Michael K. Shaub

Establishing an ethic of accounting: A response to Westra's call for government employment of auditors

The central question in Westras (1986) search for an ethic of accounting concerns to whom the accountant owes loyal agency: to the client or to the public interest. The authors argue that the accountants master has already been defined as the public interest. An ethic of accounting is identified through analysis of the accoutants master and through examination of the accountants ethical obligations under the Code of Professional Conduct (AICPA, 1988). Potential conflicts between professional and organizational loyalties are analyzed with respect to the real-life problem used by Westra to support her argument. Finally, the implications of government employment of auditors are discussed.

Call of Duty: A Framework for Auditors’ Ethical Decisions

This chapter examines the concept of duty as it applies to audit professionalism. Providing professional literature, examples from practice, and research as support, we assert that duty as an ethical perspective is often subordinated to consequentialist calculations in audit practice. Focus on public interest, a defining attribute of professionalism, tends to fall casualty to self-interested considerations when auditors ignore duty. We explore the concept of professionalism and the roles of duty and virtue in auditing, contrasting them with consequentialism. Then, we examine three obligations of the audit professional—requiring truth-telling, dissenting and confronting, and honestly self-assessing independence and professionalism. Through increased awareness of and attention to duty, auditors may be more able to fulfill their obligations in each of these areas. Making more balanced ethical decisions that are informed by duty could help auditors to maintain professionalism.

A PSYCHOMETRIC COMPARISON OF TWO ORGANIZATIONAL COMMITMENT SCALES

This study evaluated the equivalence of two alternative organizational commitment measures found in the social sciences literature, particularly in business disciplines. The results indicate that the 1974 organizational commitment measure developed by Porter, Steers, Mowday, and Boulian demonstrates better internal and external consistency than the 1984 four-item Hunt, Chonko, and Wilcox scale. Both measures were given to a group of 207 professional auditors employed at all levels in the hierarchy of a large public accounting firm. The auditors averaged 27 yr. of age, with 4.4 yr. of public accounting experience. 61.7% were men, 56.8% were married, and 50.2% had been professionally certified. The factor analysis indicates that the Hunt measure represents one of the three defined aspects of the Porter measure of organizational commitment, an individuals desire to maintain membership in the organization. Based on the results, researchers should be aware that the two scales measure somewhat different constructs and should consider the appropriateness of substituting one measure for the other.

A Wisdom-Based Accounting Ethics Course

Abstract The purpose of this chapter is to describe an accounting ethics course whose purpose, in part, is to short circuit the process that leads to foolish ethical decisions by professional accountants. In addressing how to make ethical decisions, the course deliberately includes processes intended to develop wisdom and to impede reflexive decisions that reflect the five fallacies of thinking. The approach described represents an active, engaging approach to increasing dialogical and dialectical reasoning in students’ pursuit of wisdom through individual selection of outside reading, engaging speakers, and the use of ethics accountability groups. The course is adaptable to large and small class settings where the professor desires extensive interaction among students, and it creates an environment designed to help students develop self-chosen principles to guide their professional lives. Students take responsibility for developing self-determined principles to guide their professional lives. Clearly identifying these principles provides students a basis for resisting ethical compromises in their careers. The course focuses students on developing wisdom and recognizing the weaknesses in a purely calculation-based moral reasoning.

A Case for Updating Management Accountants’ Ethical Standards

Explains the implications for management accountants′ ethical responsibilities following the restructuring of the American Institute of Certified Public Accountants (AICPA) Code. In order to enable management accountants to integrate their work more effectively with internal and external auditors, changes are recommended in the National Association of Accountants (NAA) Code of Standards.

Pivotal change in US policy: how the Sarbanes-Oxley Act affected internal auditing and its relationship to external auditing

Accounting regulation is one aspect of the governments role in protecting the investing publics interest. The Sarbanes-Oxley Act of 2002 (SOX) was an effort by the US Congress to remedy negative effects of earlier major accounting failures. Requirements of SOX highlight the critical role of internal control as a component of accurate and reliable financial reporting. This new emphasis on effective internal controls places internal auditors of public companies at centre stage. Internal audit departments are asked to identify, evaluate, and test the effectiveness of internal controls over financial reporting. This study examines the perceived role of the internal audit function in the external audit and financial reporting process. Results indicate that internal audit participation in the external audit process is perceived to be important by both internal and external auditors. Internal auditors are performing more work for the external auditors after the passage of SOX. Thus, implicitly, external auditors are placing greater reliance on the work of internal auditors.