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ETHICS IN HIGHER EDUCATION

In this chapter, we begin the discussion with two key drivers of ethics education and complete the discussion with a foray into the literature for insights into ethics within higher education. Although accounting ethics education originated within the profession, its more recent growth has been in formal academic settings. We examine the rise of the multiple groups of stakeholders as users of financial statements and key ethical failures within the profession as contributing factors to the development of ethics education in the classroom. We follow with a review of teaching and researching ethics within the post-secondary environment. Ultimately, we conclude that the importance of ethics for the profession has not dissipated over time but that we need more training and education about ethics for instructors and students.

As ethics within the accounting classroom began with a professional need and, in the past, was sponsored by the profession, we start with the earliest accounting users to demonstrate the need for ethics within the profession. Accounting has been around for thousands of years (Robson 1992); the double-entry bookkeeping system was first described in print over 500 years ago in Luca Pacioli’s Summa de arithmetica, geometria, proportioni et proportionalita. The change to the method of accounting was not the only major change that accounting underwent during these formative periods. Thus, we begin with the initial preparers and users of financial records to highlight how ethics has grown in importance within the profession.

Originally, accounting was used by monarchs and leaders in early civilizations, including Mesopotamia, Israel, Egypt, China, Greece, and Rome, to keep track of the affairs of their kingdom and levy taxes (Soll 2014). Early merchants used accounting to keep track of their business dealings (Soll 2014). According to Paris (2016), as trade developed in Europe, historical records indicate that sophisticated accounting systems developed within banking houses in the early 1300s.

As trade continued to expand, the role of the accountant continued to expand. By the 1500s there were several additional books published that described how bookkeeping and the practice of accounting expanded across Europe, entering Scotland by the late 1600s (Paris 2016). The development of a practice in investing in stocks in the mid-1600s to early 1700s required the accounting profession to take on additional responsibilities, including those related to ensuring that assets and profits were properly stated not just for owners, creditors, and business partners but now for investors (Paris 2016). With the expansion of the role of the accounting profession, accountants were able to move out of a direct association with business persons and form their own, independent accounting firms, such as Tribe, Clarke, and Company, which was formed by Josiah Wade in Bristol England in 1780 (Paris 2016).

The influence that users of financial statements have on ethical practices in accounting cannot be understated. When a single individual develops and uses the accounting information, there is no ethical conflict between the creator of accounting information and the main user. The owners could lie to themselves, but the major harm is more limited than later, when these roles are separated. However, any time separation exists between the users and the creators of financial statements, the creators of financial statements have an informational advantage, which in turn provides an opportunity for ethical compromises. As an early example of this, Pacioli’s (1494) writing indicates that accountants should not keep two separate sets of books for the purpose of deceiving buyers and sellers of the merchant’s goods. Pacioli’s (1494) admonition against this practice suggests that, even 500 years ago, business individuals were willing to use accounting information to deceive others and that accounting educators were warning future accountants against engaging in unethical practices.¹ By the mid-1600s, accountants were already serving many of the same users of financial information that they serve today, including owners, business partners, creditors, and investors. However, there was much less regulation and uniformity regarding financial statements. Thus, accountants who did not ensure a system of credible financial reporting could manipulate the statements to fool the users of financial information.

As such, it is perhaps not surprising that the rapidly growing profession soon sought to form professional associations, such as the Institute of Accountants established in Scotland in 1853, the bodies of accountants formed in London, Liverpool, Manchester, and Sheffield in the 1870s, and the Institute of Accountants and Bookkeepers established in 1882 in New York (Paris 2016). These professional organizations eventually grew, merged, and were recognized by governing bodies as capable of influencing the standards by which accounting practitioners should abide. Although they had different names and different scopes, the organizations developed during these formative periods are predecessors to the organizations we know today, including the American Institute of Certified Public Accountants (AICPA) and the Institute of Chartered Accountants in England and Wales (ICAEW).

