$49.5 million
Ethical financial reporting provides all stakeholders with true information relating to an entity’s financial position and performance, enabling them to make properly informed decisions.
Ethical financial advice puts the client’s interests ahead of the adviser’s interests.
Ford decided not to repair the Pinto car after its cost-benefit analysis showed that the cost of repairs was higher than the potential damages from accidents, leading to a court order for damages that exceeded repair costs.
Social order, responsibility, and reverence for family.
Normative theories of ethics propose principles that distinguish right from wrong by establishing a norm or standard of correct behaviour that should be followed at all times.
Ethical egoism suggests that the accountant should provide full and accurate advice and allow the client to choose their professional adviser, as it is in the accountant's long-term interest to do so.
Restricted egoism is seen as a more ethically acceptable form of egoism that sanctions corporate self-interest while encouraging competition, provided it maximizes utility and benefits society as a whole.
1. Identify and articulate the ethical problem(s). 2. Identify all available courses of action. 3. Determine foreseeable costs and benefits. 4. Compare and weigh good and bad outcomes. 5. Select the option that produces the greatest benefit for the greatest number.
Plato and Aristotle.
1. Approve the proposal while expressing her concerns about the risks. 2. Advise Joe to reconsider the expansion until they have a clearer understanding of the market conditions.
Ethics of conduct and ethics of character.
Misleading reporting, cited by 40.88% of the sample.
Both ethical and unethical reporting can have positive and negative consequences for various stakeholders and the entity itself.
29.66% of the sample surveyed.
Professional ethics is the use of principles and frameworks to guide decisions and behaviours that accord with the interests of clients and society and reflect the expectations of the profession.
Utilitarianism focuses on the greatest happiness for the majority, while ethical egoism prioritizes the interests of the individual.
Distributive justice commands that individuals performing the same job functions to the same level should receive equal benefits.
Contemporary ethical issues include the use of AI, ensuring sustainability disclosures are understandable, and greenwashing.
Key sources of pressure include clients, corporate management, and conflicts of interest.
Contractual rights arise out of agreements and relationships between individuals, such as an accountant's duty to provide professional services that the client has a right to receive.
Decision making by professional accountants that does not accord with the profession’s ethical standards impacts negatively on the profession as a whole and on society’s trust in the profession, potentially resulting in increased external regulation.
Teleological theories determine right from wrong based solely on the results or consequences of the decision or action.
1. Prepare the estimates as requested without mentioning the council plans. 2. Refuse to prepare the estimates until more information is available about the council's intentions.
A significant justice issue is the gender gap, where men often receive higher wages than women for equivalent roles.
Utilitarianism evaluates the rightness of an action based on consequences for others.
The focus is on normative theories of ethics.
Enlightened self-interest highlights situations where acting selfishly may not be in one's own self-interest.
Egoism focuses on taking actions that result in the best consequences for the individual taking the action/making the decision.
The intention behind the act itself is more important than the results of the act.
Justice-based theories focus on taking actions that intend to be fair and equitable to the parties involved.
13.87% of the sample.
Pressure from clients (21.43%), conflicts of interest (18.91%), and pressure from corporate management or a board of directors (17.65%).
The primary objective is to find the truth in a situation.
Jane is uncertain about signing off on Joe's expansion proposal due to concerns about the financial viability and potential risks involved.
Common ethical issues include misleading reporting, fraud, tax evasion, lack of transparency, and breaches of confidentiality.
Greenwashing occurs when organizations make misleading or false claims about their environmental consciousness to attract investment.
Ethical egoism describes how people should behave by pursuing their own self-interest, while psychological egoism describes how people tend to behave without implying an ethical judgment.
Students acquire virtues by behaving ethically in context, similar to how athletes or musicians gain their abilities through practice.
Justice theory is concerned with issues of fairness and equality, including procedural justice and distributive justice.
Utilitarian principle
Whether the substance of a disclosure is meaningful for the users for which a report is intended.
