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Investigation of the Impact of an Ethical Framework and an Integrated Ethics Education on Accounting Students’ Ethical Sensitivity and Judgment

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Abstract

This research is motivated by the criticism levelled at the academic community for its failure to incorporate sufficient ethics education into the accounting curriculum (Earley and Kelly, Issues in Accounting Education 19(1):53–71, 2004; Madison and Schmidt 2006). The inclusion of ethics decision-making frameworks (frameworks) by professional bodies in their codes of conduct (IFAC 2012; APESB 2010) or as a standalone tool (AICPA 2012) and the encouragement of their use as a part of ethics education to help students to identify (ethical sensitivity) and think through ethical issues (ethical judgment) in a business context (AACSB 2004) has been subject to very limited research to date. The aim of this study is to provide evidence of the impact of providing a framework on its own and providing a framework as part of a comprehensive integrated ethics education component of a first-year unit of study, on accounting students’ ethical sensitivity and judgment. Results indicate that providing students with a framework only does not increase students’ ethical sensitivity but does support their ethical judgment. In contrast, the integrated ethics component does increase student’s ethical sensitivity, however, an unexpected finding of this study is that increases in students’ ethical judgement are greater if they have not been previously exposed to the framework. Taken together, our findings suggest that it is the framework that has a significant impact on students’ ethical judgment, while an integrated ethics education can expose students to a range of ethical issues and thereby improve their ethical sensitivity, a critical component which initiates the ethical decision-making process.

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Notes

  1. The terms moral and ethical are considered to be equivalent in this study, and the term ‘ethical’ is used throughout for consistency.

  2. The Ethical Conflict Resolution Process (ECRP) framework (see Appendix 1) used in this study aligns with the first 2 components of Rest’s (1986) model. Ethical sensitivity (steps 1–3 of the ECRP) and ethical judgement (step 5).

  3. The Definition issues test (DIT), which was developed by James Rest, provides a quantitative assessment of moral development based on subjects’ responses to five moral dilemmas. The DIT is in effect an operationalisation of Kohlberg’s (1973) model of moral development as a series of hierarchical cognitive stages.

  4. The undergraduate business/accounting degree in Australia consists of six semesters (24 units). The first-year accounting unit (1 of 4 units undertaken during the semester) consisted of 1 lecture of 1.5 hours per week and 1 seminar/tutorial hour per week. The accounting unit runs for one semester of 13 weeks. The ethics component is integrated as follows:

    In the first 3 weeks of the unit the students are introduced to the ECRP framework, a variety of ethical perspectives and work through practical cases in tutorial classes with their peers and with the support of their instructors. Outside class, the students work on their newspaper task assignment by searching for business–related ethical issues reported in the media. They then work in teams on their ethics case to prepare their team report, team presentation. Students also complete an individual reflection report at the end of the unit. In class, students experience between 5 and 6 team presentations on different business-related ethical issues. There is only one presentation per week for each team until all teams have presented and each team must present on a different case in their class.

  5. The case was reviewed by a number of accounting practitioners as well as a technical expert responsible for the ethical component of Institute of Chartered Accountants in Australia CA Program. The case was also reviewed by the lecturer in charge of the subject who was not one of the researchers.

  6. Of the 15 tutorial classes, the ‘no framework’ case was administered to students in eight tutorials. The ‘with framework’ case was administered to students in seven tutorials. Tutorial class sizes varied from 14 to 18 students per class on any given day. Sample sizes are provided in Table 1.

  7. TOTAL 10 MARKS were allocated as follows:

    Environmental: identify ethical issue (1 mark), recommendation (2 marks), justification (2 marks) SUB TOTAL 5;

    Human rights: identify ethical issue (1 mark), recommendation (2 marks), justification (2 marks) SUB TOTAL 5.

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Acknowledgements

We would like to acknowledge The University of Sydney, Business School, Special Research Grant Scheme, for the funding support on this project. We would also like to acknowledge Linda English, staff in the discipline of accounting (in particular, Trish Strong), and the University of Sydney Learning Centre (in particular, Helen Drury) for their input into the introduction and ongoing development of ethics programme explored in this study.