Most importantly, these professional organizations sought to establish accountants as professionals, not tradespeople with bookkeeping skills, by funding higher education endeavors in accounting, albeit not all the ventures went smoothly. In the United States, the American Association of Public Accountant (AAPA), now part of the AICPA, started a night school under the supervision of New York University in 1892; however, the school subsequently failed (Abs et al. 1954). Van Wyhe (2007a) describes that the university forays into elevating accounting education, such as the establishment of the first formal accounting courses at the University of Pennsylvania in 1881, did not exclude them from offering lower-level courses teaching the fundamentals of bookkeeping. Practitioners continued to fund higher education initiatives in an attempted to establish accounting as a formal profession; for example, New York University taught cost accounting in 1904 (Abs et al. 1954).

The history of practitioner-funded accounting higher education is under-explored, from the beginning to the current day initiatives among accounting firms, professional societies, and educational institutions. The degree of influence that the profession had over the accounting professors and the ties the professors had to the profession are mostly unknown. Additional research could focus on the ideas and conventions of the time that were transmitted during the earliest years of these relationships. Future research could examine who was involved with the initiatives, factors for success and failure of these programs, and the textbooks used during these early time periods for ethical discussions, as these would be the predecessors to the formalization of accounting credentialing and ethical standards discussed next.

In addition to providing educational opportunities and recognized credentials for members, the larger professional organizations also set out to control membership to create prestige for the profession and elevate it from a trade. Control was exerted with barriers to entry such as oral exams given by the Council of the Institute of Accountants in 1871. In other cases, rules initially prevented, and then accepted, women and persons of color from earning professional designations.² Although Christine Ross became the first female certified public accountant (CPA) in 1899³, she was not the first female applicant to earn a professional designation. In 1888, Mary Harris Smith was denied membership to the ICAEW (Paris 2016). Mary Harris Smith eventually became the first female chartered accountant in the world in 1919.⁴ John Cromwell became the first black CPA just a few years later, in 1921.⁵ Mary T. Washington Wylie became the first female African-American CPA in 1943, just over 20 years before Congress passed the Civil Rights Act in 1964.⁶

As membership continued to expand in these larger professional organizations, specialized organizations also began to develop to further transition accounting from a trade into a profession. The first state society of CPAs was founded in New York in 1897,⁷ as it was also the first state to legally recognize CPAs. Coupling the educational requirements with credentialing requirements, New York also became the first state to institute an examination requirement (Van Wyhe 2007a). Once the exam requirement was in place, the debate about how closely higher education curricula should be modeled after the exam began in higher education within the United States. The current version of the CPA exam includes ethics in the auditing and regulation sections with references to United States Department of the Treasury publications and the AICPA’s code of professional conduct (AICPA 2019).

Although practitioners have funded and started these higher education initiatives, there was tension between the academics and the practitioners as to what should be taught in the college curriculum, even in the early years of the 20th century (Van Wyhe 2007a). By the 1920s, 335 schools taught accounting; 18% awarded a bachelor degree, and almost 10% offered a master’s degree (Van Wyhe 2007a, 167). What later became the American Accounting Association (AAA) in 1936⁸ started out as the American Association of University Instructors in Accounting in 1916.⁹ As the AAA became the premier academic organization representing higher education accounting instructors, various commissions involved partnerships between the AAA and practitioners that included an ethical dimension. Most recently, the Pathways Commission, comprised of the AAA and industry representatives, discussed ethics as important to accounting education (Black 2012). However, this was far from the only commission that resulted in a report calling for an improvement of accounting ethics education. Black (2012) discussed the Beamer Committee’s work in issuing the 1967 Horizons for a Profession Report that included ethics for a newly minted CPA. The Treadway Commission in 1987 specifically stated that “Limiting students’ exposure to the problem of fraudulent financial reporting to a single course on ethics is simply not enough” (Treadway Commission 1987, 80). Although ethics is often mentioned in each of these commission reports between practitioners and the AAA, future research could examine these reports using qualitative methods to identify common themes and develop theory. Research could also consider whether and why the instillation of ethical values and eliciting ethical behaviors from the profession has (or has not) been effective.

