Ethical dilemmas and educational challenges

Critical Perspectives on Accounting 19 (2008) 222–254
Accounting scandals, ethical dilemmas and
educational challenges
Mary Lowa,∗, Howard Davey a, Keith Hooper b
a Waikato Management School, The University of Waikato, Hamilton, New Zealand
b Faculty of Business, Auckland University of Technology, Auckland, New Zealand
Received 12 November 2005; received in revised form 12 April 2006; accepted 12 May 2006
Publicity over the role of accountants often accompanies major corporate collapses. It is argued
that recent corporate scandals have set a new low for the accounting profession. It is, after all, the
accountants who have assisted in financial management, prepared financial statements and audited
these statements. As a corollary to this, it can be argued that accountants play a significant role in good
corporate governance and ethical sustainable business practices. Increasingly there are calls for greater
transparency and corporate governance as well as increased adoption of professional and ethical
practices by businesses. Is this possible given our inherently materialistic nature of accumulating
wealth? The question must therefore be asked, if new or additional legislation would not work,
what will? It has also been argued that poor quality professional education is one of the problems
contributing to these scandals. This paper identifies and explores five factors that seemingly influences
and contributes to the perpetuation of accounting and corporate scandals because of their impact on
ethical behaviour. Also discussed in this paper is the debate related to the inadequacy of university
curricula particularly with regard to the influence of ethics education on accounting graduates. To
investigate further these issues, we surveyed students to ascertain whether they believe education can
influence ethical behaviour. The findings from the surveys could not conclusively indicate that students
perceived ethics education to have a significant influence on their ethical behaviour but nonetheless
they believed that it was still important to have ethics education in their programme of study. This
finding, in itself, suggests that it is still possible to influence the ‘thinking’ of accounting graduates
before they entered the complex world of business.
© 2006 Elsevier Ltd. All rights reserved.
∗ Corresponding author at: Department of Accounting, Waikato Management School, The University of Waikato,
Hamilton, New Zealand. Fax: +64 7 8384332.
E-mail address: [email protected] (M. Low).
1045-2354/$ – see front matter © 2006 Elsevier Ltd. All rights reserved.
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 223
“To educate a person in mind and not in morals is to educate a menace to society”
(President Theodore Roosevelt)
1. Introduction
It is fitting that we start our paper with a quotation from Theodore Roosevelt, the 26th
President of the United States of America (1901–1909). Roosevelt was prescient in warning
us a century ago, “To educate a person in mind but not in morals is to educate a menace
to society” (Platt, 1989, website source, not paginated). Society continues to suffer from
corporate and accounting scandals, despite the fact that people are now better educated.
Why? Roosevelt may have been right in his warning. Contentiously, behind each scandal
and crisis is a possible lack of morals in “educated people”.
Crises in accounting are not new. Accounting scandals of firms (should not we really
be saying “people”?) manipulating results continue to make news headlines. Where are
things going wrong? Can blame be placed on perceived weaknesses of legislation and
accounting standards? Or is it that education is not producing the type of accounting and
business graduates needed to prevent such scandals? Applying Roosevelt’s warning, one
could regard lack of morals in “educated professionals” as the “accounting menace” to
society. Year 2002 has been reported as a watershed period for the accounting profession
because of significant American corporate collapses such as Enron, WorldCom and Tyco,
to name a few. With the collapse of Arthur Andersen, the “Big Four” accounting firms of
PriceWaterhouseCoopers, Deloitte & Touche, Ernst & Young and KPMG remain.
Referring to the proposals to reform accounting, auditing, and corporate governance in
the aftermath of the 2001 and 2002 collapses of large companies, Amernic and Craig (2004)
These have included strong calls from diverse quarters for the business community
to commit determinedly to new ethical and moral values, to develop better mechanisms for corporate governance, and to exercise better corporate responsibility. (pp.
In America, there have been calls for tighter and tougher reforms in accounting standards and government regulations. Elsewhere in the world, discussion continues on the need
for each country to take its own measures to avoid an “Enrongate” type crisis. The recent
American cases of Enron and WorldCom have triggered legislation in America such as the
Public Company Accounting Reform & Investor Protection Act of 2002 and the SarbanesOxley Act 2002 that impose tougher sentences on corporate fraud. Professional bodies
worldwide have also responded by issuing documents on corporate governance and transparency. For instance, the Institute of Chartered Accountants of New Zealand (now known
as the New Zealand Institute of Chartered Accountants (NZICA)) has issued a document
titled “Corporate Transparency—Making Markets Work Better.” The Institute of Chartered Accountants of Australia, which is an inaugural member of ASX (Australian Stock
Exchange), contributed to the development and release of the “ASX Corporate Governance
Council Principles of Good Corporate Governance and Best Practice Recommendations.”
The United Kingdom responded with the “Turnbull Report on Internal Control: Guidance
224 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
for Directors of Listed Companies Incorporated in the UK” that was published by the
Institute of Chartered Accountants in England and Wales.
However, will the recommendations contained in these professional pronouncements
stem the flow of corporate fraud and accounting scandals? Some would argue that these
were typical institutional responses by the profession and authoritative bodies. Thomas
(2002) writes:
In a characteristic move, the SEC and the public accounting profession have been
among the first to respond to the Enron crisis. Unfortunately, and sadly reminiscent
of financial disasters in the 1970s and 1980s, this response will likely be viewed by
investors, creditors, lawmakers and employees of Enron as “too little, too late.” (p. 7)
Furthermore, the practice of issuing professional or legal edicts/standards by professional
and authoritative bodies following accounting or business collapse-type scandals may be
seen as attempts to placate society and thereby ensure that society maintains confidence in
the credibility of the services being provided. The burning question is whether such reforms
will address the crises that seem to erupt time and time again. Pitt (2004), a former chairman
of the Securities & Exchange Commission in America, says that new laws will not prevent
the next corporate scandals:
And, no matter how many laws and regulations are passed, there’ll always be some
who lie, cheat or steal on a grand scale, in the misguided belief that risks are outweighed by the potential gains. As Plato put it, “Good people don’t need laws to
know they must act responsibly, while bad people will always search for ways around
them.”(Pitt, 2004, p. 3)
Smyth and Davis (2004) argue, “[c]ertainly the widespread nature of the recent publicized
scandals suggests that there has been a deterioration of ethical standards in the corporate
workplace and raises the question of whether regulatory or legislative actions alone will be
sufficient to ensure that the next generation of workers will demonstrate ethical decision
making” (p. 64). It has subsequently been argued that “one of the causes of the seemingly
never-ending parade of accounting scandals and unexpected company collapses has been
the inadequacy of university curricula and business education” (Amernic and Craig, 2004,
p. 343).
This paper will first examine the questions raised by recent accounting scandals and
identify the underlying factors that arguably contribute to the recurrence of such crises,
in spite of changes to legislation and accounting standards. In order to achieve a broader
view than that presented in academic publications, we undertook a review of literature from
a variety of sources, including academic, professional, business and media publications.
By drawing on publications outside the academic arena, a broader view of the causes of
corporate collapses and accounting scandals was obtained. The literature search identified
a range of issues that writers argued were contributing factors in corporate scandals. For
instance, documents released by professional and legislative bodies included discussion
papers on the need to improve corporate transparency and audit independence. Five recurring
themes drew our attention and we identified these as the key underlying factors that were
to become the focus of this study. The frequent identification of these five factors in the
literature suggests that they permeate and compound the problems that accountants face
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 225
in the demanding and complex world of business and commerce, and that they may also
contribute significantly to the recurring scandals. The five factors that we focus on are:
issues of corporate transparency; corporate values and behaviour; money culture; vices of a
capitalistic society; the prevalence of a legalistic culture. Arising from our literature search,
we identify a major issue: the inadequacy of business/accounting education to provide
graduates with the ability to cope with complex business ethical decision making. This
important issue will be discussed as a prelude to two surveys that were conducted with
accounting students.
The paper will subsequently illustrate how the five factors might have an influence on the
behaviour of accounting students. To achieve this objective, a simple questionnaire survey
[Survey One] was conducted in a senior class to find out what their responses would be
to situations that involve some of the five identified factors that contribute to the perpetuation of accounting scandals. Furthermore, we wanted to find out students’ opinions on
whether education can influence ethical behaviour. A questionnaire survey [Survey Two]
was conducted with third year accounting students. If our findings were to show that students had a strong belief that there is a linkage between education and its influence on
ethical behaviour, then we might suggest that good corporate governance can happen in
organisations. Good corporate governance could lead to the ethically sustainable business
practices that are increasingly needed in a complex business world. In concluding this paper,
we reflect on the findings of our investigation and stress that good ethical behaviour is fundamental to organisations; without it, good corporate governance and ethically sustainable
business practices may not be sustained.
Before proceeding further, it is important to note that our study has several research
limitations. Firstly, our literature review, while broad in scope, was not a comprehensive
or systematic review of corporate scandal issues. Secondly, the study is fragmentary in the
sense that we chose to focus our discussion on five main themes as underlying factors that
contribute to corporate scandals. There is obviously a much wider scope of issues we have
not researched. Thirdly, the questionnaires conducted on the two survey groups were only
very small studies and a more extensive study would yield more conclusive findings about
the role that education can play in influencing ethical behaviour in accounting graduates.
