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Accounting Ethics and the Fragmentation of Value

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Abstract

This study investigates how one important accounting professional authority—CPA Canada—discusses accounting ethics and exhorts its members to think about ethics-related issues. To do this, we rely on empirical evidence of the types of arguments used by CPA Canada to describe what they consider acceptable moral justifications in a variety of practical situations that accountants may encounter. We argue that the articles contained in the profession’s primary publication for all members, CPA Magazine, offer a wealth of such evidence. We analyze 237 articles about accounting ethics that were published in CPA Magazine from January 2000 to December 2017, and find evidence of moral pluralism (Nagel in Mortal questions. Cambridge University Press, Cambridge, 1979). Six categories of justifications dominate: private commitments, utility, perfectionist ends, general duties, and specific obligations, plus self-interest. Of these categories, the specific obligations logic is the most widely used. We offer a tentative explanation, and discuss the implications of our findings for a better grasp of the complexities of accountants’ practical conflicts and a rethink of the ongoing tension between professionalism and commercialism.

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Fig. 1

Notes

  1. Until recently three different professional accounting titles were used in Canada—Chartered Accountants (CA), Certified General Accountants (CGA) and Certified Management Accountants (CMA), but since 2014, these have been replaced by a single new title: Chartered Professional Accountant (CPA). The profession’s magazine has also often changed its name. It has been renamed “Pivot” since May 2018.

  2. Although not exclusively. Notable exceptions include Reiter (1997), Shearer (2002) and Macintosh et al. (2009). Rather than focusing on ethical rules or on the character of the person acting, they focused on the relationships, inter-dependencies and inter-subjectivity between the person acting and others. They approached the question respectively through an ethics of care (Reiter 1997) and a Levinasian ethics perspective (Shearer 2002; Macintosh et al. 2009).

  3. By "justification" we do not mean "rationalization", but arguments supporting a particular behavior.

  4. Critical accounting research has long relied on the deontological approach to ethics (which, by definition, is a rules-based perspective). Mainstream accounting research, in contrast, has favored the utilitarian view, although in an entirely implicit way. Exceptions include Noreen (1988), who distinguishes ethical behavior that is altruistic from ethical behavior that is ultimately utilitarian in motivation. Although Noreen does recognize that altruistic behavior may genuinely exist, he argues in favor of an ethical model that is compatible with agency theory (which assumes that agents are always driven by self-interest and that their behavior is opportunistic). According to the version of utilitarianism that Noreen chooses to promote: “an individual obeys ethical rules in the expectations that others will also obey the rules” and that, as a consequence, systems (including financial markets) function more efficiently and “there is more to be consumed by everyone” (op. cit., p. 360). This is an explicitly utilitarian framing of accounting ethics. Given the way it is articulated, we can legitimately categorize it within the “rules-based approach to ethics.” Contrary to the assumptions made by deontological ethics, here the motivation to obey ethical rules does not stem from respect for the rules per se, but rather, the positive consequences expected from following the rules.

  5. While the specific nature of the tension between professionalism and commercialism is not uniformly defined, these accounts of change usually describe a shift from serving the public interest to serving economic self-interest (Guo 2015; Zeff 2003a, b; Suddaby et al. 2007).

  6. Including, in Canada, the creation of the Canadian Public Accountability Board (CPAB), and the establishment of the Auditing and Assurance Standards Oversight Council (AASOC) to oversee the work of the Auditing and Assurance Standards Board (AASB). In addition, companies’ audit committees are subject to new regulations (e.g., the Canadian Securities Administrators’ (CSA) National Instrument (NI) 52-110) that endorse, inter alia, the fundamental tenets of SOX; internal control rules, such as Canadian regulations requiring management certification of internal controls; and independence rules, including amendment of the Harmonized Rule of Professional Conduct (rule 204), contained in each provincial code of ethics of Chartered Professional Accountants.

  7. This claim is not uncontested. See for example Griffin (1977).

  8. An agent A may be motivated to do X (say, torture kittens because it brings him/her pleasure) but this does not necessarily entail that s/he has a good reason to do (see Ridge 2017 for a discussion).

  9. See Shaver (2017) for a review of “ethical egoism”, and a comparison with “psychological egoism” and “rational egoism”.

  10. As summarized by Manne (2016, p 124): the simplest version of the Humean theory of reasons is: “An agent A has a reason to V if and because A has a desire which would be promoted by her Ving.”

  11. This database includes articles published in CA Magazine from 1987 to 2010 inclusive.

  12. The full search expression used was: pubid(49116) AND all(ethic*) OR all(scandal) OR all(malpractice) OR all(deontolog*) OR all(offence) OR all(crime) OR all(wrongdoing) OR all(negligence) OR all(withdraw AND license).

  13. This database contains articles published in CA Magazine from 2001 to 2013.

  14. A typical example, according to Supiot (2015), is the way in which institutions like the International Monetary Fund (IMF) operate. The IMF’s power over the people’s lives can only be exercised because of the allegiance of 189 member states that willingly submit to the reform programs assigned to them by the IMF.

  15. With 6 logics (Nagel’s 5 logics plus the self-interest logic that emerged from our analysis), there are 6C2 possible combinations of 2 logics, i.e., 15 possible practical conflicts, and many more, if we consider that 3 or 4 logics may conflict in a given situation.

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Acknowledgements

We thank Professor of Philosophy Luc Bégin of Université Laval, for his insightful comments on the paper’s theoretical approach. We are also grateful for the comments received at the following research workshops and conferences: The Public Interest Accounting Group workshop, held at the Schulich School of Business in Toronto, on November 4th, 2017; ESSEC’s research workshop held on December 20th, 2017; Université Paris Dauphine’s research workshop, on December 21st, 2017, the 2018 Interdisciplinary Perspectives on Accounting Conference in Edinburgh, on July 12th, 2018, and Université Laval’s Faculty of Philosophy’s workshop, organized on September 28th, 2018, by Professor Patrick Turmel. Finally, we thank Ann Gallon for her invaluable copy editing work.

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Correspondence to Marion Brivot.

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Céline Baud, Marion Brivot and Darlene Himick, declare that they have no conflict of interest.

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Baud, C., Brivot, M. & Himick, D. Accounting Ethics and the Fragmentation of Value. J Bus Ethics 168, 373–387 (2021). https://doi.org/10.1007/s10551-019-04186-9

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