Accounting educators are in the midst of creating new opportunities for students to enhance their abilities to recognize ethical dilemmas, establish criteria by which to make ethical decisions, and establish support mechanisms and strategies to facilitate their ethical decision-making. CPA firms, professional organizations and state boards of accountancy are co-operating to increase requirements for ethics education for candidates taking the CPA exam. The current situation is confusing and sub-optimal regarding the use of precious learning time in college programs. A new (...) dialogue between the three stakeholders, creative learning approaches, and additional resources can lead to a more consistent and optimal learning paradigm regarding the ethics education of accountants. Research evaluating the effectiveness of various approaches is needed to effectively apply limited resources in an area critical to the reputation capital of the accounting profession. (shrink)

In 1990, the Federal Trade Commission (FTC) issued a consent order to the American Institute of Certified Public Accountants (AICPA). The order decreed the AICPA to lessen its longstanding ethics code which had until then banned the receipts of commissions, referral fees and contingent fees. The FTC alleged that the AICPA banned receipt of the fees as an attempt to restrain trade (FTC, 1990).In the present study, we sought to determine if CPAs'' preference for bans on commissions, referral fees and (...) contingent fees is related to their moral reasoning whereby CPAs perceive the bans to serve as a means of resolving ethical issues. While determining this matter cannot prove whether the bans did or did not actually result in restrained trade, it can offer insight into the perceived ethical importance to CPAs of the overturned rules. Based on a random sample of AICPA members and using Rest''s Defining Issues Test (DIT) to measure moral reasoning, we did not find a CPA''s moral reasoning to be related to his/her preference for ethics rules which ban commissions, referral fees or contingent fees. However, our results did indicate that most CPAs prefer banning commissions, referral fees and contingent fees, with those CPAs holding a higher financial stake in public accounting, namely partners, favoring banning referral fees and contingent fees significantly less than CPAs with a lesser stake. Further, we noted a significant negative relationship between financial stake and moral reasoning. These results seem to suggest that self-interest among CPAs may influence their moral reasoning.Further study is needed to examine the relationship between self-interest of CPAs and their moral reasoning. If self-interest clouds moral judgments made by CPAs, capital markets are in danger. Rendering an independent audit opinion must exclude self-interest. (shrink)

Accounting educators are in the midst of creating new opportunities for students to enhance their abilities to recognize ethical dilemmas, establish criteria by which to make ethical decisions, and establish support mechanisms and strategies to facilitate their ethical decision-making. CPA firms, professional organizations and state boards of accountancy are co-operating to increase requirements for ethics education for candidates taking the CPA exam. The current situation is confusing and sub-optimal regarding the use of precious learning time in college programs. A new (...) dialogue between the three stakeholders, creative learning approaches, and additional resources can lead to a more consistent and optimal learning paradigm regarding the ethics education of accountants. Research evaluating the effectiveness of various approaches is needed to effectively apply limited resources in an area critical to the reputation capital of the accounting profession. (shrink)

The paper reports the findings of a study of CPAs designed to determine whether they tend to find factors related to their professional environment (especially the guides to professional conduct of the American Institute of Certified Public Accountants) to be more helpful than factors related to their business environment when faced with ethics problems. Like internal auditors surveyed earlier, the CPAs tend to view a number of factors in their business environment to be even more helpful than factors related to (...) their professional environment in dealing with ethical dilemmas. Implications for CPAs as individuals and for their professional associations are discussed. (shrink)

This study investigates the impact of Securities and Exchange Commission enforcement actions on individuals holding Certified Public Accountant accreditation. While prior research has investigated both the characteristics of companies that have been investigated by the SEC and litigation against audit firms, it has not addressed the ways in which SEC investigations impact CPAs. Using a sample of 262 CPAs, we find that the most common CPA breach was associated with overstating revenues/income or earnings. The study finds serious consequences for CPAs (...) in terms of employment restrictions and SEC actions, incorporating suspension, which is often permanent. We find that the primary factors relating to the severity of actions by the SEC is whether the CPA intentionally breached the professional code of conduct, the age of the CPA, whether the CPA is still a member of the AICPA with CPA status and whether the CPA was operating as an external auditor or in a corporate accounting role. Our findings have implications for accounting practitioners, the AICPA and boards of directors. (shrink)

This paper explores three questions: (1) Why should Certified Public Accountants (CPAs), as a group, adhere to their code of ethics? (2) Why should an individual CPA adhere to the code? (3) Of what significance are the answers to these questions in regards to possible changes in the accounting curriculum and the CPA profession's present concern for self-regulation through quality control reviews? The paper concludes that all college accounting majors should be required to take an ethics course and that the (...) current quality review program should be mandatory, not voluntary. (shrink)