2. Underlying factors that contribute to accounting and business scandals
The integrity of the accounting profession and the credibility of financial information
provided by businesses have been undermined by scandals. Much of this derives from
questionable ethical practices of corporate executives and accountants. The 2003 Task Force
on Rebuilding Public Confidence in Financial Reporting, an independent group that was
commissioned by the International Federation of Accountants, reports:
Many of the examples of reporting failure evidence a failure to act ethically by at least
some of the participants. The list is lengthy: misleading auditors, auditors looking the
other way, disguising transactions, withholding information, providing unbalanced
advice, abuse of trust, and misusing insider information. Participants have been seen
as following self-interest without concern for the interests of the company or its
shareholders. (p. 15)
226 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
Such negative behaviour by participants has been contentiously linked by researchers
to the capitalist economic system. It has been suggested that accounting is central to the
workings of capitalism. Debate on the legitimacy of capitalism as an economic system continues. For instance, Gasparski (2002) states that, “[t]here is a dispute lasting over a century
between those who believe that capitalism is immoral in itself and those who advocate it as
a system establishing just behaviour by itself” (p. 7). But what if capitalism as a system in
establishing just behaviour by itself is only a theoretical ideal? Young (2003) contends that
what has happened in recent history can be explained by excesses of capitalism. He stresses
that it is this brute capitalism ideology that has led to the scandals and social ills becoming
equivocal features of modern business. According to Young, this is where capitalism has
turned its back on the ideals of Adam Smith and has degenerated into arrogance, amorality
and an interest only in the narrow definition of the bottom line. Young illustrated the “cost of
brute capitalism” (p. 38) by considering the achievements of corporate boards of directors
and the senior officers they hired and supervised. Some of these have been cited here to
illustrate the perverse role that accountants would have played in these “achievements”:
• Enron: accounting/off balance sheet contrivances; chief financial officer indicted; company bankrupt; billions of equity value lost
• Tyco: chief executive officer charged with tax evasion, waste of corporate assets; massive
charge of $6 billion to earnings after disposal of CIT unit
• WorldCom: $3.8 billion fraud; loans to chief executive officer; bankruptcy
• Adelphia Communications: off balance sheet loans to senior officers
• Xerox: accounting overstates profits by $1.4 billion
• Global Crossing: filed for bankruptcy after fiddling accounts
• Qwest Communications: chief executive officer resigned; profits restated, assets cut by
50%, or $34 billion; share price down
• Health South: $1.4 billion fraud; false entries created in income statements and balance
• $110 billion merger of AOL and TimeWarner cemented with inflated accounting of AOL
revenues; within 18 months, company value declined 75%, and massive write-downs of
asset values were taken – AOL’s 2002 earnings were written down by $98.7 billion (a
figure only slightly smaller than the European Union’s budget for 2003); civil litigation
ensued for damages to investors
• Bristol-Myers: restates $2.5 billion in sales and $900 million in profits after inflating
distributor’s stock levels; settles antitrust lawsuits for a cost of $670 million
• Vivendi-Universal in France: failure of strategy; loss to shareholders; class action suits
filed alleging misrepresentation of company’s financial realities
• Ahold in The Netherlands: chief executive officer fired and stock price collapsed after
American subsidiary was found to have falsely reported earnings
• HIH insurance group in Australia: failed with debts of $3.1 billion after consistently
understating claims liabilities; chief executive officer, among other things, spent A$
340,000 on gold watches in 1 year; criminal and civil charges pending against several
• SK Global in South Korea: overstates 2001 earnings by $1.2 billion; liquidity crisis
caused for credit card companies; $10 billion pulled by investors from investment trusts
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 227
(pp. 38–40, Reprinted with permission of the publisher. From Moral Capitalism, Copyright©(2003) by Stephen Young, Berrett-Koehler Publishers, Inc., San Francisco, CA.
All rights reserved.
The above corporate scandals illustrate why accountants and the functions that they perform have been viewed as being central to the workings of capitalism where “just behaviour”
does indeed appear only to be a theoretical ideology. Clarke et al. (2003) state, “[t]here has
been a pervasive lament that instances of inadequate information flows and accountability
checks threaten the trust that is so essential to the capitalist market-based system” (p. 13).
Importantly, they note:
Yet, after all the huff and puff in Australia and the United States, where the defaults
were the most talked of, where regulators have declared they will get tough, and where
government-sponsored inquiries have taken place, there seems little attempt to change
fundamentally the system of accounting – tinkerings and fine tunings have been
preferred. The main aim seems to be to retain the primarily self-regulated expenditure
capitalisation system at all costs. (p. 13)
Chambers, in Clarke et al. (2003), writes: “[c]orporate accounting does not do violence
to the truth occasionally and trivially, but comprehensively, systematically, and universally,
annually and perennially” (p. 3). Sikka and Wilmott (2002) argue that accounting “prioritises
property rights (as in a balance sheet), celebrates the supremacy of capital over labour (as
in the income statement) and encourages belief in efficiency, profits and competition” (p.
194). We posit that such prioritisation ultimately leads to the consideration of “self” above
all else. Furthermore, we suggest that such self-consideration promotes negative behaviour
associated with the five factors identified in our literature review. The negative behaviour
associated with the five factors, involving corporate transparency, corporate values and
behaviour, money culture, vices of a capitalistic society and legalistic culture, contributes
significantly to the never-ending scandals. Each of these factors will now be explored.
2.1. Corporate transparency
Whenever corporate fraud or accounting scandal occurs, a common feature will be irregularities in financial reports; this creates a lack of confidence and uncertainty and reduces
the decision usefulness of such reports. It has been suggested that continuing revelations of
accounting scandals involving America’s iconic corporations have shaken investor confidence and the public perception of corporates and the accounting profession. Turner (2002)
notes that the vitality of financial markets and economic activity rests on the profession’s
ability to restore confidence in the financial reporting system. A CBS News/New York
Times poll (cited in Paul, 2002) reported 7 in 10 respondents as saying, “the accounting and
other practices that led to Enron’s collapse are widespread in corporations” (p. 24). Why
are such questionable accounting and corporate practices so widespread? What effect does
this have on corporate values, culture and behaviour?
The Economist Intelligence Unit (EIU), claims that, “[n]early a year after the Enron revelations first surfaced, corporate governance dominates the political and business agenda”,
that “[n]o one disputes the need for transparency, honesty and accuracy on the part of corpo-
228 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
rations”, but questioned whether “the pendulum has swung too far?” (2002, p. 1) The EIU
white paper notes that concerns were raised among executives that hastily prepared regulations and overly strict internal procedures may impair their ability to run their business
effectively. The Unit also notes that today’s corporate turbulence may seem unprecedented,
but that it has happened before. They cite J.K. Galbraith’s book, “The Great Crash 1929”,
which chronicled how an asset bubble bred lax accountability. The bubble’s collapse exposed
malfeasance as money became tight; this created a loss of investor confidence and public
outrage that, in turn, prompted a hasty reaction by lawmakers and regulators. Imhoff (2003)
maintains that serious problems exist today in accounting, auditing and corporate governance that undermine the quality and integrity of financial reporting. He writes that to
attribute U.S. accounting failures to a deficiency in U.S. GAAP was totally inappropriate.
He argues that U.S. GAAP represented the most comprehensive set of financial statement
requirements in the world and that this therefore generated greater transparency in financial reporting than in any other country. Imhoff supports his argument by pointing out that
accounting rules required implementation by managers to disclose the complex activities of
a transaction which were subsequently reviewed by auditors. Importantly, he stresses that
managers and auditors could always circumvent both bright-line and principles-based rules
when they no longer acted in the interest of shareholders.
Saravanamuthu (2004)suggests that the profession had deprioritised the public interest at
a time when society sought responsible direction for sustainable business practices and life
styles. The profession’s alignment with commercial interests undermined its very status and
relevance as a profession. She argues that “gold-collarism” (explained by Saravanamuthu
as a term that Kelley in 1985 coined to signify the end of knowledge workers’ struggle for
control over the labour process), which includes accountants, draws attention to the “ethics
versus profits” dilemma that the profession is embroiled in. She further states, “it appeared
that the public interest role was abandoned for a more lucrative one of consulting-partner
to the business community despite its presumed impartiality in transforming management’s
rules of engagement with multiple stakeholders” (p. 587). If decreasing confidence is placed
in financial reports prepared and audited by the accounting profession, we need to examine
why this is happening. The next section will reflect upon the corporate values and behaviour
that come into play when managers, auditors and accountants no longer act in the interests
of the public and shareholders/stakeholders.
2.2. Corporate values and behaviour
The situation regarding corporate values and behaviour was aptly summarised by Higgs
(in EIU, 2002 paper, p. 5): “The first thing in this game is that there are no absolutes.
