RESEARCH ON ACCOUNTING ETHICS, VOLUME 4, 1998

JAI Press, Inc.: Stamford, Conn., and London, England

Managing Editor: Lawrence A. Ponemon, PricewaterhouseCoopers, LLP

By Joseph Schachter, CPA, NYSSCPA Professional Ethics Committee member

This volume contains studies from 37 contributing authors with accounting backgrounds. They opine on ethical problems from social responsibility, recognition of ethical issues in financial reporting, tax education and preparation of tax returns, and earnings manipulation to motivations and ethical attitudes of the profession. The studies encompass the period beginning in the early 1980s and ending in the late 1990s.

Recognizing an ethical issue, making a moral judgment, and creating an intention leading to behavior are included in a study on models of ethical reasoning. It concludes that ethical issue recognition is a function of both the subject's ethical sensitivity and the moral intensity of the issue. Interactions based on stakeholder theory increased subjects' ability to recognize ethical issues but did not change their levels of moral reasoning.

Another study found that accountants engaged in tax practice frequently face moral and ethical problems arising from their dual responsibility to their client and to governmental agencies. The accounting curriculum and textbooks used in introductory accounting courses suggest there has been little or no attempt to include coverage of ethics in tax courses.

A study that examined the effects over time of an instruction program incorporating ethics components throughout the accounting curriculum indicated an increase in students' reasoning across groups. The study urges educators to widen their approach, clarify their goals, and seek others for support. Ethics education should be broader than "moral development" in that it should address the wider considerations of a pluralistic profession, and narrower in that it should address issues specific to the accounting profession.

The loss of auditor independence violating Rule 101 of the AICPA Code of Professional Conduct was the subject of a research project utilizing 2,000 randomly selected AICPA members in public accounting practicing as a staff auditor, senior, or manager. They were presented with 15 activities that are violations of Rule 101 and were instructed to provide their best estimate of the frequency with which each ethical violation occurred at their firm. While the overall perceived occurrence rate for a majority of the independence-related ethical violations was low, problem areas were, in fact, revealed. The auditors most commonly believed that the amount of professional fees obtained from audit clients and management advisory services provided to these clients were inappropriately influencing audit judgments.

Valid points are raised in all of the studies, by writers with fine backgrounds. I would have preferredreading about contemporary problems and statistics; some studies were almost 20 years old. I do, however, feel this is a book worth reading--particularly since many of the older situations and problems remain with us and solutions have not been implemented.