We investigate whether enforcement is influenced by politics by comparing the severity of PCAOB sanctions of individual CPAs to the severity of related state-level disciplinary actions imposed by boards of accountancy. Our results provide evidence that when responding to PCAOB sanctions, BOAs under Republican regimes impose less severe penalties than do BOAs under Democratic regimes. Our data and analyses inform the regulatory and enforcement practices of the accounting profession and other professions. Most directly, motivated by improvements in technology that facilitate (...) the cross-jurisdiction practice of public accounting, states have adopted mobility laws where CPAs are only required to be licensed in their state of residence to practice in multiple states. These laws simplify licensing but may complicate enforcement. Beyond generalized red-state, blue-state differences in enforcement, we find that non-resident CPAs receive less severe disciplinary actions. If not reasonably consistent across BOAs, regulators may be unwilling to delegate responsibility for enforcement to another state’s BOA. (shrink)

Using professional accountants as respondents in Hong Kong, this study strives to develop a model to depict the effect of ethical reasoning on the relationships between guanxi and auditors; behaviour in an audit conflict situation. The results of the study found that (1) there is a significant relationship between an auditor's ethical judgement and one's moral cognitive development; (2) there is a relationship between an auditor's ethical judgement and the existence of guanxi; and (3) the impact of guanxi on an (...) auditor's judgement is depending on the level of ethical reasoning. (shrink)

As in other professions, such as law and medicine, accounting has a Code of Professional Conduct (Code) that members are expected to abide by. In today''s legalistic society, however, the question of what is the right thing to do, is often confused with what is legal? In many instances, this may present a conflict between adhering to the Code and doing what some may perceive as proper ethical behavior. This paper examines (1) the reasoning process that CPAs use in resolving (...) ethical issues related to confidentiality; and, (2) whether or not there is a perceived conflict in adhering to the Code and the moral values of some CPAs. The results indicate that although most CPAs sampled resolve ethical issues in accordance with the Code, such decisions do not always reflect their belief of what is morally right. Although the results are useful in understanding how some CPAs reason in making moral choices involving confidentiality decisions, care should be exercised in drawing further inferences from this study due to the limited sample size. (shrink)

ROBERT A. COOKE, CPA, has owned or co-owned three successful small businesses and is the author of six books, including Doing Business Tax-Free and How to Start Your Own S Corporation, Second Edition, both from Wiley.

A study of 612 CPAs employed in four separate regions of the People’s Republic of China shows that they exhibit ethical orientations that are not significantly different from one another and that they do not, as a group identify with the Subjectivist description provided in the Forsyth et al. (Journal of Business Ethics 8(83):813–833, 2008) meta-analytic international study involving the Ethical Position Questionnaire. Confirmatory factor analysis did however establish the validity of the instrument as a measure of idealistic and relativistic (...) tendencies. It was established that the ethical tone within local accounting firms plays a significant role in forming ethical positions and that these variables together work to influence ethical judgement making with respect to issues involving independence and objectivity. The constructs of relativism and idealism act as reliable predictors of moral choice, but need to be carefully interpreted in the context of field research. The study highlights concerns about the ethicality of a fledgling group of professionals having to cope with the exigencies associated with the world’s fastest developing economy. (shrink)

The Common Prior Assumption (CPA) plays an important role in game theory and the economics of information. It is the basic assumption behind decision-theoretic justifications of equilibrium reasoning in games (Aumann, 1987, Aumann and Brandenburger, 1995) and no-trade results with asymmetric information (Milgrom and Stokey, 1982). Recently several authors (Dekel and Gul, 1997, Gul, 1996, Lipman, 1995) have questioned whether the CPA is meaningful in situations of incomplete information, where there is no ex ante stage and where the primitives of (...) the model are the individuals' beliefs about the external world (their first-order beliefs), their beliefs about the other individuals' beliefs (second-order beliefs), etc., i.e. their hierarchies of beliefs. In this context, the CPA is a mathematical property whose conceptual content is not clear. The main results of this paper (Theorems 1 and 2) provide a characterization of Harsanyi consistency in terms of properties of the belief hierarchies that are entirely unrelated to the idea of an ex ante stage. (shrink)

The aim of this paper is to provide some insights for a normative theory of corporate political activities. Such a theory aims to provide theoretical tools to investigate the legitimacy of corporate political involvement and allows us to determine which political activities and relations with government regulators are appropriate or inappropriate, permissible or impermissible, obligatory or forbidden for corporations. After having explored what I call the “normative presumption of legitimacy” of CPAs, this paper identifies three different plausible strategies to criticize (...) and object to corporate political involvement: the “egalitarian” strategy, the “corporate citizenship” strategy, and the “market failures” strategy. It constitutes an attempt to develop the market failures approach to reflect on CPAs. My main claim is that within such an account, the idea that corporations have a license to operate considerably limits their right to engage in political activities. (shrink)

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. 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. (shrink)

