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“Teaching Accounting Ethics”
Kevin O’Brien
[email protected]
CPA, JD, LLM in Taxation
Business Ethics & Legal Studies
Bill Daniels
“I truly wish I could return to
Denver 350 years from now to
make certain these new
facilities have withstood the
test of time, to see what
technologies have changed, and
to see how the bricks have
withstood the elements over
the centuries. But my guess is
that it will be the curriculum,
with its emphasis on values
that will be viewed as our
greatest achievement.”
Learning Objectives
• Appreciate the challenges and opportunities in converting a general
business ethics course to an accounting ethics course.
• Understand the impact of AACSB guidelines on ethical content for
business programs.
• Understand the impact of state boards of accountancy, such as
Colorado's, on the content required for an accounting ethics class.
• Understand how the mandatory state CPE ethics course content
informs the needed content for an accounting ethics class.
• Describe how accounting ethics content is covered in major recent
accounting ethics textbooks.
• Describe how the AICPA Ethics Exam provides a source for ethical
topics to be included within an accounting program.
2004 AACSB Report “Ethics
Education in Business”
• Page 17 of Report: Where do students learn:
– about the responsibility of business in society?
– ethical decision making? Do any of the examples
involve ethical issues from the students’ own
– ethical leadership
– corporate governance
– Specific ethical issues relating to other content
2004 AACSB Report: On Last Point
• “There is a danger that implicit ethical issues
will be ignored in the coverage of disciplinary
content. While general ethical education is
important, ignoring ethical implications
during the discussion of detailed subjects
sends a message that ethical conduct may be
relegated to certain areas and ignored in
others. This encourages students to disregard
the ethical implications of some decisions and
assume there will be no consequences.”
Ethics Requirement for Licensing
Require Accounting Ethics or Ethics
Do not require
• January 1, 2017 and ongoing
• A minimum of three semester or four quarter
units in courses devoted to accounting ethics
or accountants' professional responsibilities.
Required of all applicants beginning January
1, 2017.
Colorado Requirement
• After July 1, 2015, “must include a 3 semester
hour, or more, course concentrating on
accounting ethics.”
• Colorado Rule 2.5B.2: All courses must be
designated by an accounting program code or
the Applicant must otherwise demonstrate
that the coursework was in accounting.
The Texas Requirement!
• [T]he board requires that 3 passing semester
hours be earned as a result of taking a course
in ethics. The course must be taken at a
recognized educational institution and should
provide students with a framework of ethical
reasoning, professional values and attitudes
for exercising professional skepticism and
other behavior that is in the best interest of
the public and profession.
And this course has to be taught by ….
• an instructor who
has not been
disciplined by the
board for a violation
of the board's rules
of professional
conduct unless
waived by the
• Thirty (30) semester hours or 45 quarter credit
hours in Group I, which requires 27 semester
or 41 quarter credit hours must be in
accounting and related subjects, and 3
semester credit hours or 4.5 quarter credit
hours must be in ethics.
Colorado’s Distinction Between
Regulatory Ethics and Behavioral Ethics
CR&R: Colorado Rules & Regulations CPE must
cover 100% of the rules
Regulatory Ethics: Can focus on some board rules
and apply ethical frameworks.
Behavioral Ethics: Why do good people engage in
unethical conduct?
Rhode Island
• The following additional subjects will also be
considered within the field of regulatory
ethics: public interest and responsibilities,
licenses and renewals, SEC oversight,
competence – discreditable act, advertising
and other form of solicitation, independence,
integrity and objectivity, confidential client
information, contingent fees, commissions
and other considerations, conflict of interest,
discreditable acts, full disclosure, malpractice
and record retention.
Rhode Island
• Behavioral ethics shall include courses
relating to general professional ethics
including ethics and professional conduct,
ethical practice in business, personal
ethics, ethical decision making and
corporate ethics.
Metaprofessional & the
Review in Journal of Business Ethics
• Steven M. Mintz and Roselyn E. Morris, Ethical
Obligations and Decision Making in Accounting:
Text and Cases, 1914
• A combination textbook and casebook.
• “The authors wrote the book to guide business
and accounting students through the mine-fields
of ethical conflicts they will face throughout their
careers and to help insure that their postgraduate professional work meets the highest
standards of integrity, independence, and
Chapters 1-4
• 1: ethical philosophies and approaches to
moral reasoning.
• 2: cognitive reasoning and ethical decision
making models of Kohlberg and Rest
• 3: guiding principles involved in creating an
ethical environment and good corporate
governance system within an organization
• 4: introduces the AICPA’s Code of Professional
Chapter 5-8
• 5: fraudulent financial statements, auditor’s
responsibilities, evolution of the PCAOB, and
landmark fraud cases.
• 6. legal and regulatory obligations of auditors
(confidentiality, whistle blowing, business
judgment rule, auditor tort liability)
• 7. distinguishes between acceptable and
unacceptable earnings management
• 8. International ethics and corporate
governance—bribes, illegal acts, global code of
Reviewer Strategy if Adopting
Textbook for a Standalone Course:
• “I would pick one or two cases for each class
and assign them to students. I would probably
have students present about half of the cases
with me introducing the other half…
• I would require every student who responds
to defend not only the decision he or she
made but to explain why his or her’s is the
best decision.”
Conversion of Business Ethics Course
to Focused Accounting Ethics
• What business
topics to deemphasize
• What accounting
concepts to
• Accounting cases
and applications
Robert Troccoli
• De-emphasized
• Cases Added
sexual harassment
– Scott London
Insider Trading
and employee
– Two Troccoli cases
Wrongful discharge
• New module on the
– KPMG Tax Shelter
AICA Principles and
Case– Sales Resp.
Duty of
Course Topics
• First Half/Exam
Social Contract
Law & Public Policy
Ethical Frameworks
Levels of Moral
– Virtue Ethics
– Distributive Justice
– Organizational Ethics
• Second Half/Exam
– Professional
– Employment at Will
– Whistle blowing
– Sexual Harassment
– Confidentiality
– Sales Responsibility
– Insider Trading
Ticket to the Class
• Read readings
• Contribute to the
discussion forum
• Take online quiz
• Done before each
class during the
• If late, just email
your reasonable
Grade Components
• Expert Reports
• Participation
• Two Exams
– (15% each)
• Quizzes
• Service Learning