A 2017 report Building Ethical Capability for Accounting Professionals, by two Swinburne University of Technology staff, Dr Cristina Neesham and Dr Mohammad I. Azim, provides useful information for applicants faced with questions on ethical issues.
The purpose of their project was to ‘identify ethical capability needs of Australian accounting professionals and produce policy recommendations that can inform future measures to improve ethical behaviours and culture in the profession, as well as the design of an ethical capability building program’. [P. 4]
The authors point out that ethical improprieties by accountants can be ‘detrimental to society, resulting in distrust by the public and dysfunctions in the economy’. [P.6] Plus, due to globalisation, the ethical practices of accounting professionals can have worldwide implications.
Accounting benefits from one of the strongest ethics regimes among the business-related professions. [P.6] Yet accounting professionals are still confronted with moral dilemmas and ethical challenges. The authors point out that ethical competence, i.e. the cognitive ability to identify and understand an ethical issue when it arises, should not be confused with ethical performance, i.e. the actual behaviour that enables a decision maker to follow through with an ethical choice. [P.7] This distinction marks the so-called judgment-action gap, i.e. why and how the recommendations provided by ethical competence are superseded and lead to undertaking unethical action.
Ethical capability is defined as ‘the ability to identify and respond effectively to ethical issues, by making, implementing and managing ethical decisions (particularly) when influenced, pressured or forced to do otherwise – either as an organisation or as an individual.’ [P. 7-8]
The authors collect perceptions of Australian accounting and related professionals with regards to ethical issues encountered, response practices observed, recommended solutions, and support actions and resources needed to strengthen ethical capability of individuals and organisations. They conceptualise the integrated knowledge of these four areas as knowledge of ethical capability needs. [P.8]
Based on interviews and questionnaire responses, the authors identify the main ethical issues faced by accountants as:
- Misleading or inaccurate reporting, including inaccuracy, incompleteness and questionable re-categorisation
- Fraud and tax evasion
- Lack of transparency in accounting decisions
- Breaches of confidentiality
- Misrepresenting expertise
- Overcharging fees or over-servicing clients
- Bribery. [ P. 14]
The main sources or causes of these ethical issues were
- Pressure from the client
- Conflict of interests
- Pressure from the employing organisation’s management or leadership.
The most frequent response practices were reported to be:
- Saying ‘no’ to external pressures
- Seeking advice
- Educating either fellow professionals or clients.
The dominant criteria for determining whether an issue is of an ethical nature were:
- Accuracy and correctness
- Justice (fairness) and impartiality
- Completeness and transparency
- Negative effects or consequences, mostly on the integrity of the profession and on clients. [ P. 15]
The authors note an interesting distinction between truth and honesty. Being accurate is seen as related to being truthful, while being complete with information is seen as being honest. An inaccurate person is seen as incompetent, while producing incomplete information is seen as a character shortcoming.
For applicants in the accounting field this report can be used to identify common ethical issues and to help explain responses to ethical issues. For supervisors and managers, the report helps with identifying actions that help build an ethical culture and provide professional development for staff.