The Statements on Responsibilities in Tax Practice (SRTPs) provide guidance to the CPA when making decisions in tax practice. Many of these decisions are ethical in nature and have implications for tax compliance. In this study, a survey methodology is used to test whether the SRTPs affect decisions that CPAs make. The findings suggest that a clear majority of CPAs follow the SRTPs when making ethical decisions relating to tax return preparation and that CPAs follow the SRTPs more often than (...) unlicensed preparers on half the issues tested. However, a statistically significant number of CPAs do not follow the SRTPs and, CPAs do not follow the SRTPs any more often than unlicensed tax preparers on three issues. (shrink)

This paper examines the relationship between organizational ethical culture in two large international CPA firms, auditors'' personal values and the ethical orientation that those values dictate, and judgments in ethical dilemmas typical of those that accountants face. Using an experimental task consisting of multiple judgments designed to vary in "moral intensity" (Jones, 1991), and unique as well as tried-and-true approaches to variable measurements, this study examined the judgments of more than three hundred participants in our study. ANCOVA and path analysis (...) results indicate that: (1) Ethical judgments in situations of high moral intensity are affected by personal values and by environmental variables, such as the professional code of conduct (direct and indirect effects) and previous ethics instruction (direct effect only). (2) Corporate ethical culture, and a relatively strong firm rules-orientation, affect auditors'' idealism but not relativism, and therefore indirectly affect ethical judgments. Jones'' (1991) moral intensity argument is supported: differences in the characteristics of specific judgment tasks apparently result in different decision processes. (shrink)

Traditionally, certified public accountants (CPAs) have served a unique role in the world of commerce and the profession of accounting. They perform an attest function and thereby serve as the chief providers of relevant, high quality accounting information to the decision making public. CPAs are licensed practitioners, who as expert independent accountants express opinions about an entity'sfinancial statements. Their license provides them with the exclusive right to perform this attest function. This monoploy relies on the concept of independence that is (...) the normative standard of accountancy. It is this perceived independence of auditors which provides credibility, reliability and trust in the financial accounting information upon which stakeholders depend to make informed decisions. Now, however, we see the environment in which CPAs operate undergoing rapid change. Both the globalization of business operations and technological advances have radically changed how and where accountants work and the speed at which things happen. The very nature of accounting information services is evolving; moving from a concentration on audits to an increasing reliance on consulting and assurance services. New ethical issues have been raised by this confluence of changes in the accounting environment. Noteworthy is that the application of the principle of independence by CPAs has been called into question by no other than the SEC. Are those stakeholders who depend upon the independence of CPAs at risk? The influence of insiders has significantly increased as accounting firms perform multiple tasks for the same clients. This paper discusses the different groups who can potentially impair the independence of auditors and the steps that are being taken to enhance the "independence" of the auditors. (shrink)

. The accounting profession’s image and reputation is built upon the members of the profession acting with the “highest sense of integrity” in “the public interest” (AICPA, 2003, www.aicpa.org/about). The Enron debacle initiated the latest crisis facing the profession regarding its image and reputation. The American Institute of Certified Public Accountants (AICPA) is the largest professional body representing the accounting profession and the one to which regulators have looked in establishing and upholding professional standards relating to the public practice of (...) accounting and auditing. One of the AICPA’s responsibilities is to “promote public awareness and confidence in the integrity, objectivity, competence and professionalism of CPAs ....” (AICPA, 2003, www.aicpa.org/about). We analyze the public statements issued by the AICPA (i.e., press releases, speeches of officers, testimony, published articles) during this ethical and identity crisis beginning with the AICPA’s first public statement on the Enron debâcle (AIPCA 2001) and concluding with the AICPA recognizing the need for a “new accounting culture” (Melancon 2002). In order to better understand the public discourse, we use image restoration theory (Benoit, 1995), because it provides a typology of strategies for dealing with the public face of crises. We identify the three most common strategies the AICPA employs during this period. Proposals for taking corrective action represent the most commonly employed strategy, but the analysis also indicates an attempt to evade responsibility by claiming defeasibility and to reduce the offensiveness of the situation by employing a bolstering strategy. A second analysis using DICTION, a software package useful in revealing latent dimensions in a text, indicates that early statements tend to use language related to accomplishing specific action while the later statements tend more toward general language that relates to peoples’ everyday lives. The findings raise questions as to substantive nature of the changes proposed by the AICPA, and thus, the extent to which the public interest is being served by them. (shrink)

Given that the benefits of Corporate Political Activity (CPA) are usually granted in the form of favorable industry regulation that benefits all industry participants rather than a single firm, small politically inactive firms are often able to take advantage of the benefits from CPA without investing in them. We argue that the free‐riding problem is context specific. Situations of extreme uncertainty create institutional voids that enable individual firms to more fully appropriate the returns from their CPA. In this paper, we (...) examine the influence that CPA had on the U.S. government’s disbursements of TARP funding in 2008. We find that politically active firms were able to avoid the free‐rider problem by obtaining more instances of TARP funding when compared to firms that were not politically active. In addition to being more likely to receive TARP funds, politically active firms received larger amounts of TARP funding than those firms who were not politically active. (shrink)