There are no blacks and whites. There is no such thing as getting it right-there are only
behaviours that tend to improve the outcomes.” An accounting analyst with Credit Suisse
First Boston, Zion (in Tunick, 2002) says, “I think everyone’s looking for black and white,
and the accounting rules are not black and white”; furthermore, Zion claims that, “the
overabundance of information and transaction types within GAAP creates confusion on
how its rules should be applied” (p. 1). The EIU paper declares, “What’s more, a key lesson
from the Enron experience, where the board was an exemplar of best practice on paper,
is that governance structures count for little if the culture isn’t right” (p. 9). Tierney (in
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 229
the EIU 2002 paper) explains, “Culture is what determines how people behave when they
are not being watched” (p. 9). The crisis in corporate confidence can thus be attributed
to lapses in personal and professional integrity, and their subsequent effect on accounting
firms and their corporate clients (Adler, 2002). When such deficiencies are scrutinised and
found wanting, the profession and offending corporations become villains. Korten (1998)
postulates that the prevailing sentiment in business schools is that executives are to be
trained to succeed in the world of business as it exists, not to change it. He adds that the
best and brightest executives are being trained for careers in service to an economic system
engaged in the systematic decapitalisation of people and planet to make money for the
already very rich. This is a myopic ideology. Korten asserts that we need to create a system
that makes power accountable to life, or money will destroy us. Therefore, Korten contends
that serious attention is needed “from talented professionals who value people, nature, and
our living planet more than they value money and people who have expertise in the design
of large-scale behavioural systems” (p. 389). Young (2003) argues for moral capitalism,
where private interests should be reconciled with the public good, public confidence can be
restored, wealth created for all and poverty ended. A strong argument was put forward by
Craig and Amernic (2002a):
… we contend that the very nature of corporatized capitalism as a social and economic
phenomenon requires scrutiny because of the power and attendant mindset it bestows
on key elites and the behaviours it imposes on many others. Therefore, even ‘model
citizen’ corporations, especially the powerful ones, require permanent critique, since
closer scrutiny may unmask some of the perceptual blinkers by which they were
judged to be such ‘model citizens’. (p. 143)
The above discussion raises issues of ethical behaviour by participants embroiled in
the ongoing business and accounting scandals. Should we not examine ethical values of the
participants, if we want to improve stakeholder confidence in what we do? Could we, through
education, influence participants’ behaviour? Can they be taught and influenced on how to
behave appropriately for the overall good of society? What is this elusive quality that will
make us all winners in the world that we live in? People need to ask “what matters most?”
(Korten, 1998, p. 389). It has been debated that what matters most is largely an internal
contest about what values we hold versus what values we ought to hold and what society
expects of the profession.Jones (1998) comments, “it is a war within each of us” (p. 20) and
claims that there is a battle between our material desires and satisfactions and our deeper,
possibly buried, convictions about nature and the integrity of creation. The high profile
Martha Stewart case in America provides such an instance. Martha Stewart built a catering
company into a media empire of lifestyle magazines, cookbooks and television shows and yet
chose to make an unethical and illegal decision that, one could argue, was about maximising
her wealth accumulation, realising her material desires and gaining satisfaction. She was
found guilty in March 2004 of conspiracy and making false statements. The 11 March 2005
Editorial of The Boston Globe observes:
Stewart released from the facility in Alderson, W.Va., last week after serving five
months for lying to federal prosecutors investigating the 2001 sale of ImClone
Systems Inc. stock symbolises America’s ambivalence for honesty. She is seen by
230 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
some as a queen of the culture of cheating, condoned because “everybody loves it.”
(p. A14)
In his investigation into the history of corporate collapses in Australia, from the first
bank closure in the 1820s through the four great recessions of the 1840s, 1890s, 1920s and
1970s to the downfall of the house of Gollin, Sykes (1988) writes:
Nor can we ignore the high incidence of fraud and dishonesty which has been chronicled in official reports and investigations. It is probably true to say that nearly every
company in Australia is being plundered to some extent by its directors and senior
management. The most frequent form is by falsifying expense accounts or charging
items of personal consumption to the company’s account. As long as the company
stays healthy, with strong and genuine earnings, these practices can be tolerated as
perquisites of office. (p. 551)
The norms of society contribute to corporate values and behaviour that demands individuals put their material desires first; it is by the accumulation of personal wealth that the
success of an individual is measured. The battle for material desires is therefore entwined
with a prevailing and overriding culture that insidiously dictates our quality of life and how
we live, without it in this modern society, we cannot survive: this is the money culture.
2.3. Money culture
Money makes the world go around, so we have been told. Without money we cannot
have resources to develop and grow. Without money, we cannot have a comfortable life and
some would like to have more than just a comfortable life! Right from an early age we are
introduced to the idea of money and its importance in providing the things we need. Children
are told that they cannot have good resources in their classrooms because their schools lack
the money to buy them. Increasingly, they are involved in fundraising activities to fund these
resources. They are given raffle books and other fundraising forms. Kindergartens hold
dance-a-thons. Primary schools hold skip-a-thons. Forms have to be filled in by sponsors
to indicate the dollar amounts that the children will earn for their institutions from these
“fun” activities. Commercial organisations become involved early in our children’ lives.
The sponsoring of their products by schools, for example, photo shoots and pies, allow
commercial organisations to get their money before giving the school a percentage of the
proceeds. What is becoming increasingly apparent is that children now learn from an early
age the “value” of money. Gallo (2001) writes:
We are barraged with messages about money and values associated with money from
toddlerhood to adulthood. For way too many children, the bulk of those messages are
from the most sophisticated information delivery service ever invented: the modern
marketing industry that inculcates the message that consumption is good and that he
who dies with the most toys wins. (p. 46)
We argue that it is the importance of this money culture that we take with us as we grow
up to become more active participants in the world. We are trained and conditioned from a
very early age that money allows us to have things and that other matters become secondary.
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 231
It is of little wonder that peoples’ values and behaviour may become questionable when their
sole purpose in life is devoted to acquiring money and its associated pleasures. We see this
in the Chapman debacle where the gamekeeper had turned poacher. Chapman was a New
Zealand auditor-general who appeared not to have enough money to spend. He was found
guilty of using taxpayers’ money to fund his personal expenses. On 11 August 1998, The
Evening Post reported that this disgraced former auditor-general was penalised by ICANZ
(now NZICA) for fraudulent activities. Another debacle that illustrates how money plays
such an insidious role in our lives occurred in the HIH Insurance Company in Australia.
The findings of the Royal Commission into HIH, Australia’s largest corporate collapse,
indicate that the founder and former HIH chief executive, Ray Williams, faced charges of
misleading investors, giving away company money and keeping crucial information from
the board. Clarke et al. (2003) write:
What’s a billion or two between corporate friends? The 1980s high priests of corporate
finance, now the disgraced entrepreneurs, certainly had no qualms in lending hundreds
of millions of dollars to each other. Revelations in the HIH Royal Commission indicate
that little may have changed over the subsequent two decades – they refer to alleged
corporate largesse with ‘other people’s money’, in the form of a ‘river of money’
flowing from HIH just prior to its liquation. It was reported in the press that Counsel
for the HIH Royal Commission alleged that CEO Ray Williams dished out millions
of dollars on executive rewards, bonuses and funding to associates and charities prior
to HIH’s collapse. (p. 9)
Cahn (2000) writes, “[w]e are so immersed in a money environment that we can no more
perceive how it shapes or affects our perception than a fish can imagine that water might
distort the world it perceives” (website source, not paginated). It has been suggested that
the worship of money has become our secular religion and that we live in an age where
money talks and people listen (Lapham, 1988). One might ponder, all for what? Sykes
(1996) illustrates the impact that the money culture has on people when he writes about
Australia’s corporate collapses:
They were bold riders, all right. The corporate cowboys of the 1980s rode our financial
landscape as none had done before. They used tiny equity holdings as the basis for
huge empires built on debt. They took the savings of Australians, entrusted to our
banks, and channelled them into takeovers on a scale that had never been seen before.
(p. xv)
One has to reiterate, all for what? Sykes affirms the views held on the money culture
when he comments:
The Eldorado they sought came in many shapes. A mansion with rich furnishings and
an art collection was de rigeur. It was usually supplemented by a country estate with
equally rich fittings. There were private jets and luxurious boats, strings of racehorses
and sleek, high-powered cars. Their wives wore diamonds and–in many cases–so did
their girlfriends and mistresses. (p. xv)
As an interesting aside relating to the issue of money, but one which is more related to
academic publishing than to the business environment per se, Tinker (2000)states, “[m]oney
232 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
can’t buy you love, but it can buy a piece of the editorial action of a prestigious journal
like Accounting Horizons, especially when money materialises as academic labor power.”
(p. 58) Young (2003) brings out clearly the issues associated with money and power. He
There are times when we may sell our souls to gain what money promises in the way
of power and license. This is especially true in today’s culture of consumerism where
we have sanctified appetite over character. Money enables us to do what we want.
People seek it; they covet it; they even kill for it. Money provides us with discretionary
power, easing our ability to turn people and their needs to our use. (pp. 136–137)
The issues dealing with money are reinforced by Korten (1998) who writes, “[o]ur
present system makes power accountable to money rather than to life” (p. 389), and adds
that because people confused the relationship between money and wealth, they have come
to embrace policies and institutions that are destroying the real wealth of the planet and
society to make money. Soros (1997) argues that people increasingly rely on money as the
criterion of value. There is a perception that what is more expensive is considered better,
that the value of art can be judged by the price that it fetches and that people deserve respect
and admiration because they are rich. He states, “what used to be a medium of exchange
has usurped the place of fundamental values” (p. 4). Furthermore, Soros (1998) writes:
What I can say with confidence is that the substitution of monetary values for all
other values is pushing society toward a dangerous disequilibrium and suppressing
human aspirations that deserve to be considered as seriously as the growth of GNP.
[…] Profit-maximising behaviour follows the dictates of expediency and ignores the
demands of morality. Financial markets are not immoral; they are amoral. By contrast,
collective decision making cannot function properly without drawing a distinction
between right and wrong. We do not know what is right. If we did, we would not need
a democratic government; we could live happily under the rule of a philosopher king
as Plato proposed. But we must have a sense of what is right and what is wrong, an
inner light that guides our behaviour as citizens and politicians. (p. 208)
In addition, Soros asserts that what is happening in our society today is that our sense
of right and wrong is endangered by our preoccupation with success being measured by
money. It therefore appears that it is this money culture that entwines people into the vices
of a capitalistic society.
