethical Decision-Making Process that incorporates the accounting dimension explicitly by examining professional standards and SEC regulations. It also includes an organizational perspective in the moral development and virtue stages. Organizational considerations include: 1) identifying the effects of the dilemma on the employees, management, and the organization; 2) evaluating whether legal issues exist and their effects on the organization; and 3) finding supporters in the organization to strengthen the position and help to counteract opposing points of view. The process is described in Exhibit 3 (Mintz and Morris, Ethical Obligations and Decision Making in Accounting: Text and Cases, 4th Edition, McGraw-Hill Education, 2017, pp. 76–79).

Exhibit 3

Mintz and Morris’s Integrated Ethical Decision-Making Process

Components; Descriptive Criteria; Examples/Considerations Identification of the dilemma; Identify the ethical and professional issues; GAAP, auditing standards, AIPCA code, IMA ethical standards Identify the stakeholders; Investors, creditors, employees, management, the organization Ethical judgment; Identify alternatives; What can and cannot be done Determine whether legal issues exist; Laws, SEC regulations What steps can be taken to resolve the conflict?; Consider professional standards Which ethical reasoning methods apply?; Teleology, deontology, virtue Ethical motivation; Evaluate the likelihood of outcomes if specific actions are taken; What are the possible outcomes?; Consensus view of appropriateness of alternatives Evaluate the rights of stakeholders and obligations to them; Categorical imperative Consider how virtue motivates ethical action; Moral and intellectual virtues Ethical character; Decide on a course of action; Meet the public interest obligation Determine arguments to strengthen the position; Identify enablers in the organization Counteract opposing points of view How can virtue support converting ethical intent into ethical action?; Integrity

The PLUS Ethical Decision-Making Model

The PLUS Ethical Decision Making Model was developed through the Ethics Resource Center, the research arm of the Ethics and Compliance Initiative (ECI). The ECI is a community of organizations committed to creating and sustaining high-quality ethics and compliance programs to assist organizations in building strong cultures. The mission of the ECI is to help its members across the globe operate their businesses at the highest levels of integrity.

The PLUS model is based on a seven-step process, described below. “PLUS” is an acronym (Policies, Legal, Universal, and Self) for the ethics filters that facilitate the analysis of ethics considerations and implications of the decision at hand. These filters ensure that ethical issues rise to the forefront in ethical decision making. A description of each filter and its role in decision making follows (Ethics Resource Center of the ECI, The PLUS Decision Making Model,

  • Policies. Is it consistent with organizational policies, procedures, and guidelines?
  • Legal. Is it acceptable under applicable laws and regulations?
  • Universal. Does it conform to universal principles and the values of the organization?
  • Self. Does it satisfy my personal definition of right, good, and fair?

The advantage of the PLUS model is that it relies heavily on organizational ethics. This is important because no matter how good one’s ethical judgment may be, ethical decision making is not likely to occur unless support for the position exists in the organization. Exhibit 4 describes how the PLUS filters are integrated into the model. A summary of the seven-step model follows.

Exhibit 4

PLUS Ethical Decision Making Model

Step 1: Define the problem.

Determine why a decision is necessary and identify the desired outcomes. This helps to clearly state the problem and where to look for alternatives to resolve it. Consider the PLUS factors to ensure the existing situation does not violate any of them.

Step 2: Seek out relevant assistance, guidance, and support.

Identify the available resources within the organization. This helps to define the guidelines and individuals within the organization that may help resolve the problem.

Step 3: Identify available alternative solutions to the problem.

Consider all relevant solutions to avoid the dichotomy of one choice versus another.

Step 4: Evaluate the identified alternatives.

This step uses decidedly consequence-based criteria. Positive and negative consequences are evaluated, with fact-based consequences weighed more heavily because the expected outcome is more likely to occur. The PLUS factors are an integral part of the evaluation to supplement teleologically based outcome-oriented considerations with universal principles (deontology) and virtue ethics as represented by organizational values. This step uses decidedly consequence-based criteria. The plus model should be expanded to incorporate specific consideration of the ethical reasoning theories discussed above.

Step 5. Make the decision.

After evaluating all the alternatives, decide on a course of action. The reasons for choosing one alternative over the others should be explained, especially if the decision is by a work team that recommends a solution to higher management.

Step 6. Implement the decision.

Putting the decision into effect is essential to change the situation and resolve the problem.

Step 7. Evaluate the decision.

A determination must be made as to whether the decision fixes the identified problem. Questions to ask include: Did it go away? Did it change appreciably? Is it better now, or worse, or the same? What new problems did the solution create? In making these determinations, it is important to incorporate the PLUS factors to ensure the solution conforms to organizational policies, laws and regulations, universal principles, and values adopted by the organization.

The “S” component requires explanation because it is not recognized explicitly in the other models, although virtue considerations come close. To implement the “Self” factor, the decision maker should consider whether the solution satisfies one’s personal definition of right, good, and fair. It means that individuals should understand how their values influence decision making to ensure the decision reflect those values. For ethical decision making to occur in an accounting situation, those values should include the principles of professional behavior: independence, integrity, objectivity, and due care.

Ethical Decision-Making Model Recommended

Exhibit 5 shows the link between the seven-step model with PLUS factors and Rest’s model as used by Thorne, as well as this author and Morris, in their decision-making process. The Mintz/Morris model provides useful descriptions of the accounting dimension of ethical decision making. Combining that model with the PLUS model provides a more comprehensive approach to decision making than any one model alone. Thus, the author recommends a decision-making model that combines the features of Rest’s model described in Exhibit 3 with the components of the PLUS model described in Exhibit 4.

Exhibit 5

Integration of Mintz/Morris Model and PLUS Decision-Making Model

Ethical decision making is a complicated process that relies on organizational variables to ensure that the ultimate decision is supported by those who have to carry it out. The PLUS model incorporates those factors and should be used in accounting ethics education to make it more relevant given the increased focus on organizational ethics in the post-SOX era. The model can also be used in continuing education courses to keep accounting professionals up to date on approaches to state-of-theart ethical decision making.

The advantage of using the integrated model described in Exhibit 5 to teach ethics to accounting students is that it increases student awareness of organizational factors that influence ethical decision making. In reality, regardless of the ethical justification for one’s position, a decision is unlikely to be implemented unless individuals within the organization support resolution of the ethical problem. Knowing how the internal systems work can help to make that determination early on and influence ethical decision making in a positive way.

Steven Mintz, PhD is professor emeritus of accounting at California Polytechnic State University, San Luis Obispo, Calif. He is a member of The CPA Journal Editorial Advisory Board.