During the same period as the founding of the AAA, student organizations with their own codes of conduct and ethical behavior expectations appeared on campuses. The first chapter of Beta Alpha Psi, an international honor organization that today serves students in accounting, finance, and information systems, was formed at the University of Illinois in 1919.¹⁰ The National Association of Black Accountants was founded in 1969, and just five years later, the Association of Latino Professionals for America (ALPFA) was founded as the American Association of Hispanic Certified Public Accountants.¹¹

Each of these organizations remains active on campuses today providing multiple ethics research opportunities. Areas for research surrounding student organization membership include consideration of whether students who are members of these organizations have different ethical perceptions than students who choose not to become members; whether changes in ethical attitudes are different for students who choose to become members of these organizations than for other nonmember students in the same accounting programs; or whether these organizations seem to attract students with different ethical perceptions. Research could also examine whether the ethical attitudes of students within these organizations differ by geographical region or by the longevity of the program at that institution. Finally, research could see if the ethical attitudes of students who are members of award-winning chapters are different from those chapters without awards, exploring whether the local chapter activities, national organization exposure, or community interactions influence the ethical attitudes or the development of students.

Professional, academic, and industry groups also undertook several initiatives to develop best practices, both procedural and ethical. The Accountant, a well-respected trade magazine still in print today, was first published in 1876.¹² The Journal of Accountancy, which is still published by the AICPA, began in 1905¹³ and The Accounting Review was first published in 1926.¹⁴ These periodicals and journals shaped the profession by providing a forum where practitioners could debate and learn about financial reporting and accounting measurement issues.¹⁵ Eventually these debates led to procedural standard practices. For example, in 1936, the American Institute of Accountants first used the terms “Generally Accepted Accounting Principles” in their report on “Examination of Financial Statements.”¹⁶ Many governing bodies, such as the International Accounting Standards Board, the ICAEW, and the Federal Standards Advisory Board, continue the work of developing procedural standard practices and guidance for the work of today’s practitioners.

Several of the organizations also sought to develop ethical standards of practice. To this end, the AAPA created a committee to develop ethics standards for their members in 1906, and the American Institute of Accountants (AIA) put forth eight rules of professional conduct in 1917, two of which focused specifically on the accountants duties to the users of financial information: (1) requiring that professionals not certify financial statements that contained false or misleading statements or omissions; and (2) requiring that professionals avoid issuing opinions on financial statements that they have not properly examined (Chatfield and Vangermeersch 1996). In addition, other professional standards focused on ensuring that professional accountants involved in assurance maintained their independence from those whose reports they opined on. For example, the AIA first banned contingency fees in 1922, presumably concerned with the compromises that professional accountants might make if faced with a compensation model that depended on outcomes.¹⁷ These ethical requirements remain basic tenants of professional standards in place today. These developments highlight the nature of the formalization of codes of conduct and ethics’ frameworks in accounting practice.

While these codes of conduct are valuable resources for accounting instructors to incorporate ethics into various classes, there have been multiple calls for ethics material that goes beyond the code of ethics (Loeb and Rockness 1992). A partial motivation for these calls is that, while the codes of conduct offer exposure to ethical standards, these frameworks deal with more black and white issues – not the gray areas that students will often face in their professional careers. For example, the AICPA code of professional conduct section 102.05 102–4 suggests that CPAs must not misrepresent facts or subordinate their judgment when performing professional services for a client, for an employer, or on a volunteer basis.¹⁸ While well intended and important, the requirement that CPAs not subordinate their judgment even to their supervisor or any other person within the member’s organization does not help lower-level CPAs within an organization determine how, when, or if the application of this standard should supersede normal employment practices of deferring to superiors who have more experience when issues are discovered or people are asked to participate in questionable behaviors to keep their jobs/positions (Smith 2013). One example is the lower-level employees who made journal entries at the direction of their bosses in the MCI/Worldcom fraud ( Jennings 2004). Future ethics research could follow up on Loeb and Rockness’s (1992) work to examine which courses discuss and utilize frameworks as the basis of the ethics courses and identify best practices for extending the discussion beyond topics directly covered in these frameworks.

While there are many additional developments that impact the ethical development of the accounting profession that could be highlighted, many of the developments that came after 1925 are not largely attributable to the role that expanding users of financial statements had in shaping ethical practices and education within the profession. Indeed, by the early part of the 1900s the major users of financial information created by or certified by accountants had been set. At this point, financial statement users included owners, business partners (including suppliers and ultimate consumers), creditors, investors, regulators, and governments. Today, financial statements continue to serve these groups, as well as employees, security analysts/rating agencies, and other associations, including FINRA.¹⁹ Beyond advances attributable to the growth in financial statement users, advancements in the development of ethical attitudes came from discussions on how to educate members regarding appropriate ethical attitudes.