2.4. Vices of a capitalistic society
So what are we up against? Cooper and Deo (2005) argue:
The process of blame shifting and the rhetoric of attempting to prevent a recurrence of
unexpected corporate failures such as One-Tel, Health International Holdings (HIH)
in Australia and Enron in United States and Europe’s Parmalat, inevitably ensure that
the regulatory failures and reform cycle will continue to be “a never ending story”.
(p. 156)
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 233
We argue in this section that it is the vices of a capitalistic society that contribute to
the never-ending nature of corporate and accounting scandals. Percy (in Bruce, 2002) is
of the view that there are systemic reasons for corporate failure, based on behavioural
issues. He indicates that there is a wider issue than just the reforming of accountants in a
crisis. According to Percy, “a culture of integrity in business dealings” (p. 3) needs to be
re-established. EIU (2002) white paper reports that, “[i]n any case, corporate governance
is about much, much more than the accuracy of the balance sheet” and “[i]ndeed, except
in cases of rudimentary fraud, the balance sheet is just an output of manifold structural
and strategic decisions across the entire company, from stock options to risk management
structures, from the composition of the board of directors to the decentralisation of decisionmaking powers” (p. 7). Senior management members focus on becoming leaders, in some
cases world leaders, in their industry area. The desire to be a leader may tend to outweigh
corporate social responsibility issues. Importantly, however, Smith and Smith (2003) contend that, “If you occupy a position of leadership then your actions profoundly influence
those who follow your example”, and cite General H. Norman Schwarzkopf’s view on the
leadership issue: “Leadership is a potent combination of strategy and character. But if you
must be without one, be without strategy” (p. 7). We can only postulate that the strength and
conviction of one’s character will determine pertinent strategies. Kammler (2002) writes,
“[w]hile we are talking of economic performance, another separate discussion is going
on about the lamentable loss of our ethical values. Nobody seems to realize the two are
connected or, even worse, that the unfettered free market economy is itself destroying our
values” (p. 9). Citing Mumford, Kammler argues, “[t]he capitalist scheme of values in fact,
transformed five of the seven deadly sins of Christianity – pride, envy, greed, avarice, and
lust – into positive social virtues, treating them as necessary incentives to all economic
enterprise; while the cardinal virtues, beginning with love and humility, are rejected as bad
for business” (p. 9).
Phillips (2002) reinforces this view when he notes that speculative markets and growing
wealth also corrupt philosophy and ideology, reshaping them to justify greed and ruthlessness. According to Phillips, the 1980s and 1990s imitated the Gilded Age1 (1878–1889)
in intellectual excesses of market worship, laissez-faire and social Darwinism, and those
notions of commonwealth, civic purpose, and fairness have been crowded out of the public debate. The privatization of telecommunications and energy entities into profit-making
companies illustrate Phillips’ argument adeptly. In the past, these entities were state-owned
enterprises, providing essential services to society. Since their privatization and the adoption of a capitalistic business model, the focus of these companies has been to maximise
their returns (profits), irrespective of the cost burdens on society. Media reports indicate
the suffering of the elderly in the winter months because they cannot afford to turn on
their heaters. Where is the notion of commonwealth, civic purpose and fairness from these
companies? They inform the shareholders (and the government), whom they perceive to be
1 The Gilded Age in the American history period saw the growth in industry that produced a lot of wealth for a
number of businessmen like John D. Rockefeller (in oil) and Andrew Carnegie (in steel) who became known as
robber barons; people who got rich through ruthless business deals. The Gilded Age got its name from the many
great fortunes created during this period and the way of life this wealth supported. Information was sourced from
the Library of Congress website:
234 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
their main stakeholders, that their economic performance is below par if they are not generating millions of dollars surpluses. To obtain these surpluses, they argue that charges on
consumers/society need to be increased. Of course, they would not present their arguments
in such a manner. Explanations for such fee increases would focus on how onerous a cost
it is to provide such essential services. They would argue that if charges were not increased
then the quality of the services provided would diminish. However, the ulterior motive for
such surpluses must be questioned, especially since society is hurting from such continually
increasing charges.
It has been argued that genuine and sustainable reform has to come ultimately from
within and not be legislated from outside. Googins (2002) points out that if corporate
leaders commit themselves to an honest and deep self-reflection, they will recognize the
downsides to the narrow brand of capitalism that has marked much of recent decades.
Schwartz (2002) writes that the deeper, radical truth was that the Enron debacle epitomizes
the dangers of the speculative “free market” mania that has resulted in deregulation and
the gutting of the public sector in favour of the fool’s quest for short-term profit. He also
suggests that the other side of speculative profit is speculative bust, the costs of which
fall on small investors and workers rather than on corporate executives who are routinely
rescued by government bailouts and “golden parachutes”. Schwartz further notes that the
“Enron collapse is not a footnote to an otherwise healthy global capitalism” but rather
that it was “another calamitous product of a deregulated financial system that places all
the costs of corporate risk-taking on ordinary citizens and allows the speculative risktakers to get away with – for them – costless failure” (p. 7). Googins writes, “[w]hat
will win back our confidence in big business is not the sight of a chief executive behind
bars, but a solid record of companies practicing good corporate citizenship” (p. E4). He
Years of working with hundreds of companies as they develop their citizenship strategies has taught me what citizenship is – and what it isn’t. Corporate citizenship is not
about how a company gives away money. It’s about how it makes its money and how it
manages its money. Good corporate citizenship is fiscal transparency, the demonstration of a corporate social conscience, and evidence that corporate values are more than
pretty words on a framed plaque. Look at Enron. It had an ethics program, standard
accounting practices and a code of conduct. It even invested $18 million in minority
– and women-owned businesses in what was a truly laudable community economic
program. Yet, all of that was choked off by corruption at the core of the company. (p.
Why do corporate managers get involved in acts of corruption? Korten (1998) asserts
that it is not because they lack morals or that they have no sense of right and wrong. He
No. They do it because it is what they are paid to do and they work in a culture of
capitalist ideology that says their job is to produce returns to shareholders – governments and society will take care of the rest. Furthermore, it is what business schools
train them to do. (p. 395)
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 235
Pratt (2002), however, puts forward another notion:
Organisations can be portrayed as inherently evil, to be resisted and criticised at every
turn. Or they can be seen as, for the most part, led by inherently good people who are
doing their best to create sustainable wealth and well-being for people, organisations
and society with a set of tools and ideas about managing and accounting which are
grounded in modernity and ill-suited for a post-modern world. (p. 189)
In equipping accounting and business graduates with inappropriate tools and ideas about
how organisations should operate in the post-modern world, it should come as no surprise that business collapses and accounting scandals continue to happen. Interestingly,
Mintzberg, cited in Cowe (2002), says that while the current crisis of corporate honesty
stemming from the collapse of giants such as Enron and WorldCom has highlighted the
dangers of the US-inspired model of shareholder value, the issue was more fundamental
than old-fashioned corruption. He explains that the problem was what he called “honest
corruption” (p. 10) and that this referred to a system that allowed companies to damage
society within the law and executives to amass untold riches, despite destroying value. This
system of honest corruption, known as the “legalistic culture” (EIU white paper, p. 6), is a
dominant and controlling factor that prevails in the complex world of commerce.
2.5. Legalistic culture
Society is increasingly being confronted with a legalistic culture that exists in corporations which seem to take the attitude that law can be interpreted to suit their own ends, that
is, in such a manner that if the interpretation says that they are not breaking the law then it is
fine for them to conduct the action. This would imply that corporations take a narrow legalistic view when conducting their business; if they are not breaking the law, then apparently
everything else is “up for grabs” in business, regardless of the consequences to society. It
is of little wonder that business and accounting scandals continue to flourish, despite the
reforms by profession and authoritative bodies; we are living in a society of people who
know how to “get around the law” without actually breaking the law.
An interesting point was raised by Hastings (2002) with regards to the legalistic culture.
He notes that since the early 1980s, management styles have become more aggressive over
transactions not covered by specific accounting rules. Managers have apparently adopted a
permissive approach to accounting treatments and challenge auditors by arguing, “[s]how
me where it says I can’t” (p. 57). Percy (in Bruce, 2002), who sits on a joint Treasury and
Department of Trade & Industry Committee, notes that there were signs that the United
States’ standard-setters would like to move towards the United Kingdom concept of a
principles-based approach rather than a rules-based approach. He also notes that the obsession with legally defined rules in a lawyer-dominated society would make it difficult to
prefer substance over form. Davies (also in Bruce) reinforces this view when he observes,
“[l]awyers make very good lawyers; they don’t make very good accountants” (p. 3). Jones
(quoted in Bruce), a national audit technical partner with Deloitte & Touche in London,
says, “[i]t will mean more rules linked to a litigious environment” and “more explanation
is a better route than more regulators and more rules” (p. 3). Bruce (2002) subsequently
points out that in the United States, accountants rely on rules which can be pushed to the
236 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
limit by companies and their lawyers with the result that accountants will always come off
second-best in an argument. He says that the rules-driven approach in the United States
means that a partner spends more time at the lower levels of a company dealing with rules
rather than in the boardrooms saying, “[t]his won’t do” (p. 2). Dodsworth’s (chief executive
officer of Camico (California) quoted in Ruquet, 2002) observations are:
Ultimately, CPAs must exercise their professional judgement and walk away from
clients “who make them nervous”. There are a lot of areas where the rules are not
hard and fast and require professional judgement. Our advice is that if it gets to the
point, what they want to do is the right thing and be able to say good-bye to a client.