This study used a national sample of professionals and a questionnaire containing equitable relief vignettes to explore whether the new equitable relief subset of the revised innocent spouse rules is helpful to the IRS when making relief decisions. The study also addressed the ethical and gender issues associated with equitable relief innocent spouse cases. The results suggested that several equitable relief factors are useful as discriminators in the relief decision. The results also demonstrated that the recognition of an ethical issue (...) and perceptions of moral intensity affected the decision to grant relief in innocent spouse situations. Finally, women subjects were more ethical and more sympathetic toward the victim in an innocent spouse situation than were their male counterparts. These findings have numerous personal and societal implications for businesses, IRS agents, CPAs, and attorneys, as well as other nations wishing to reform their tax structures while assessing the tradeoff between equity and tax revenue generation. (shrink)

It is believed that the atmosphere in which employees carry out their responsibilities influences whether employees will behave ethically. An important factor contributing to the integrity of the financial reporting process is the tone set by senior management (i.e., the corporate environment). This study was conducted to describe financial accountants'' perceptions of management''s ethical standards. These perceptions are based on both management''s actions and management''s expectations of the employee. This researcher also attempted to identify demographic variables that are related to (...) these perceptions. The results are based on a survey mailed to 400 CPAs who prepare financial reports. Accountants generally perceive management''s conduct as ethical and believe that management expects them to behave ethically. Of particular interest is that respondents have more positive attitudes about management''s expectations of them than they do about management''s own actions in terms of ethical behavior. The majority of respondents reported at least some pressure to achieve short-term performance targets. Management level, industry, size of an organization, and gender were all found to be related to employee perceptions. (shrink)

This paper investigates how ethics is incorporated in the qualification process for prospective professional accountants across Australia and New Zealand. It does so by examining the structure of these qualification processes and by analysing the learning objectives and summarised content for ethics courses that prospective accountants take either at university or through the post-degree programs provided by CPA Australia and Chartered Accountants Australia and New Zealand. We do this to understand how the ‘sandwich’ approach to teaching ethics :77–92, 1993) is (...) implemented. This approach advocates a standalone ethics course, followed by ethical cases that are integrated across accounting courses, and subsequently a capstone course that combines ethics and professionalism. We test the extent to which this approach is adopted and examine how its application relates to the components of moral behaviour. The results provide three significant contributions. The first is that the ‘sandwich’ approach is not in place for most prospective accountants as only a minority of programs include a mandatory course with a substantial ethics component, and this is more likely in undergraduate rather than postgraduate programs. The second contribution is that although moral sensitivity and moral judgement are widely considered, little attention is given to issues of moral motivation and moral character. We suggest that change is unlikely without explicit ethical education requirements from the professional accounting bodies. The paper also makes a final contribution by proposing a more nuanced typology characterising the degree to which ethics is incorporated in particular courses. (shrink)

Some critics of the accounting/auditing profession in the United States claim that independence-related quality control problems are the cause of an increased number of alleged audit failures. Certified public accountants (CPAs) were queried regarding independence impairment in their profession. Questionnaire results indicate a number of CPAs believe independence deficiencies exist, and some CPAs admit to personal independence impairment.

This article examines the relationship between an aspect of a firm’s corporate social responsibility, corporate community programs, and the effectiveness of its corporate political activity. Developing a conceptual model based on resource-based view of the firm, the authors argue that the mechanism linking a firm’s CCP to CPA mechanism is the effect of CCPs on the development of firm level resources. Specifically, the intensity of a firm’s CCPs enhances a firm’s human capital, organizational capital, and geographic resources, which in turn (...) improve the effectiveness of two key aspects of CPA: information and constituency-building political strategies. This linkage of CCPs to CPA effectiveness may be particularly relevant when the firm faces unfavorable political markets. (shrink)

We review articles about corporate political activity published in Business & Society since its beginnings 60 years ago and in a set of other leading management journals over the past decade. We present evidence that most studies of CPA use the political markets’ perspective. Under the premise that the contemporary political environment has changed significantly since the inception of the political markets’ perspective, our review asks two interconnected questions. First, to what degree have changes in the political environment challenged the (...) ability of the political markets’ perspective to understand the pillars of politics: issues, institutions, interests, and information? Second, to what degree have CPA scholars augmented or diversified their theoretical arguments to accommodate these changes in the political environment? We document the CPA literature across these dimensions and questions and note that many scholars are already adopting other theories side by side with the political markets’ perspective. (shrink)