After the development of standards of conduct for professional members, early educational efforts were conducted through trade publications. However, the growth of the accounting profession required the profession to identify new avenues to incorporate ethics education into the profession. A natural place to start was to look to the newly developing program of accounting instruction appearing at institutions of higher learning across the United States. By 1883, the Wharton School of Finance and Commerce was offering an accounting course (Chatfield 1975). Most of these early courses, similar to the early development of the profession, focused predominantly on the technical accounting skills. There was some initial discussion on course curricula, as well as a growing distinction between the profession of accounting and bookkeepers. However, it is unclear whether ethics was an integral part of the educational process during this formative period.

To examine the formal integration of ethics into the professional discourse, we searched for articles that dealt with ethics and ethics education published in The Accounting Review from its first publication date in 1926 until 1978. To assist us in this review, we used “An Index to the Accounting Review 1926–1978” prepared by Gary John Previts and Bruce Committe in 1980. We focused on The Accounting Review during this period because it was the only American Accounting Association journal in existence until 1974, when the first issue of The Accounting Historians Journal was published.

Previts and Committe (1980) categorize 13 articles whose subject is ethics from 1929 until 1973. Of these 13 articles, five address ethics education as part of the accounting curricula, all of which were published from 1931 until 1954. Given the limited number of articles, Table 20.1 lists them all.

While these articles seem to suggest that there is general agreement that ethics is an important component of both the profession and education, the articles also seem to portray an attitude that the incorporation of ethics into accounting curricula is generally neglected and left up to the teacher of the course. Unfortunately, the persistence of the teacher discretion in including ethics appears to have held until at least the early 1970s, as Loeb and Bedingfield (1972) and Bedingfield and Loeb’s (1973) surveys indicate that ethics is predominantly taught as a portion of audit, when the professor covered the AICPA’s guidelines for professional practice. Loeb and Bedingfield (1972) and Bedingfield and Loeb’s (1973) articles seem to suggest that there was some movement toward professors wanting ethics education to go beyond the presentation of the AICPA professional guidelines, to focus more on why it is important that future accounting professionals and current accounting professionals adhere to high ethical standards. This objective was partially met with another major impetus in ethical practices and ethics education, accounting scandals.

Investors and students today are often taught about some of the more egregious ethical failures that happened with financial reporting in relatively recent history, including Enron, WorldCom, HealthSouth, and more. While these recent failures might be more prominent to accounting instructors today, significant accounting failures happen each decade going back to the 1920s in the United States. The regular presence of these failures is not to say that accounting, or business by itself, is immoral. Indeed, Pacioli (1494) is clear that there is nothing morally problematic about business or the pursuit of profits (Fischer 2000). Thus, the perpetual presence of accounting failures seems at odds with the notion that there is nothing immoral about business or the pursuit of profits, until one factors in human elements such as greed, lack of oversight, and cultural and legal differences that can contribute to, at a minimum, differences in opinion regarding what constitutes ethical behavior and, at a maximum, ethical lapses. Fortunately, while these human elements lead to ethical dilemmas, the human elements are also the solution to ethical dilemmas.

Major accounting frauds often negatively impact the users of financial statements and result in significant changes in accounting regulation, professional ethical standards, and ethical education. For example, the discovery that the Hatry Group in the United Kingdom was found to be insolvent after they used fraudulent bearer certificates to obtain large loans is cited as a contributing factor to the 1929 stock market crash, which immediately preceded the Great Depression. One common response to such egregious events is increased regulation. In 1932, fearing that investors were being severely misled, the New York Stock Exchange required companies to have audits. The New Deal of 1933 improved banking regulations and required accounting oversight and independent audits. The 1933 Securities Act obligated companies to disclose pertinent information concerning securities that are publicly offered and sold. Fewer than 10 years later, in 1938, the McKesson & Robbins scandal was revealed, whereby four brothers had managed to fictitiously create approximately a quarter of the company’s total assets. The SEC’s investigation revealed that the auditors had failed to confirm accounts receivable and did not verify the existence of inventory. Following this scandal, the accounting profession sought to improve self-regulation, when, in 1939, the American Institute of Accountants (AIA) set up a standing committee to develop generally accepted auditing standards.