(p. 15)
The EIU white paper notes, “[i]ndeed, some argue that it is no coincidence that today’s
corporate scandals have been centred in a country with a very legalistic culture” (p. 6).
Corporate executives will often confront situations that may not be illegal but may be
unethical, and in such situations they must decide whether they will act in their personal
interest or for the good of society (Johns and Strand, 2000). The scary thing to consider
is whether we, as educators, are providing the type of education that encourages law and
accounting graduates to adopt such capitalistic vices. We discuss next some of the issues
raised with regards to the adequacy of ethics education and suggest important directions for
improving accounting and business education.
3. Inadequacy of ethics education and directions for accounting education
Unless there is a change to corporate values and behaviour, accounting graduates will
continue to be confronted with a variety of ethical dilemmas in the work environment.
Some of these dilemmas may not be particularly harmful to society. However, some of
these dilemmas may be extremely detrimental because they fundamentally affect the organisation’s existence and subsequently impact on society with destructive consequences. A
very enlightened view on accounting was presented by McPhail (2001) who argues that
“accounting dehumanises individuals and makes it easier for some people to treat other
individuals in a cruel way” (p. 291). Gray et al. (1994) aptly state:
Although there is much to admire about current accounting practice, there is also considerable evidence of ethical and intellectual failure among accounting practitioners.
At least some responsibility for these failures can be laid at the door of accounting education. There is evidence that accounting education fails to develop students’
intellectual and, relatedly, ethical maturity. (p. 51)
Plimmer (2002) observes that, [t]eachers, like parents are given to anguished cries of
“where did we go wrong?” (p. 7) when graduates end up on the wrong side of the law.
Business schools are not insulated from criticisms and are now grappling with the fallout of
recent ethical scandals rocking the corporate world. Moreover, McPhail (2003) points out
that the profession’s approach to accounting and business education is one of the key areas
where things are not right. He argues that it is an area that seems to have been marginalised
in the current discussion and debate surrounding Enron.
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 237
It is well established within the accounting literature that accounting serves capitalism
because of the function it performs in society. McPhail (1999) suggest that accounting
education, in particular, contributes to the dominance of capitalism because it engenders a
particular kind of ethical identity within students, which they subsequently use to discipline
themselves. As an alternative, McPhail calls for creative thinking from accounting educators
as to how the pedagogy of accounting could instead inculcate a sense of ‘fellow feeling’
or compassion. Interestingly, writing of business education in Australia but which could be
equally applicable elsewhere, Woldring (1996) notes:
The answer is not simply to implement a new business ethics unit here and there
but to radically overhaul the narrow vocationalism of many business schools. A new
paradigm for undergraduate business education in Australia is urgently needed. The
priority should be not just to train accountants and computer programmers – valuable
as that is – but rather to graduate informed business managers and professionals who
are sensitive to the importance of values as well as techniques, who are aware of the
responsibilities of leadership as well as the tasks of management, and who are capable
of confronting the long-term ethical dilemmas involved in their businesses as well as
the short-term pressures of the financial bottom-line (p. 285). [Italics for our added
What direction should accounting education and, generally, business education take if
we are to try to minimise the risk of unethical behaviour by our graduates? It has been
suggested that we must raise the critical consciousness and values of our students. Korten
(1998) aptly summarises the requirements of business schools with the following statement:
What we need are educational institutions that can provide our best and brightest
with the vision and critical consciousness needed to transform a life that is destroying
capitalist economy into a democratic, life-affirming market economy. These would be
places in which the discussion and debate of such questions as “What is the difference
between money and wealth, between democracy and financial rule, and between the
market economy and capitalism?” are vigorously discussed and debated. (p. 398)
Having accepted all of this, accountants must realize the significance of their contribution
to society. Francis (1990) clearly explains this significance when he notes that, because of
their potential impact upon society, accounting choices tended also to be moral choices. He
Accounting, to the extent that it is a choice about how to affect our lived experience …
is a practice grounded in moral discernment. Accounting is important precisely to the
extent that the accountant can transform the world, can influence the lived experience
of others in ways which cause that experience to differ from what it would be in the
absence of accounting, or in the presence of an alternative kind of accounting. (p. 7)
There is a need for accounting ethics education to instil in students not just the knowledge
of what is ethical but also the strength and conviction of character required to actually behave
ethically (Bay and Greenberg, 2001). Ethics education should attempt to engender a sense
of moral commitment towards other individuals and to “humanise accounting students”
(McPhail, 2001, p. 282). Consequently, one of the main goals of ethics education should
238 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
be to encourage students to recognise the broader social and political context within which
their profession practices. However, it has also been put forward that if the scope of ethics
education were restricted to the discussion of codes of ethical practice then, paradoxically,
we may simply be legitimating the inequities and inequalities of the prevailing capitalist
A 2003 study commissioned by PricewaterhouseCoopers on the accounting curriculum
in nine universities in America found that ethics was not a consistent and integrated part
of the education of most accounting students. The PricewaterhouseCoopers’ position on
accounting education discussed in this study indicated that accounting educators had to play
a clear role in restoring public trust. The study reported that collegiate education had a very
significant and lasting effect on the knowledge, skills and attitudes that individuals took to
the marketplace. This study recommended that the values of quality, integrity, transparency
and accountability should be integrated throughout the curriculum.
The Association to Advance Collegiate Schools of Business (AACSB) has always
required ethics coverage in its accredited institutions. Its January 1, 2004 revised standards go even further and require the institution or the business programs of the institution
to establish expectations of ethical behaviour by administrators, faculty, and students. The
2004 Ethics Education Task Force Report to the AACSB states:
From the undergraduate to the master’s and doctoral levels, business schools must
encourage students to develop a deep understanding of the myriad challenges surrounding corporate responsibility and corporate governance; provide them with tools
for recognizing and responding to ethical issues, both personally and organizationally;
and engage them at an individual level through analyses of both positive and negative
examples of everyday conduct in business. All of us involved in business education
need to think more deeply and creatively about how to advance ethical awareness,
ethical reasoning skills, and core ethical principles that will help to guide business
leaders as they respond to a changing legal and compliance environment as well as
complex, conflicting, and sometimes highly problematic interests and opportunities.
(p. 9)
As the Enron crisis has shown, it is not that the participants of the scandal did not
have business ethics training, they did, from prestigious US business schools, but these
participants were prepared to secure optimum personal gain without giving adequate thought
to the final consequences on society. Levitt (2004) writes that we need firms to help in
improving education and in recruiting a new generation of auditors and accountants by
funding academic chairs at leading institutions, ensuring that these appointed men and
women can produce students who have a grasp of the full range of views on the key issues
of the day and have a keen appreciation of the importance of ethical standards in performing
their future job. However, it is interesting to note that Levitt’s position contradicts Tinker’s
view on the involvement of professional firms in education. Tinker (2000) states:
One quandary still remains however: How have the Big Five secured the collaboration of professors from universities that prize academic freedom and independence?
The answer lies in what history and chess puffs will recognise as the “Mercenary
Maneuver”. (p. 58)
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 239
Tinker views the accounting profession’s funding of academic chairs at academic institutions as contributing to the problems occurring in accounting education. He argues that
a revolution in accounting education and research cannot be led by a narrowly schooled,
finance-oriented professoriate. His view is that tenure-ensconced staff in senior university
chairs would only obstruct better-qualified candidates who might change the direction of
the “university supertankers” (p. 59). Craig and Amernic (2002b) suggest:
Each and every one of us should strive to engage in debate and conversation about the
university and the nature of the accounting education we provide within the university.
We should actively and fearlessly pursue ways of fostering university settings that
will improve accounting thought and practice and ultimately be conducive to the
accounting profession better serving the society in which it serves. (pp. 200–201)
The above discussion focussed on researchers’ perceptions on the inadequacy of ethics
education in business schools and how the curriculum had to change to produce more
responsible accounting/business graduates who were concerned about corporate responsibility and corporate governance. However, it is important to point out that an implication of
Tinker’s view is that it is not just a question of changing the curriculum. While any positive
changes to the ethics curriculum by educators should be applauded, it is important that we
do not ignore the receptiveness of the audience, our students. The next section will discuss
the findings of the two surveys that were conducted on accounting students.
3.1. The two survey studies
Two surveys were conducted with accounting major students. The first was a small survey
conducted with some senior students at a tertiary institution to analyse their responses when
faced with questionable propositions. These propositions were developed to specifically
test students’ responses on how they thought they would behave in ethically challenging
situations related to the five factors identified in our literature. Of primary interest in this
small survey was the implication of the responses provided by students with regards to their
own perceived behaviour and that of their peers in a given situation. Table 1 provides the
results obtained from this survey. The four questions asked in this small survey have also
been presented in Table 1.
A second survey collected information on students’ perception of ethics education. This
survey was conducted in a third year accounting paper during their regular lecture meeting
time. The focus of this questionnaire survey was to find out whether students perceived
ethics education to be important and to what extent they perceived that such education
could influence their behaviour in an ethical dilemma. It is important to note that 85% of
respondents had some prior ethics education in papers they were either currently taking or
had already completed. Their responses, therefore, came from a position of knowing what
ethics education coverage may involve in a paper and how much importance they placed
on such an area of study within their papers.