In this commentary, the author discusses two strengths and two weaknesses of “Better than Best (Interest Standard) in Pediatric Decision-Making,” in which Lainie Friedman Ross critiques the best interest standard and proposes her own model of constrained parental autonomy (CPA) as a preferable replacement for both an intervention principle and a guidance principle in pediatric decision making. The CPA’s strengths are that it detaches from the language and concept of “best” and that it better respects the family as a distinct (...) and intimate decision-making unit. The first weakness of the framework, as an intervention principle, is that because it imports a Rawlsian understanding of basic interests, it neglects certain populations of children (for example, children with intellectual disabilities). The second weakness is that, as a guidance principle, it is unclear what actual guidance the CPA is positioned to offer and how that guidance would be justified. To conclude, this commentary offers suggestions for what should be required of both an intervention principle and a guidance principle in pediatric decision making. (shrink)

This integrative volume proposes major revisions to the APA ethics code and works toward creating an ethics code applicable across psychology, psychiatry, and related mental health professions. Careful analysis identifies theoretical and structural deficits in the principles and standards comprising the existing APA code, corrects its ambiguities, and provides scientific and compare-contrast illustrations to address current and potential controversies arising from current gray areas. Proposed revisions are informed by the American Medical Association, Canadian Psychological Association, and international ethics codes, emphasizing (...) not only clearer language and diverse situations but also deeper conceptualizations of professional skills such as decision-making and client engagement. Ideally, the resulting universal code would be more inclusive of evolving ethical challenges in increasingly complex work environments and society. Included in the coverage: Comparison of the APA and CPA ethics codes. Proposing five core and five supplementary ethical principles and their sub-principles. Analyzing the APA's ethical standards toward revising the APA ethics code. Elucidating new standards, domains, sub-domains, and meta-principles. Culling lessons from the 2017 AMA medical ethics code. Examining ethical decision-making: fallacies/biases and models. Proposing new concepts, such as participatory ethics and psychological co-regulation. Giving concrete and practical recommendations toward revising the APA ethics code and creating a universal mental health ethics code. An exhaustive text that spans clinical, research, teaching, and education domains, Revising the APA Ethics Code is essential reading for ethics scholars, practitioners, and the APA administrative and ethics committee hierarchies. These real-world guidelines will help ensure that the mental health professions remain both modern and moral. (shrink)

In comparative policy analysis (CPA), a generally accepted historic problem that transcends time is that of identifying common variables. Coupled with this problem is the unanswered challenge of collaboration and interdisciplinary research. Additionally, there is the problem of the rare use of text-as-data in CPA and the fact it is rarely applied, despite the potential demonstrated in other subfields. CPA is multi-disciplinary in nature, and this article explores and proposes a common variable candidate that is found in almost (if not) (...) all policies, using the science of conceptual systems (SOCS) as a pathway to investigate the structure found in policy as a lynchpin in CPA. Furthermore, the article proposes a new text-as-data approach that is less expensive, which could lead to a more accessible method for collaborative and interdisciplinary policy development. We find that the SOCS is uniquely positioned to serve in an alliance fashion in the larger qualitative comparative analysis that supports CPA. Because policies around the world are failing to reach their goals successfully, this article is expected to open a new path of inquiry in CPA, which could be used to support interdisciplinary research for knowledge of and knowledge in policy analysis. (shrink)

There is a lack of research about the political strategies used by firms in emerging countries, mainly because the literature often assumes that Western-oriented corporate political activity has universal application. Drawing on resource-dependency logics, we explore why and how firms orchestrate CPA in the institutionally challenging context of Nigeria. Our findings show that firms deploy four context-fitting but ethically suspect political strategies: affective, financial, pseudo-attribution and kinship strategies. We leverage this understanding to contribute to CPA in emerging countries by arguing (...) that corporate political strategies are shaped by the reciprocity and duality of dependency relationships between firms and politicians, and also by advancing that these strategies reflect institutional weaknesses and unique industry-level opportunities. Importantly, we shed light on the muttered dark side of CPA. We develop a CPA framework and discuss the research, practical and policy implications of our findings. (shrink)

While support for corporate political activity (CPA) is well echoed in the literature, little has been done to empirically examine its ethicality. Moreover, existing ethical CPA frameworks assume normative and rational leanings that are insufficient to provide a comprehensive account of CPA ethicality. Utilizing the Ghanaian context, adopting a multiple case study design involving 28 Directors from 22 firms, and employing a grounded theory approach, I explore how the ethicality of CPA is determined in weak institutional environments. The findings reveal (...) that business executives evaluate ethics at three levels (i.e. context, organizational and strategy) using three principles (i.e. utilitarianism, justice and institutions). Leveraging this knowledge, I present an eclectic framework that bridges the long-standing gap between normative ethical prescriptions and lived ethical realities. In doing so, I move away from abstraction to give “voice” to the actors involved in CPA. I also present a model that shows how the ethical judgement process is influenced by managerial intuition and interactive personal and organizational experiences. This article has important theoretical and practical implications for ethical business-government relations in developing countries. (shrink)