Preventing misleading disclosures from being published.
Skills to effectively evaluate and verify the accuracy of management's claims.
A sense of duty to do the right thing.
A right is an entitlement that a person may have by virtue of a particular characteristic, role, or condition.
The utilitarian principle states that the right action is the one that produces the greatest benefit or pleasure for the greatest number of people, while minimizing harm.
If the benefits of a proposed action outweigh the costs, the decision or action is considered ethically correct.
Egoism and utilitarianism.
The decisions that accountants make and those made by others based on information provided by accountants often have significant consequences for stakeholders.
A set of ethical principles provides a coherent and consistent basis for decisions and actions, guiding accountants to ethical decisions amidst uncertainty and conflicting interests.
Maximises net positive benefits to the greatest number of people.
Ethical egoism states that the pursuit of self-interest should not come at the expense of others, while utilitarianism may produce the best overall consequences for everyone, even at the expense of a minority.
Rights-based theories focus on taking actions that intend to recognise the rights of the parties involved.
The three principles are equality principle (equal share), merit principle (reward based on effort or ability), and needs principle (share based on need).
Unethical financial reporting misleads some stakeholders, leading to decisions different from those that would be made with the true information.
$137 million
Accountants that breach ethical standards may face penalties and lose their membership of their accounting body.
29.66%
Egoism evaluates the rightness of an action from the perspective of the decision maker (self).
Religions shape various aspects of thought and influence how individuals and groups engage with each other.
Legal rights are those rights defined and enforced by the legal system, prescribing what people are entitled to and what duties others have to protect those entitlements.
Utilitarianism focuses on taking actions/making decisions that will result in the greatest good for the greatest number of people.
Motive is far more important than the action itself or its consequences.
Seeking advice.
1. Difficulty in measuring non-economic outcomes. 2. Uncertainty in identifying all stakeholders and predicting outcomes. 3. Focus on results rather than intentions. 4. Justification of decisions that may harm minorities.
Research suggests people have varying personal definitions of ethics, and ethicists offer different conceptions of ethics and what constitutes an ethical dilemma.
Ensuring that AI outputs are accurate, free from bias, and comply with relevant laws and regulations.
Aristotle argued that fairness does not mean treating everyone the same but acknowledging individual differences and allocating resources accordingly.
Virtue ethics.
It illustrates the tension between an employment agreement requiring confidentiality and the publicizing of sensitive information.
Integrity entails the disposition to do the right and just action without regard to personal gain or advantage.
Gil is asked to prepare financial estimates for the sale of the business without disclosing potential risks related to local council restrictions on food trucks.
Key ethical principles include integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
Descriptive ethics explains existing behavior, while normative ethics sets norms for how people should behave.
Kant, Rawls, and Jonas.
The difference principle allows for unequal distribution of resources only if it works to everyone's advantage, including those in inferior positions due to the inequality.
Virtue ethics focuses on understanding and developing virtues that make individuals better people.
Acts of self-interest are commonly misunderstood as acts of selfishness.
Deontological theories centre around the need for individuals and groups to consider the intent of actions.
A good decision is one that respects the rights of others.
They provide a framework for judging the rightness of an act or decision after the event has occurred, and a framework for decision making to resolve ethical problems.
Maximises net positive benefits to oneself.
Virtues are defined as attitudes, dispositions, or traits of character that enable ethical behavior and become habitual through consistent practice.
Commonly recognized human rights include the right to life, freedom of choice, right to the truth, right to privacy, and freedom of speech.
Teleological theories centre around the need for individuals and groups to consider the consequences of actions.
Examples of virtues include courage, courtesy, compassion, generosity, fairness, fidelity, friendliness, honesty, integrity, prudence, and self-control.
The rights principle struggles to address conflicting rights and obligations, providing little guidance on how to prioritize among different rights.
The three virtues are expertise, courage, and integrity.
An accountant has a duty not to breach this right unless the need to serve the public interest supersedes it.