Students’ perception on the importance of ethics education at the university level has
always been a contentious issue (see Tannenbaum, 2004; Mastracchio, 2005) and most
students would tend to avoid enrolling in an ethics course unless it was compulsory in
their programme of study. This reluctance by students to enrol for an ethics course can
240 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 Table 1 Survey questions and response information Question Underlying factors that contribute to the accounting crisis How the students would respond to the situation themselves Student’s perception of how they think their peers would respond Yes No Not sure Yes No No response If in a university assignment, with which you were having difficulty, someone offered you a model answer would you copy the model answer? Personal values and behaviour 8 (32%) 17 (68%) 17 (68%) 8 (32%) If you were offered an accounting job in the Bahamas for US$ 200,000 tax-free and all expenses paid for 1 year and your partner wanted to go, would you accept? Money culture 21 (84%) 4 (16%) 21 (84%) 4 (16%) A client has bought a $50,000 pleasure boat and instructs you to treat the purchase in their accounts as business purchase so that they can claim GST and depreciation allowances. Would you disagree and be prepared to lose that client’s business? Corporate values and behaviour and vices of a capitalistic society 16 (64%) 8 (32%) 1 (4%) 11 (44%) 12 (48%) 2 (8%) An audit you are working on reveals the existence of an off-balance sheet subsidiary, which is greatly in debt and could jeopardise the viability of the parent company. It is quietly hinted to you that if you ignore the subsidiary you will be promoted, while if you make a fuss about
it, it could be the end of your job and any
future reference you required would brand
you a “troublemaker”. Would you ignore
the subsidiary’s existence?
Corporate values and behaviour,
corporate transparency and legalistic
10 (40%) 15 (60%) 15 (60%) 8 (32%) 2 (8%)
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 241
be attributed to a number of reasons. One of the prevailing reasons provided in student
feedback from the second survey was that it was difficult for them to include a further
course in their accounting degree programme that already required so many accounting,
business and liberal courses. A more prevailing reason obtained from the second survey
was the perception that students appeared to have of the importance of an ethics course in
their future work roles.
From the findings of students’ responses in survey two, it appears they believe an ethics
course would have very little influence on how they would behave in the work force; their
perception is that their own ethical and moral stances were already ingrained from family
and other influences. Hence, it could be argued that if students generally felt that ethics
education would have no significant impact on their moral and character development, and
if they felt logically opposed to learning any issues related to ethics, then any directions
for improving ethics education may have very little impact on the never-ending story of
accounting and corporate scandals. This is because, per se, people would continue to retain
the same values that are contributing factors to scandals. However, also in contention is the
view held by some researchers (see McPhail, 2001), that business schools already train their
students in certain ways that has been debated as contributory to the continuing scandals.
In this paper, it is, therefore, critical for us to assess students’ perceptions on the importance
of ethics education.
3.2. Survey one
A simple questionnaire survey was conducted on a master’s level accounting course with
25 students to find out what their responses would be to situations that reflect some of the
underlying factors that, we argue, contribute to accounting malpractice.2 The students were
asked simply to provide a “Yes” or “No” response to the four questions provided in the
questionnaire. They were asked, firstly, to answer “Yes” or “No” to the situation provided
in the question as it applied to them and, secondly, to answer as they perceived their peers
would respond to the same situation. Their responses have been provided in Table 1.
The findings from Table 1 are interesting with regards to how students perceived themselves acting in a situation and how they perceived their peers acting in that same situation.
In any discussion on ethical issues and the importance of ethics education with students,
their resolutions of ethical dilemmas indicate that an individual’s personal values play a
more prominent role than any code of ethics raised in ethics education. The first question
is, therefore, important as it highlights how students perceive themselves to have higher
ethical standards; only 32% of students indicated that they would copy model answers if
given the opportunity. However, the students had a much lower perception of their peers’
ethical standards, responding that 68% of their peers would take the opportunity to copy
model answers.
2 The demographics for this small survey population indicated 16 female (64%) and 9 male (36%) students. The
age distribution for these students ranged: 20–30 years; 44%, 31–40 years; 40% and 41–50 years; 16%. Of these
students, 12 (48%) were completing their degree honours programme and 13 (52%) students were studying the
paper for a post-graduate qualification. The class had 16 (64%) students with New Zealand citizenship, 5 (20%)
with permanent residence status and 4 (16%) students were international students.
242 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
The second question looked at the lure of money (money culture) and for both the
students’ own responses and their perception of peers’ responses; 84% of students answered
that they would accept a highly paid accounting job. The fact that such a highly paid job
would be in a tax-free haven, and the type of work that accountants might be doing for
such a high salary appear to be lost on the majority of respondents. Only 16% indicated
that they would not accept the job3. The third question explored whether students were
prepared to help their clients provide incorrect accounting records for tax evasion purposes.
Such a situation raises issues of corporate values and behaviour and, thereby, the vices
of a capitalistic society. Accounting students would need to consider that some accounting
services to corporate clients might involve unethical behaviour and have illegal implications.
Students had to decide whether it was more important to retain a dishonest client for their
fees or to compromise their integrity. Again, the results were interesting. 64% of students
indicated that they would not comply with the client’s wishes and were prepared to lose that
client’s business; 32% indicated that they were not prepared to lose the client’s business,
and 4% indicated that they were not sure what to do in such a situation. Similar to the
first question relating to students’ personal values and behaviour, the results showed that
students had a lower perception of the ethical values of their peers. Here, the results showed
respondents believed that 48% of their peers would oblige their clients whereas they believed
that only 44% of their peers were prepared to risk losing clients.
The fourth question examined students’ responses to a situation that involved the
disclosure of substantial debt risk for a parent company by recognising an off-balance
sheet subsidiary’s debt situation. This situation illustrates issues of corporate transparency,
corporate values and behaviour, and the legalistic culture that all come into play when
organisations choose to hide important information that falls within appropriate accounting
standards and legal framework. These ethical dilemmas confront auditors in the performance of their duties and they need to evaluate the consequences of what could happen if
appropriate signals are not provided to stakeholders with regards to the viability (going concern) of businesses being audited. The results again show that the students’ perceptions of
how their peers would behave compare less favourably to how they perceive themselves as
behaving. The results indicate that 40% of students would ignore the subsidiary’s existence
in order not to miss out on a promised promotion, while 60% of students indicated that they
were prepared to disclose the situation about the company’s viability. The percentages were
reversed with regards to how students perceive their peers would act in such a situation:
students believe that 60% of their peers would ignore the subsidiary’s existence to gain from
a promotion and that only 32% of their peers would act ethically in such a situation.
The findings of the above survey study indicate that, as accounting educators, we need to
be aware of how accountants might act in situations that call for the application of personal
values. A study conducted by the National Association of Accountants (cited in Farrell and
3 Unfortunately, we did not seek explanations to the responses provided. The reasons why these four students
would decline the job offer would have provided some valuable insights into their personal values and behaviour
as it may appear from their answers that they did not consider the money culture an important factor for their doing
well in life. A limitation of asking questions with simple “Yes/No” answers with scenarios presented as ethical
dilemmas has the effect of excluding more nuanced answers which might also allow for the creative development
of alternatives by respondents.
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 243
Clevenger, 1994) indicated that 87% of managers surveyed were willing to commit fraud in
at least one of the scenarios presented to them. While it may appear from our findings that
the majority of students in our study were unprepared to act unethically themselves, they
perceived that their peers were somewhat less reluctant to act unethically. For accountants,
the implication of this awareness is that there is pressure to show revenues, incomes and
balance sheets in the best possible light. There is an element of hypocrisy in our findings that
students, while denying their own likely culpability, believe others would act unethically
to obtain an advantage. In New Zealand, it would seem that the profession falls into this
trap, which we might uncharitably call hypocrisy; that is, the Big Four accounting firms
subscribe to a code of ethics but there have been several recent instances of these firms
being publicly censured. For example, Cone (2003) wrote on how PricewaterhouseCoopers
defended their controversial $400 million valuation of a client’s software asset, which their
client had 2 years previously bought for $5000. It was alleged that, the excessive valuation,
using a discounted cash-flow methodology, was aimed at attracting investors and achieving
huge tax deductions (National Business Review, 25 July 2003, p. 9). O’Sullivan reports,
“BNZ’s former auditors Ernst & Young are expected to face stiff censure when the Securities
Commission next week issues the results of its 6 month probe into a $200 million so-called
captive insurance scheme the bank used twice to shift off-balance sheet bad debts” (National
Business Review, 28 May 1993, p. 1). The failure of New Zealand’s largest bank in the late
1990s, the BNZ, involved criticism of Ernst & Young for allowing the BNZ to claim a $100
million pre-tax profit. McManus (1993) writes:
The 1990 accounts were given an unqualified approval by the bank’s auditors, Ernst
& Young, even though the auditors did not agree with the accounting method used
by the bank to calculate its result. The 1990 accounts were not a true and fair view
of the BNZ’s financial position, nor could the scheme it used to inflate the profits
be properly classified as insurance as the necessary element of risk transfer was not
present. (p. 6)
McManus also presented some of the key findings from the Securities Commission report
on the BNZ affair:
“We believe the reporting of the pre-tax profit in 1990 of $100 million when it was
$36 million is indeed material,” the commission says. “We have no doubt that users
of the financial statements would have been misled to the degree that judgments and
decisions made would be affected.” …
Overall, the overstatement was $66 million. “In our view,” the commission said,
“the bank’s accounting in 1990 was an example of “creative accounting”—a practice
condemned by the commission in the late 1980s, following the sharemarket crash. (p.
The Economist (2005) reports that the firm of Arthur Andersen is back in court accused
of “witness tampering” in connection with its destruction of masses of Enron-related documents (30 April, p. 61). These are but a few examples cited to make the point that, like our
students, most accountants would probably individually disagree with the actions of these
audit firms but such deeds still go on.