This article focuses upon answering the following question: Does corporate political activity (CPA) stand as an academic field? Following Hambrick and Chen, we consider three elements of the emergence of an academic field—differentiation, mobilization, and legitimacy. Utilizing a variety of data sources, we find CPA to be well differentiated from other academic fields; to have undertaken a number of activities to mobilize CPA as a field, but short of large-scale unification; and to have earned low to moderate legitimacy within management, (...) but little legitimacy outside of management. All in all, at this time, CPA does not squarely meet the elements necessary to emerge as a field. (shrink)

The public accounting industry's voluntary code of conduct in the United States is the American Institute of CPA's Code of Professional Conduct. Based on our analysis, we conclude that the accounting industry's current code is limited in its ability to serve the public interest in three respects. Specifically, the code is input-based, requires no third-party attestation of compliance with the code, and contains no public reporting process of code compliance/noncompliance at the accounting firm level. We propose that the accounting profession (...) should reorient its largely input-based Code of Professional Conduct to include output-based performance measurements. We also conclude that third-party attestation of compliance with the profession's code would help to promote compliance. Finally, we maintain that the accounting industry should initiate a public reporting process at the individual accounting firm level. Such a requirement would add a degree of public accountability as to whether a firm complies or fails to comply with the industry's voluntary code of conduct. (shrink)

The public accounting industry’s voluntary code of conduct in the United States is the American Institute of CPA’s Code of Professional Conduct. Based on our analysis, we conclude that the accounting industry’s current code is limited in its ability to serve the public interest in three respects. Specifically, the code is input-based, requires no third-party attestation of compliance with the code, and contains no public reporting process of code compliance/noncompliance at the accounting firm level. We propose that the accounting profession (...) should reorient its largely input-based Code of Professional Conduct to include output-based performance measurements. We also conclude that third-party attestation of compliance with the profession’s code would help to promote compliance. Finally, we maintain that the accounting industry should initiate a public reporting process at the individual accounting firm level. Such a requirement would add a degree of public accountability as to whether a firm complies or fails to comply with the industry’s voluntary code of conduct. (shrink)

While the best interest standard (BIS) enjoys wide endorsement as the ethical and decision-making standard in pediatrics, it has been criticized as vague and indeterminate. Alternate decision-making standards have been proposed to replace or augment the BIS, notably the harm principle (HP) and constrained parental autonomy (CPA) model. In this edition of The Journal of Clinical Ethics, Lainie Friedman Ross argues that CPA is a better standard than the BIS or the HP as both guide and limiter in pediatrics. In (...) response, I review the important work done by the BIS in pediatrics, and argue that neither the HP nor the CPA can take over these functions or replace the BIS. Among other things I argue: (1) The BIS provides more robust protections for the moral claims of children. (2) The CPA model and the HP do not resolve the indeterminacy and vagueness present in complex medical situations, and the BIS is better suited to deal with this vagueness and indeterminacy. (3) The BIS is a general principle of medical ethics with special application in pediatrics; it fits seamlessly into the system of medical ethics and fulfills many functions within pediatrics. The HP and the CPA model do not fit so readily within medical ethics, and are not equipped to take over the functions of the BIS. (shrink)

The concept of scientific field lacks a definition in a form allowing the distinction of whether a particular academic area of study is or is not a true scientific field. Starting with the classic definition by Whitley of a field as a “reputational work organization,” this essay extracts eleven explicit and implied features of a field from Whitley’s definition and discussion, extending his analysis. The article reviews Hambrick and Chen’s model of field formation as an “admittance-seeking social movement.” Hambrick and (...) Chen argue that strategic management followed that model with success, offering the SIM Division of the Academy of Management as an unsuccessful example. The article notes errors in their assessment of SIM, argues that Hambrick and Chen are really offering a model of what I term condensation and promulgation of a field and that their model cannot be used to determine whether a field exists. The article applies the extended Whitley model of a field to examine three candidate fields within SIM: corporate social responsibility (CSR)/corporate social performance (CSP), stakeholder theory, and corporate political activity (CPA). I conclude that none is technically a field, and considering as well the comments of three senior scholars who contributed to the symposium, the article discusses the potential trajectory of fields in SIM. (shrink)

