Evaluating Ethics Education for Accounting Students

The past several years have been rife with accounting scandals. In the United States alone, we can cite well-publicized scandals at Adelphia Communications, Dynergy Inc., Enron, Rite Aid Corp., Tyco International, Xerox, WorldCom, and many others. The collapse of Arthur Andersen was the result of individual partners and managers perpetuating a number of frauds. We believe it is reasonable to think that accountants are caught in an ethical crisis. While the solution to such a large-scale problem is not simple, teaching accounting ethics specifically via a stand-alone ethics course as part of a multiple model approach may be part of the solution. Accounting students in particular need to learn the basic concepts of good ethics and need to be able to internalize those concepts in order to understand what it means to act ethically. A 1990 study by the Social Issues in Management (SIM) Section of the Academy of Management revealed that one-third of the Association to Advance Collegiate Schools of Business (AACSB) accredited schools did not offer a standalone business and society course. When a school offered such a course, it was seemingly tacked onto the program haphazardly with no consensus on its focus--ethics or management. More than half the schools had no faculty members teaching ethics full-time, and the faculty who did teach ethics came from more than a dozen academic disciplines. (1) After 1990, overall ethics research in accounting appeared to increase. An annual accounting-specific ethics symposium began in 1994, and a discipline-specific ethics journal, Research on Professional Responsibility and Ethics in Accounting, started in 1995. In a 2004 report, the AACSB encouraged schools to adopt four broad themes in business ethics education: (1) the responsibility of business in society, (2) ethical decision making, (3) ethical leadership, and (4) corporate governance. Some in academia, however, criticized the report for not recommending any specific action and complained that the AACSB had long excluded ethics from its list of traditional subject matter. Critics offered one proposed remedy: a stand-alone business ethics course. In 2005, when the Education Committee of the National Association of State Boards of Accountancy (NASBA) proposed changes to the education requirements of the Uniform Accountancy Act, which included three semester hours of accounting ethics in addition to three semester hours of business ethics, the reactions were almost opposite. Opponents contended that NASBA had overstepped its scope and authority and cited a lack of data that colleges and universities were not already teaching ethics adequately. In 2007, NASBA subsequently revised its stance to recommend instead a three-semester-hour ethics course that could either be taken as a stand-alone course or integrated into the existing accounting curriculum. (2) Research and Regulation Despite the controversies, professionals and academic researchers have long been advocating for more ethics education for accounting students, specifically in the form of a stand-alone ethics course. Based on the American Institute of CPAs (AICPA) website for CPA licensure requirements of the 55 jurisdictions issuing CPA certificates in the United States, 35 require an ethics exam or course. (3) Five states require an ethics course to meet the educational requirements for licensing. There also is an annual requirement of 30 hours of NASBA-approved continuing professional education (CPE) for individuals who hold the CMA[R] (Certified Management Accountant) credential. Two hours of this are ethics CPE. Is there any hope that normative control can be established in accounting? A recent study at two medium-size U.S. universities by a California State University at Los Angeles professor discovered among auditing students a positive correlation between emotional commitment to the accounting profession and students' propensity to report fraud. …