244 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
So, what can be done about it? The profession seems to believe that the answer lies in better standards: “Mr Hunt, who is also PricewaterhouseCoopers’ New Zealand chief executive
said the new accounting standards would unveil a new era of transparency and accountability in every area of activity in an organization, including directors and top management”
(National Business Review, 25 July 2003, p. 9). If Hunt is correct the problems of ethics in
accounting may be resolved without any educational input. However, the issue of ethical
misbehaviour is possibly wider and deeper than Hunt estimates. In competitive, western
societies, marketing, branding and self–promotion are increasingly rewarded. Brands may
make extravagant claims and corporations seek to be seen as both profitable and socially
responsible. Accounting lends itself to manipulation because there is so much discretion
and so many alternative methodologies, making it possible to turn an asset with a low historical cost of a few thousands into one worth multi-millions, as our earlier cited example
illustrates. With awareness of these ramifications, educators might have more influence by
advocating more integration of ethics within the curriculum rather than offering ‘Ethics’ as
a separate course (we explore this issue in our second survey).
Given the vices of the capitalistic society that we live in, the perceived importance
of money and the increasingly pervasive legalistic culture globally, we need to consider
the influence that our accounting educational programmes have on our students. Can we,
as educators, provide them with an ethical programme that will markedly influence their
behaviour so that they may act ethically for the betterment of society? The second survey
study was carried out to evaluate students’ perceptions as to the extent to which ethics
education would influence their behaviour in the face of potentially unethical circumstances.
3.3. Survey two
The importance of this second survey4 stems from our belief that if students perceived ethics education as important and saw such education as possibly influencing ethical
behaviour positively, then there is a need to ensure that such ethics education highlights
what are ethically best practices. Ultimately, it is people who are responsible for organisations and who must also look after the needs of our communities and society. Clarke et al.
(2003) aptly write:
It is interesting to note, when it suits, how the personification of corporate activity
sheeted home the blame for dubious corporate activity to the legal entity itself, not
4 There were 72 students in class on that day; 29 (40%) were male and 43 (60%) were female. The age distribution
for these students showed that the majority of students, 72% of them were in the age category of 24–28 years (8%
were in the age categories of: 19–23 years and 34–38 years and 1% in the age categories of 44–48 years and 49–53
years). Eighty-nine percent of the students were enrolled in the four-year business management degree programme
and 11% were enrolled in post-graduate studies. As the survey was conducted on a third year accounting paper,
67%, that is, the majority of students (48) were in their third year of studies. There was 1 (1%) student who
was attempting this paper at his/her second year of university study and 12 students (17%) were in their fourth
year of university study (students can choose to do this paper in their final year of studies). Seventeen percent of
students were returning to university to study an accounting graduate diploma as their first degree was not in the
accounting subject area. For particular questions in this second survey, the total number of respondents varied as
some questions allowed the respondent to omit answering the question if it did not apply to them.
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 245
to its human agents – its directors, managers, employees, accountants and auditors –
and the system in which they function. (p. 316)
They explain, using an illustration of the 1950s’ mercury poisoning at Minamata by the
Japanese chemical company, Chisso:
For decades, victims seeking compensation were fighting an amorphous corporate
giant. It was as if humans had played no role in the poisoning of the sea around
Minamata. (p. 362)
They, therefore, argue:
Yet, surely only the human agents have conceived, implemented and followed the
actions complained of; only they made the choices between alternative proposals;
only they directed the manner in which the corporate vehicle interacts with other corporations and real individuals within the community. It surely is contestable whether
corporate officers are necessarily acting in the best interests of their corporation if its
resources are diverted from the market-driven financial objectives. (p. 316)
The first three questions asked of students in this questionnaire survey were to find
out the number and percentage of students who have had some prior ethics education
coverage and in which particular subject areas. The responses to these three questions are
summarised in Table 2. It is of interest to note that, by the third year of their business
management degree, 85% of students had had some ethics coverage in their papers. A
significant percentage (94%) of students had this coverage from an accounting subject
area. Given that our accounting students would need to study for a number of compulsory
management papers, it is also therefore surprising that only 52% were exposed to ethics in
the management subject area. In terms of students’ response to how adequate they found
Table 2
Ethics coverage
Prior ethics education in papers
Number of respondents 72
Yes 61
% 85
No 11
% 15
Subject area for ethics
education coverage
Accounting Computer
Law Management Science Social
Number of respondents 60 0 13 33 0 3 3
% 94 20 52 5 5
Number of
Inadequate Not very
Adequate Quite
Adequacy of ethics
education coverage
in papers
64 3 13 33 13 2
% 5 20 52 20 3
246 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
Table 3
Importance of a compulsory ethics component in a programme of study
Total Not important
at all
Important to
some extent
Any programme of
70 0 15 12 25 18
% 0 21 17 36 26
For accounting
students to have
compulsory ethics
71 2 3 14 37 15
% 3 4 20 52 21
Separate and
accounting ethics
71 5 12 32 19 3
% 7 17 45 27 4
Would you choose to do the paper to learn about appropriate ethical
behaviour if there was a separate but not compulsory accounting ethics
Yes Not sure No
Number of respondents 71 20 30 21
% 28 42 30
the ethics education coverage, 52% of students found this coverage to be adequate; 20%
quite adequate and only 3% indicated that they found the coverage was very adequate5.
Briloff (1991, in Farrell and Clevenger, 1994) believes that ethics is the very lifeblood of
the accounting profession. He argues that teaching ethics did not imply a special course or
day in class but that ethics had to permeate the curriculum and all interaction with colleagues
and students. There are, however, contradictory views held on whether ethics education at
the university level can make a difference. Baetz and Sharp (2004) and Williams (cited in
Tannenbaum, 2004 contend that ethics education is more influential much earlier in the
individual’s life and that their ethical behaviour is influenced by family upbringing. Others
such as Leung and Cooper (2005) and Eynon et al. (1997) maintain that ethics education
at the university level can still impact upon the individual’s moral reasoning. The next few
questions of the survey focused on the importance that students placed on compulsory ethics
education in their programme of study and in accounting specifically. Table 3 provides a
summary of the responses from students to these questions. A significant percentage of
students answered that it was important for accounting students to have compulsory ethics
coverage in their papers. A conflicting message emerged when students were asked to
provide a response as to how important it was that there was a separate and compulsory
accounting ethics paper.
5 A limitation of this question was that we did not define the term “adequate” to students. It was a term used
generically and students therefore judged for themselves what “adequate” meant.
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 247
The results showed an overall lack of perceived need for having a separate and compulsory accounting ethics paper. This finding may be partially explained by Hindo’s (2002)
perception of how well students receive ethics education: “business ethicists complain that
the subject is seldom woven into other courses by their colleagues. And when it is, they
gripe, students greet such material with all the enthusiasm of a 6-year-old facing a plate
of spinach” (p. 2). Students were asked in the survey to explain what they thought of the
ethics education coverage in the papers that they were currently doing or had done. From a
review of students’ comments, it appeared that students perceived any education on ethics
was going to be theory based and unrelated to practice, hence, their lack of enthusiasm for
the ethics coverage in their programme of study. It would appear that students wanted ethics
education to help them deal with “real issues” that would occur in the workplace. Verbatim
quotes taken from the survey illustrate students’ perception of this view:
“Real-life cases can be used and even professionals can be invited to do seminars,
“More explanation, effects of acting unethical needed.”
“Ethics underlie the operations of an organization – often don’t know your limits
until tested. Need to develop scenarios, different pressures in whole paper to fully
“Ethics were discussed however, in practice people will still be unethical in some
“What is taught covers a wide/broad area but it is not applied to real situations for us
to learn about. We are told of examples, but that’s about all.”
“Because the questions asked challenges us – we can say it’s right/wrong in the theory
while in the practice we can’t really tell.”
“It is hard to teach ethics—what is really right & wrong. The real world can be so
“Education is different with real practice.”
“It’s hard to teach ethics in the classroom situation with students who have very little
world experience, everything tends to be black & white.”
Our overall findings indicated that students did recognise the importance of having some
ethics education coverage in any programme of study and that the issue of ethics should be
addressed in their accounting papers. Students, however, did not place great importance on
having the ethics coverage as a separate and compulsory accounting ethics paper. Subsequent
to this question, it was found that only 28% of students indicated that they would choose
to do the separate accounting ethics paper if it were available but was not a compulsory
paper for their degree studies. Given the earlier response that 52% of students found ethics
coverage in their papers to be only adequate, it is surprising that they place little importance
on having a separate ethics paper to ensure that they are getting a more than adequate
coverage of ethics issues.