The reintroduction of Aristotle's Analytics to the Latin West—in particular, the reintroduction of the Posterior Analytics—forever altered the course of medieval epistemological discussions. Although the Analytics fell decidedly from grace in later centuries, the sophisticated account of human cognition developed in the Posterior Analytics appealed so strongly to thirteenth-century European scholars that it became one of the two central theories of knowledge advocated in the later Middle Ages. Robert Grosseteste's 'Commentarius in Posteriorum Analyticorum Libro', written in the 1220s, is most (...) likely the first complete Latin commentary on the Posterior Analytics. As the thirteenth century wore on, Aristotle’s account of human cognition was generally set in opposition to the Augustinian-influenced theory of divine illumination that was de rigueur in the early thirteenth century. Although common consensus holds that this pattern of opposition was set already in Grosseteste’s CPA, I argue that the story of the Posterior Analytics’s early reception is, in fact, quite different. In particular, I maintain that, rather than seeing himself as forced to choose between his earlier theory of divine illumination and the “new” Aristotelian epistemology, Grosseteste is perfectly content to blend and bring together the diverse elements of these systems and to present a consciously synthetic rather than adversarial picture of these differing accounts of human cognition. (shrink)

This study applies a theoretical framework, the theory of reasoned action, to the examination of unethical decision making in job-related situations encountered by CPAs. A survey methodology was employed in which respondents were asked to use both self-reported and randomized response techniques for reporting unethical behavior. The results indicate that individuals are unwilling to accurately report either unethical behavior or intention, particularly in situations where there is no question as to the unacceptability of the action or the potential penalty as (...) presented in the AICPA Code of Professional Conduct. Implications for the accounting profession and research are discussed. (shrink)

This study examines 14,900 disciplinary actions by the professional licensing boards for attorneys, CPAs, and physicians in four states from 2008 through 2014. It was found that both attorneys and physicians are disciplined at a rate at least seven times that of CPAs. While the majority of disciplinary actions are for misconduct directly related to the professional practice, nearly 14% of sanctions were the result of “social crimes” such as failure to pay child support or student loans, driving under the (...) influence, and general unprofessional conduct. The severity of licensure sanctions varied with the cause for discipline, but was inconsistent both within and between jurisdictions. These results raise important questions about the purpose and performance of state licensing boards and possible reasons for inequitable treatment. Additionally, the widespread and severe sanctions for conduct not related to the professional practice suggest that moral turpitude clauses may violate both equal protection and prohibitions on excessive fines. (shrink)

This article examines perceptions of tax partners and non-partner tax practitioners regarding their CPA firms’ ethical environment, as well as experiences with ethical dilemmas. Prior research emphasizes the importance of executive leadership in creating an ethical climate (e.g., Weaver et al., Acad Manage Rev 42(1):41–57, 1999; Trevino et al., Hum Relat 56(1):5–37, 2003; Schminke et al., Organ Dyn 36(2):171–186, 2007). Thus, it is important to consider whether firm partners and other employees have congruent perceptions and experiences. Based on the responses (...) of 144 tax practitioners employed at CPA firms, the results show that tax partners rate the ethical environment of their firms as stronger than non-partner tax practitioners, particularly among those who describe a self-identified ethical dilemma. Tax partners also report having encountered more of the common examples of researcher-provided ethical dilemmas than non-partner tax practitioners, although non-partners perceive that certain ethical dilemmas occur at a higher rate than partners do. Overall, this study provides evidence of a disconnect between tax partners and non-partner tax practitioners with respect to perceptions of organizational ethics. Suggestions for potential remedies are offered. (shrink)

This paper examines ethical violations committed by Certified Public Accountants in Puerto Rico in the 2002–2010 period and the related disciplinary actions taken by the local regulatory bodies. The institutional settings for the accounting profession in PR are different from those of the United States. Ethical complaints are investigated by the PR Society of CPAs and evaluated based on the Code of Professional Conduct of the American Institute of Certified Public Accountants, although most CPAs in PR are not affiliated with (...) the AICPA. Our study is based on data provided by the PR Society of CPAs that is not publicly available. We examine the association between the occurrence of the ethical violations and certain variables such as gender, type of practice performed by the CPA, and whether the CPA participates in a peer review program. Results of a multiple correspondence analysis suggest that not being a member of the AICPA, practicing as a sole practitioner, and not participating in a peer review program seem to be more associated with the occurrences of ethical violations by CPAs. We compare our findings with prior research on ethical infractions committed by CPAs in the United States and find some differences attributable to the institutional settings in PR. Overall, our results suggest the importance of codes of conduct in the accounting profession and compliance with such ethical guidelines by practicing accountants. (shrink)

Building on literature in political CSR and corporate political activity (CPA) as well as responsible innovation and responsible lobbying, we introduce a framework to assess the legitimacy status of corporate political activity. We focus on the fact that companies frequently face sharp regulatory backlash after penetrating markets with their innovations. In response to regulatory backlash, big tech companies often employ an arsenal of corporate political activities to (re-)shape national and local regulatory environments, which raises the important questions about the legitimacy (...) of CPA tactics that we address. To develop and apply this framework, we briefly survey and then assess Uber’s corporate political activities in its 2015 New York City political campaign. (shrink)

