Did you catch that? Start now! Cognitive-developmental theorists posit that individuals’ cognitive moral capacity (the moral reasoning that one is capable of) increases over time and is not related to an ethical context, whereas moral reasoning (the actual cognitive moral structure used to resolve an ethical dilemma) is affected by context (Thorne, 2000). Consequently, it would preclude business activities such as false advertising, exploitation of employees, and from an accounting perspective, the creation of intentionally misleading transactions and financial statements. In accounting, the values of the profession are embedded in its codes of ethics that guide the actions of accountants and auditors in meeting their professional responsibilities. Paul Kirkwood, a tutor at Kaplan, reviews and explains the core ethical theories in Paper P1 For example, it is possible for someone to have an extreme value of courage. Independence in fact refers to any factual information such as whether you, as an auditor, own any shares or other investments in the client firm. That is, there is no general rule to follow; only a calculation that shows the greatest “utility” for the act being considered. As Aristotle pointed out, it is possible for an individual to go to an extreme on any given virtue. From an accounting perspective, the lack of temperance could cause an accountant to not do their job in a professional manner. Practically speaking, you could consider using this imperative to develop the rules that would form the basis for a rule utilitarianism based approach to ethics. Prudence, Plato’s fourth virtue, is also known as wisdom. The purpose of the. Moral intensity describes the magnitude of the moral imperative in an ethical dilemma by identifying six components or attributes of an issue: “magnitude of consequences, social consensus, temporal immediacy, probability of effect, proximity and concentration of effect” (Sweeney and Costello, 2009, p. 77). In the first two cases, the problem is with regards to the allocation of resources. • Recognize issues in accounting that have ethical implications. For example, according to Van Hise and Massey (2010), since students need to be familiar with a set of principles in order to make principles-based decisions they begin their ethics course by covering a review of four classic philosophical approaches to ethics: consequential, nonconsequential, virtue, and justice theories. One thing I think the ethical theories fail to address, however, is the fact that Tohsiba willingly hired an independent investigation committee to investigate their accounting practices, whi ch … The original position refers to the idea that “Free and equal human beings meet together to agree the principles of justice that would regulate the basic structure of the society in which they are to become members. In other words, even though this is an oversimplification, the ends justify the means. From an ethical perspective, how do consequentialist-based theories help us determine the rightness or wrongness of a decision? Jones (1991) extended Rest’s model with a six-factor component, moral intensity, which is assumed to impact all four of these stages of ethical decision making. Two well-known frameworks of ethical system theories are utilitarian and the deontological. Ethics in Accounting 1. One of the key rules set out by professional accounting bodies in North America is the idea of independence. Both aspects (moral capacity and moral reasoning) imply a need for considering ethics in an academic setting: to guide and enhance cognitive-moral development, and to provide a context for “practicing” moral reasoning skills. Approximately half of the people (or at least those surveyed) believe that business is unethi… It can be traced back to Plato, Aristotle, Aquinas, and Confucius. On the surface, this seems to be a very reasonable approach. Ethical philosophies One component of the change to a concern with social responsibility and accountability has been the recognition (or reinstatement) of the importance of ethics in organisational activity and behaviour. Matching principle: This principle requires that all transactions associated with a particular type of revenue be kept together and reported as a unit. management. Registered Data Controller No: Z1821391. That is, the decision maker is behind a veil of ignorance. In appearance, would the auditor, who was invited to the party and who also received a gift, be able to maintain independence in the audit? Consequently, it takes a prudent individual to render truly just decisions. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! ETHICS IN ACCONTING ETHICS Ethics, sometimes known as philosophical ethics, ethical theory, moral theory, and moral philosophy, is a branch of philosophy that involves systematizing, defending and recommending concepts of right and wrong conduct, often addressing disputes of moral diversity. Consideration of Morals Normative Theory of Ethics in Business Accounting. 1st Jan 1970 For example, if we consider a two-person society, it is possible for one person to require a greater allocation of resources to reach the same utility of the second person. It simply means we would no longer be able to know whether someone would break a promise or not. The last two decades saw some of the worst accounting scandals in history. 48% disagreed. However, if “Rational Choice Theory is to have value to explain individuals’ behavior in ethical contexts, the theory needs to be expanded to include the achievement of personal values and psychological payoffs in addition to material payoffs” (Roberts, 2010). Philosophy Finally, “utilitarianism is unable to account for the inherent worth of professional integrity in accounting.” (Pakaluk and Cheffers 2011, p. 175) Therefore, at this point in time, it may be best to avoid consequentialist-based theories for sound, ethical accounting decision-making, although knowledge of the theories may help the accountant understand the decision-making processes (and consequences) of a client. A prudent or wise individual is an individual that has the ability to evaluate which things are truly important in life and those that are not. Utilitarians believe that the purpose of morality is to make life better by increasing the amount of good things (such as pleasure and happiness) in the world and decreasing the amount of bad things The task of determining whether utilitarianism is the correct moral theory is complicated because there are different versions of the theory, and its supporters disagree about which version is correct. 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