All these acts significantly contributed to the integral role that accountants play in today’s financial markets and helped shape the accounting profession. However, as is evidenced by the articles referenced in the last section, there was little in the way of ethics education that dealt directly with these early accounting scandals. A major change took place in 1982, when the Journal of Business Ethics was first published. Just one year later, in 1983, both Issues in Accounting Education and Journal of Accounting Education published their first issues. However, the advent of these new outlets did not automatically result in the publication of accounting ethics cases such as students and professors are more familiar with today. Indeed, a review of a new textbook by Edwards and Hermanson (1991), Essentials of Accounting with Ethics Cases, that was published in Issues in Accounting Education in 1992 indicates just how recent the use of ethical case studies is in accounting. In his review of Essentials of Accounting with Ethics Cases, Horrigan (1992) describes the availability of cases at the end of each chapter as a distinguishing feature of the book.

More recent history indicates that accounting ethics education also reacts to scandals by increasing the focus on ethics through the emphasis of professional codes and the development of cases. The scandals of the 1970s followed by savings and loan crisis in the 1980s helped to formalize a need for more specific accounting ethics education (Van Wyhe 2007b). Indeed, most students today are familiar with WorldCom, Tyco, Enron, Health South, Parmalat, and One Tel, not because of their business operations per se, but instead because of the case studies written about the large accounting scandals that occurred at each of these organizations. These scandals greatly shaped accounting ethics education for the next two decades.

On an international level, the International Accounting Education Standards Board issued specific accounting ethics education standards, effective in 2008, that remain in effect today (McPeak, Pincus, and Sundem 2012). Dellaportas et al. (2006) highlight the reality that accounting professors could introduce educational activities to assist with developing critical thinking and sensitivity to ethical issues, irrespective of the nation of origin. However, they also call for additional research with accounting and ethics to counteract the lack of relevant course materials explicitly dealing with accounting-related ethical issues in nonmanufacturing environments typically encountered by low- or mid-level employees.

In early 2004, a special issue of Issues in Accounting Education was published that was dedicated to professionalism and ethics in accounting education. One need only read the introduction, written by Gaa and Thorne (2004), to see that educators were making new commitments to ensure quality advancements in ethics education following the major corporate scandals of the late 1990s and early 2000s. This special issue contained an index compiled by Thomas (2004) of materials that instructors could use for “Teaching Ethics in the Post-Enron Era.” In this same special issue, Earley and Kelly (2004) call for more research into how educators can “effectively incorporate ethics into accounting courses, and increase the moral reasoning abilities of their students” (53, abstract). As stated clearly in the abstract, the goal set forth in Earley and Kelly’s (2004) article for ethics education is to “[p]rovide students with the ability to reason effectively with respect to moral dilemmas” that “may help to minimize future judgmental errors in accounting and auditing settings.”

The work that was started in this special issue of Issues in Accounting Education of developing cases that help students learn from the ethical dilemmas present during accounting scandals and evaluating the efficacy of accounting ethics educational methods continues today. While this is a great step forward, a review of the history of accounting ethics and an understanding of the current state of ethics education in accounting leads one to wonder, what is next?

None of this discussion is meant to take away from the great educational opportunities that arise when students have the opportunity to learn from large accounting scandals. Instead, this discussion is meant to identify a way that ethics education might supplement these cases, in the hopeful instance that accounting scandals occur less frequently, an outcome that would be consistent with ethics education that changes future behavior. The importance of such a direction in ethics education is twofold. First, both ethics education and the profession’s commitment to ethical practices requires perpetual commitment. Second, ethics tied to major accounting scandals may actually make it more difficult for students to grasp the ethical context of the initial decisions. For example, it would be easy for students to identify egregious actions as unethical. However, research clearly documents that ethical failures frequently start with small infractions (Schrand and Zechman 2012; Reckers and Samuelson 2016). Fortunately, there are several advances being made on this front in ethical education.

The objective of focusing on more nuanced ethical decisions is to remove a student’s ability to differentiate themselves from the individuals who committed the acts that ultimately lead to these large accounting failures. When they can distance themselves, students often believe that it will be easy to identify and therefore easy to avoid the circumstances that would result in their commission of acts that could lead to accounting failures. However, the perpetual persistence of accounting failures suggests that these views are naïve.