This paper examines fraudulent financial reporting within the context of Jones' (1991) ethical decision making model. It was hypothesized that quantitative materiality would influence judgments of the ethical acceptability of fraud, and that both materiality and financial risk would affect the likelihood of committing fraud. The results, based on a study of CPAs employed as senior executives, provide partial support for the hypotheses. Contrary to expectations, quantitative materiality did not influence ethical judgments. ANCOVA results based on participants' estimates of the (...) likelihood that a "typical CPA" would manipulate reported results indicated that both materiality and risk significantly influenced the likelihood of fraud, but that the perceived morality of the action did not. In contrast, results based on participants' self-reported behavior indicated that materiality and the perceived morality of the action would influence the likelihood of fraud, but that financial risk would not. Regardless of the measure used for the likelihood of fraud, the results indicate that financial executives continue to be influenced by quantitative materiality when misstatements are clearly material on qualitative grounds. (shrink)

The need to maintain the public trust in the integrity of the accounting profession has led to increased interest in research that examines the moral reasoning abilities (MRA) of Certified Public Accountants (CPAs). This study examines the MRA of CPAs practicing in small firms or as sole practitioners and the factors that affect MRA throughout their working careers.The results indicate that small-firm accounting practitioners exhibit lower MRA than expected for professionals and that age, gender and socio-political beliefs affect the moral (...) reasoning abilities of small-firm practitioners. We also find that completion of an ethics course in college has a positive impact on MRA. Also, the survey respondents indicate overwhelming support for including ethics courses within the business curriculum. Finally, the fact that those accountants with the lowest MRA are the least supportive of ethical training may indicate the need for mandatory, rather than optional, training in ethics both in university and Continuing Professional Education courses. (shrink)

The American Institute of Certified Public Accountants (AICPA) is responsible for the Code of Professional Conduct that governs the actions of CPAs. In 1988, the Code was revised by the AICPA, but a number of issues still remain unresolved or confounded by the new Code. These issues are examined in light of the profession''s stated commitment to the public good, a commitment that is discussed at length in the new Code.Specifically, this paper reviews the following issues: (1) client confidentiality and (...) whistleblowing, (2) limited liability, and (3) auditor independence. We argue that, in each of these areas, the AICPA promotes a position that is potentially harmful to the public good. (shrink)

Two central accounts of human cognition emerge over the course of the Middle Ages: the theory of divine illumination and an Aristotelian theory centered on abstraction from sense data. Typically, these two accounts are seen as competing views of the origins of human knowledge; theories of divine illumination focus on God’s direct intervention in our epistemic lives, whereas Aristotelian theories generally claim that our knowledge derives primarily (or even entirely) from sense perception. In this paper, I address an early attempt (...) to reconcile these two accounts—namely, Robert Grosseteste’s commentary on Aristotle’s Posterior Analytics—and I argue that Grosseteste’s efforts to bring Aristotle’s account of human cognition into harmony with a theory of divine illumination proves both philosophically interesting and largely successful. Grosseteste’s claim that God does not directly illumine our intellects in this life opens his theory to the worry that Grosseteste leaves the divine out of his theory of divine illumination in the CPA. Steven Marrone, for example, holds that Grosseteste’s Aristotelian focus in this work causes him to abandon the theory of divine illumination he advocated in the earlier De veritate in favor of a modified theory of “human” illumination. I argue in contrast that Grosseteste does give God a role in human knowledge in the CPA—a role that allows human beings to remain largely responsible for the acquisition of knowledge while still requiring God’s illumination for actual cognition. In short, I conclude that, although human bodies interfere with God’s direct illumination of our intellects, God nevertheless plays a crucial ideogenic role in human cognition by illuminating the objects of our intellection and making them intelligible to us. (shrink)

This study investigated the proficiency of CPAs in recognizing and evaluating ethical and unethical situations. In addition, CPAs provided attitudes on ethics education. Respondents were asked to evaluate the ethical acceptability of CPA behavior as presented in six vignettes involving a variety of ethical dilemmas from questions of conflict of interest to questions of personal honor. The results tend to signify that CPAs can, to a degree, distinguish ethical and unethical behaviors. It appears that ethical behaviors and very specific unethical (...) behaviors were more easily identified by practitioners. This may reveal uncertainty and apprehension as to exactly what constitutes unethical behavior since, in many circumstances, this resolution is made on a case-specific basis rather that via a universal rule. In addition, it is interesting to note that CPAs tend to picture themselves as more ethically-oriented than their peers.With respect to ethics education, the CPAs indicated that instruction in ethical concepts and literacy was important and should definitely be embodied in the accounting curriculum as well as at all educational levels. However, the CPAs were remarkably uncertain and ambivalent as to the qualifications of university faculty to provide this instruction and guidance. (shrink)