248 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
Table 4
Influences on an individual’s ethical behaviour
Total Not at all To some extent Moderately To a great extent Absolutely
Religious and
72 1 2 12 33 24
% 1 3 17 46 33
Education 72 1 11 33 26 1
% 1 16 46 36 1
A person’s moral code and business ethics are made up of certain elements. Certain
aspects such as childhood development, religious faith, personal experiences, education
and philosophy have been identified as coming together to form an individual’s moral and
ethical code (Farrell and Clevenger, 1994). Table 4 shows the students’ responses to how
much they thought an individual’s ethical behaviour were influenced by their religious and
moral upbringing and education. A survey of accountants in Hong Kong by Leung and
Cooper (1994) found that “family upbringing, the conduct of one’s peers and university
education were believed by the respondents to be the important factors which influence a
person’s ethical conduct” (p. 24). Baetz and Sharp (2004) also consider that, “[a]nother
challenge to teaching business ethics is that some students and even faculty may deem
the subject to be irrelevant, since values are supposed to be developed much earlier in
life and in other contexts, e.g., family, church” (p. 59). The findings in Table 4 appear to
mirror Baetz and Sharp’s opinion. When analysed, comparatively, the responses show that
students placed greater emphasis on religious and moral upbringing as influences on an
individual’s ethical behaviour. A significant percentage of students (96%) indicated that
religious and moral upbringing had a moderate or greater influence on an individual’s
ethical behaviour. However, it is possible that an alternative interpretation could be placed
on this finding. For example, the finding could be just a reflection of this particular group
having received bad or inadequate ethics education at university, even though they had
had some coverage in this area. By contrast, it should be noted that 83% still thought ethics
education had a moderate or greater influence; its lower score relative to a religious and moral
upbringing should not obscure this fact. Certainly, the responses do not indicate any feeling
of ‘irrelevance’ about the influence that ethics education might have on ethical behaviour.
A different interpretation of the result provides an interesting slant on the situation. The
question on educational influence was not specifically about ethics education at tertiary level
but education in general and could imply education from pre-school through to tertiary level
studies.6 The majority of students (46%) indicated in their responses that education only
had a moderate influence on an individual’s ethical behaviour. The findings in Table 4,
therefore, also appear to support the view that William (cited in Tannenbaum, 2004) holds
on ethics education:
How do we teach ethics to executives? Is this a subject that can be taught? Every
school has an ethics component in the curriculum. The Citadel has a dean of ethics;
6 The question was: how much do you think an individual’s “ethical behaviour” is influenced by their education?
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 249
Table 5
Ethics education and influence on behaviour in an ethical dilemma
Total Not at all To some
Moderately To a great
To what extent
will behaviour
be influenced
by ethics
69 1 12 30 19 7
% 1 17 44 28 10
Duke has a whole ethics department. Queens University and UNC Charlotte have
them. I don’t know that there are going to be any huge strides now in ethics education
at that level. Not to sound trite, but ethics really begins with parents teaching their
kids between right and wrong. I don’t think we can overemphasize what a parent will
teach a child. The ethics thing is great but its growth is going to be incremental now.
We need to grab hold of kids before they even get into the system. (p. 25)
The above view appears to be supported by Mastracchio (2005) who asks whether teaching ethics at the college level is too late (p. 6). Is ethics education at the tertiary level too
late? Given these insights and the findings in Table 4, one conclusion that could be drawn
with regards to the unethical behaviour of participants in corporate scandals is that perhaps
more faults could therefore be attributed to the limitations of the individuals’ specific prior
ethics education and fewer to the potential limitations of ethics education at the university
level. Mastracchio, however, also argues, “[a]t best, one can only hope that education can
help” (p. 6). He also contends that while accounting students should be well grounded in
ethics, society’s attitude has to change also.
The final question (Table 5) asked students to what extent they thought having ethics
education in their programme of study will help influence their behaviour when placed in an
ethical dilemma. In comparison to the influence of education on an individual’s behaviour
in the previous question, a higher overall percentage of students in this question indicated
that ethics education would help influence their behaviour in an ethical dilemma. The implication of this finding is that while students did not perceive that education generally would
have an impact on their behaviour, they did believe that ethics education was important
to help them with resolving ethical dilemmas. Leung and Cooper (2005) state that there
has to be more emphasis placed on ethics education and researching accountants’ ethical
sensitivity and motivation. They argue that “recent corporate collapses have highlighted the
complex ethical problems faced by accountants” and that accountants’ role “in corporate
governance can be further enhanced through developing their capabilities in the handling
of complex relationships and ethical issues” (p. 86). Our findings suggest that while students are aware of the importance of having ethics education to help them be in a better
situation to work through ethical dilemmas, they appear, from their responses, to be unsure
of the extent to which such ethics education would help them in the workplace. The students’ conflicting responses on the influence of education on ethical behaviour suggest that
while they believed that their moral stances might already be developed by the time they
250 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
reached university studies, further moral development to help them in ethical dilemmas
may occur through ethics education. It is therefore of interest to take note of Kohlberg’s
theory of moral development. Kohlberg (1984) believed that moral thinking and reasoning
progressed through a series of identifiable developmental stages and that this process of
moral development continued throughout the individual’s lifespan. His findings that principled thinking did not appear until adulthood led him to suggest that perhaps a different
kind of experience was required for this attainment of principled moral judgment than was
required at the earlier developmental stages. Eynon et al. (1997), with references to studies
in accounting conducted on ethical interventions, note:
Shaub (1994) shows that the completion of an ethics course in college has a positive
impact upon the moral reasoning of accounting students. Further, the positive effect
is retained as these students enter the profession in the near future. Hiltebeitel and
Jones (1992) and Armstrong (1993) also report that ethical interventions can increase
the ethical decision making abilities of accounting students (p. 1301).
We found from our study that, overall; students perceived that ethics education would
only have a moderate influence on their ethical behaviour. The extracted comments from the
survey may provide some insights as to why students felt this way. These quotes provide a
serious challenge to educators because, if upbringing does not provide the ‘right’ ethos, then
the question arises as to whether it is too late at the tertiary level to do anything constructive.
“It is an individual’s choice. Ethics has a lot to do with upbringing and values instilled
by parents/caregivers and people who we “admire”.”
“It can be taught, how well it is learned is sometimes more difficult.”
“Hard to teach ethics because it’s hard to change peoples mindsets and values so late
in life.”
“By the time you’re at Uni, you have already developed morals and ethics. No paper
can change core beliefs.”
“Guidance can be given, but ethical practices are learnt as we grow from parents,
friends, etc.”
“What happens in theory does not happen in practice.”
“Ethics are about morals and values, phenomenon that are ingrained from birth, not
“You can teach values and principles, but like anything you may not practice it.”
It would appear that most students were unsure of the learning outcomes of tertiary level
ethics education. Most comments indicate the difficulty of teaching ethics, given that most
of the students would have developed their own personal values and beliefs by this level
of study and that ultimately ethical behaviour would depend very much on the individual
and their judgement of the situation. Arguably, the most enlightening comment of all the
comments extracted from the survey is this comment raised by a student with regards to
ethics education.
M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254 251
“If you teach us on ethical issues, it may also give us knowledge on how to act
unethically and get away with it.”
In response to the above comment, we cite Crane (2004) who very clearly summarises
the whole situation about ethics education and why we cannot ignore its importance if we
are to help our graduates play their role properly and ethically in society:
Business faculty members may not be able to change the character of scoundrels
or influence corrupt individuals, but they can work diligently to persuade the overwhelming majority of students to accept the idea that ethical behaviour should be the
overriding imperative in today’s marketplace. In short, as Gioia (2002) suggested, we
should focus on educating the 99% who “get it” and not the 1% who seem to believe
that “anything goes” (p. 151).
Furthermore, as Leung and Cooper (1994) claim, “[a]s educators preparing students for
a professional career, we have an obligation to discuss ethical issues in accounting, in order
to make our students aware of the problems they may encounter in practice” (p. 24).
4. Conclusion and discussion
This paper explores the issue of corporate values and behaviour in relation to corporate
transparency, the money culture, vices of a capitalistic society and the legalistic culture
that prevails in our society in an attempt to provide some insights as to why we continue
to have corporate and accounting scandals. It would appear that the calls for reforms to
accounting and financial reporting standards will not address the underlying questions of
why we continue to have such scandals. We live in a world that is dominated by money and
legalistic cultures. Corporate values, behaviour and the vices of capitalism contribute to the
persistence of scandals. The question is whether we can look to accounting and business
education to make a difference. The nature versus nurture debate is unresolved. Our survey
of students shows, most believe education can only have a moderate influence. To make
the most of what our students consider to be of moderate influence, we need to provide
an educational curriculum in accounting that is integrated with an ethics coverage that
will influence our graduates’ thinking. It is their thinking which is important. Accounting
educators cannot necessarily expect to instil mind altering beliefs in young adults, in the way
that Jesuit educators once did when they proclaimed, “Give me the child until he is five and
I will give you the man.” What can be done is to integrate ethics into accounting processes
to show how different technical treatments may have different consequences which may
entrain longer term ethical ramifications.
The first survey indicated that students believed they were ethically superior to their peers
in terms of how they perceived their peers would act in an ethically compromising situation.
The rational paradox that these questions and their answers exposed showed much of what
is wrong: short terminism and the desire to be seen immediately in the best possible light.
Another paradox was exposed in the second survey which revealed that, while students
perceived ethics education coverage in their programme of study as important, the majority
only saw ethics education as having a moderate influence on their ethical behaviour. Making
the most of a moderate influence is, therefore, vital.
252 M. Low et al. / Critical Perspectives on Accounting 19 (2008) 222–254
Ethics as a subject set aside from accounting courses is, we argue, as useful as the profession’s code of ethics published but set aside from the main business of accounting standards.
A stand-alone course on ethics may be useful to philosophy students but accounting students tend to be more vocationally focused, as are many of their educators. The latter pose a
problem. The ability to integrate ethics smoothly into accounting teaching requires thought
and the development of new pedagogical skills. The downside is that ethics might be treated
by educators as a stand-alone topic within courses, which would defeat attempts at seamless
integration. Technical education and technical competence are important but, without an
education directed with thought to the consequences of accounting treatments which prefer
a short term advantage, the latter may well have more appeal. Educating technically proficient but shallow graduates does a disservice to society. As a previous president, Theodore
Roosevelt of the United States of America states: “To educate a person in mind and not in
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