Instead, the astute student of ethics who carefully reviews the details of the cases will come to understand that the individuals who committed the acts that lead to these accounting failures were, in many cases, regular people who, under the circumstances that surrounded them, succumbed to the ethically questionable decisions that ultimately led to accounting failures. In short, as coined in the title of Bazerman, Loewenstein, and Moore’s (2002) article in the Harvard Business Review, astute students of ethics will seek to understand why “Good Accountants Do Bad Audits.” In this article, Bazerman, Loewenstein, and Moore’s (2002) note that unethical decisions are not the result of a conscious choice to engage in unethical behavior but instead the result of subconscious choices that lead to unethical decision making.

Bazerman and Tenbrunsel (2011) help identify a potential reason for the influence of unconscious choices in ethical decision making: motivated blindness. In short, motivated blindness occurs when a person has an objective in mind, and because of this objective, the person’s ethics subconsciously fade into the background of the decision making. For example, assume that a CEO has looked at the actual earnings for the 20X1, and to her surprise, the actual earnings of $0.03 per share exceed her expectations. Unfortunately, this good news also comes at a cost. The CEO’s maximum bonus payout was achieved when the earnings are $0.02, and she is concerned that reporting the actual earnings of $0.03 per share could make it harder for her to hit earnings targets for 20X2. The CEO would have preferred that the actual earnings for 20X1 were $0.02. Motivated blindness may cause the CEO to manage earnings down to $0.02 as she focuses on her goal of reporting lower earnings instead of seeing the ethical dilemma inherent in this situation, whether to accurately report actual earnings or ease future expectations for herself. While this example could be extreme, most individuals succumb to the influence of motivated blindness in their daily decision making. For example, students might differ in their stance on whether sharing a streaming channel’s (such as Hulu, Netflix, etc.) password is ethical.

The previous examples of how motivated blindness influences ethical decision making mark new ground for ethics education. A case by Cheng and Flasher (2018) seeks to help students understand how motivated blindness may affect their actions as students as well as their actions as new accounting professionals. Hopefully, both research on the efficacy of this form of ethics education and additional cases will be developed as the state of ethics education in accounting continues to move forward.

Universities tend to follow one of two routes for the integration of ethics into their accounting curriculum based on their location – a stand-alone ethics course or integration across the curriculum ( Jonson, McGuire, and O’Neill 2015; Klimek and Wenell 2011). These approaches are partly due to the state-specific accounting ethics licensure requirements. In Texas, a student must take a separate ethics course to sit for the CPA examination. Other states, like Ohio, require an ethics test based on the AICPA framework for licensure. In addition, AACSB standards require ethics be taught within an accredited program. Specifically, Standard 9 for general business accreditation requires the inclusion of ethics within the curriculum for a bachelor’s degree as “Ethical understanding and reasoning (able to identify ethical issues and address the issues in a socially responsible manner)” (AACSB 2013, 35). The same requirement is explicitly included by reference in the separate accounting accreditation requirements. These outside forces contribute to the inclusion of ethics within higher education. Future research could examine which of these forces or other forces, for example, pressure from practicing alumni, appears to be more influential to the structure of accounting curriculum.

The natural research question of which method of incorporating ethics into the accounting curriculum is more effective – separate or integrated throughout the program – has been examined by researchers without a clear conclusion. More studies focus on teaching ethics as a stand-alone course (e.g. Dellaportas 2006; Chan and Leung 2006; Cloninger and Selvarajan 2010; Mintchik and Farmer 2009) than on the integrated approach (e.g. Felton and Sims 2005; McDonald 2004). In one integrated study, Hiltebeitel and Jones (1992) compares students at different stages (freshman and senior) of an accounting program and documents an increase in students’ reliance on ethical principles as they move through the program. Swanson (2005) details an optimal approach for having both the separate course and integration across the curriculum, emphasizing that more is probably better when it comes to ethics exposure. To reflect the extensive literature around this topic of how best to include ethics within the curriculum, Table 20.2 summarizes select papers within the literature to reflect the variety of research methodologies and settings used to contribute to this debate.