Author information

Authors and Affiliations

  1. International Performance and Governance Research Centre (IGAP), Macquarie University, North Ryde, NSW, Australia

    Nonna Martinov-Bennie

  2. The University of Sydney Business School, Sydney, NSW, Australia

    Rosina Mladenovic

Authors
  1. Nonna Martinov-Bennie
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  2. Rosina Mladenovic
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Corresponding author

Correspondence to Nonna Martinov-Bennie.

Appendices

Appendix 1: Ethical Conflict Resolution Process (ECRP) Framework

1.

Introduction

• Provide a brief overview to contextualise the potential accounting and ethical issue(s)

• Provide a succinct summary to indicate that you understand the relevant facts

2.

Identify the relevant accounting and ethical issues in the context of your chosen article

• Accounting issues: identify the relevant accounting issues, show that you understand the impact on financial reports and on decision making by external and internal stakeholders (Keep in mind that financial statements determine how outsiders view a company)

• Ethical issues: briefly outline all potential ethical issues

3.

Identify stakeholders

• Identify the key stakeholders and outline the potential impact of the ethical issues on each stakeholder’s interests (specify who is affected by the ethical conflict identified and how this is likely to impact their decision making/actions. Consider the potential impact on internal and external stakeholders such as consumers, competitors, or society in general)

• Indicate whether there are any potential conflicts of interests that could influence how the ethical issue is reported and/or resolved (i.e. the interaction between stakeholders)

4.

Outline ethical perspectives

• Identify at least 3 alternative ethical perspectives that could be adopted to assist in the conflict resolution process.

• Identify the ethical perspectives that appear to have been adopted by the key stakeholders.

• After considering the points above, identify your own ethical perspective(s) in the context of the ethical issue(s) discussed (ensuring it is appropriately applied and argued based on evidence using examples)

5.

Alternative courses of action and recommendation

• Identify the most important possible alternative courses of action.

• Recommend an appropriate course of action and justify your choice (i.e. ensure the team’s recommendations are consistent with the ethical perspective(s) applied)

  1. Source Adapted and modified version of the Ethical Conflict Resolution Process from APESB.110 Code of Ethics for Professional Accountants: http://www.apesb.org.au/APES_110.pdf

Appendix 2: The Ethical Case (Same for all Pre-test and Post-test Conditions)

Your friend Angela, who recently completed her Bachelor of Business, has been employed by Energy Limited (Energy) in the head office accounting department for the last 12 months. Energy is a publicly listed company supplying gas, electricity and coal to over one million retail and wholesale customers throughout Australia.

Energy’s strategy is to boost its profitability and market share by being the lowest cost producer of energy for consumers. A range of measures, such as the use of effluent holding ponds near residential sites and transfer of component manufacturing to less developed countries, have been used to deliver cost savings.

Angela has recently come across documents that one of the effluent ponds started leaking a known carcinogenic compound into the ground water 6 months ago. The company has kept this information confidential and aggressively purchased and bulldozed all housing (at market price) in the local area. Angela is also aware that Energy is receiving subsidies from the government for the use of local labour for component manufacture, under an ‘Export Expertise, Not Jobs’ programme although it does not employ local labour for component manufacture.

Appendix 3: Pre-test and Post-test Conditions

Pre-test Condition with ECRP Framework

Required.

From the background material provided above:

  1. (a)

    summarise the relevant facts;

  2. (b)

    identify and explain the possible accounting issue(s);

  3. (c)

    identify and explain the possible ethical issue(s);

  4. (d)

    identify the key stakeholders affected; and

  5. (e)

    assuming you are Angela, identify all possible alternative course(s) of action she could take and recommend what you consider to be the most appropriate course of action. Justify your choice.

Pre-test Condition with No ECRP Framework

Required.

Assuming you are Angela, evaluate this situation and recommend what you consider to be the most appropriate course of action. Justify your choice.

Post-test Condition

Required.

Assuming you are Angela, use the Ethical Conflict Resolution Process to evaluate this situation and recommend what you consider to be the most appropriate course of action. Justify your choice.

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Martinov-Bennie, N., Mladenovic, R. Investigation of the Impact of an Ethical Framework and an Integrated Ethics Education on Accounting Students’ Ethical Sensitivity and Judgment. J Bus Ethics 127, 189–203 (2015). https://doi.org/10.1007/s10551-013-2007-5

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