Several studies report survey results related to outcomes associated with various degrees of integration of ethics across the curriculum. Loeb and Bedingfield (1972) survey accounting departments in the early 1970s. They find that ethics content was incorporated into specific classes but not as a stand-alone course. More recently, Anzeh and Abed (2015) survey public and private Jordanian universities and document that ethics was covered more often in auditing courses than in accounting theory or IFRS courses in 2013. Ghaffari, Kyriacou, and Brennan (2008) detail the state of ethics in the United Kingdom higher education domain and find that ethics is largely integrated into auditing and upper division financial accounting courses. Caliyurt (2007) compiles evidence of ethics teaching within Turkey and concludes that developing countries need to further integrate ethics into their accounting programs to be comparable to developed nations. At Northern Illinois University, the business school successfully implemented a program to increase ethical awareness of all students – not only accounting majors (Dzuranin, Shortridge, and Smith 2013). The degree of integration varies, as faculty often protest that teaching ethics is not what they were trained to do, nor do they know how to tackle this area (Loeb 1994; Dellaportas et al. 2006; Rebele and Pierre 2019). As a result, it is often an individual instructor’s decision whether to include ethics within their specific courses.

Future research could explore why accounting faculty include ethics within their technical accounting courses and if this inclusion varies by type of educational institution (public, private, liberal arts, highly ranked, etc.). The underlying force behind this commitment might come from a faculty member obtaining and maintaining his/her own certifications, such as the CPA. Jackling et al. (2007) survey results suggest that practicing accountants support the inclusion of undergraduate ethics education in accounting programs. Thus, professors might feel a duty to the profession to include ethics in their class. Other sources of pressure for including ethics in the classroom might be accreditation requirements, assessment committees, alumni, or department chairs.

Research on teaching ethics, specifically to accounting students, does highlight a variety of methods that appear to tackle various elements of ethics education for university students globally (e.g., O’Leary and Mohamad 2008; Kelly 2017). O’Leary (2009) examines the impact of several types of ethical exercises embedded within an auditing class in Australia. He finds that senior students appear to make positive improvements with their ethical positioning after this combination of ethical instruction. Martinov-Bennie and Mladenovic (2015) compare the impact of presenting a framework to students in contrast to ethical coursework and a combination of both for first-year students (i.e., framework only, coursework only, framework and coursework). They find that there is an ethical judgment impact from presenting a framework alone, but a larger impact on ethical sensitivity is made when students are exposed to the ethical coursework, especially in the absence of an initial framework presentation. Jennings (2004) specifically lists six readings that can be used within an accounting curriculum to promote discussion about ethics that can be linked to serious corporate failures, including Enron. Frank, Ofobike, and Gradisher (2009) discuss how the Ohio Accountancy Board disciplinary actions can highlight moral development stages to students. They admit that their goal is to increase awareness of real-life consequences for unethical behavior more than to fundamentally change any student’s moral orientation. Apostolou, Dull, and Schleifer (2013) summarize a variety of teaching resources for faculty in their pedagogy framework for accounting ethics. The classroom ideas for implementation range from minute papers, to using the United States Securities and Exchange Commission Accounting and Auditing Enforcement Releases (AAERS), to role-playing with various references. Also, they list cases and the related accounting course where their presentation may be beneficial.

Most frequently, accounting educators incorporate ethical elements within cases used in class. Langenderfer and Rockness (1989) detail a specific way to analyze ethical cases that allows for a teacher to guide the discussion through the class. They emphasize the importance of shorter cases. Cheng and Flasher (2018) provide examples of cases that could be covered in a single class period and appear to be effective in highlighting ethical issues to students. Andersen and Klamm (2018) provide a new model for leveraging the earliest stages of ethical thinking, the initial intuition, as an area to help students learn more about ethics. They discuss the applicability of their scenario in five different accounting courses. Liu, Yao, and Hu (2012) emphasize the combination of increased case usage along with more guest speakers discussing ethics as beneficial to accounting students. Producing ethics cases alone is not a sufficient response to the call for ethics education. The AAA created and distributed an ethics casebook in the mid-1990s (Gunz and McCutcheon 1998). Gunz and McCutcheon (1998) examined the adoption of this casebook and determined that it was not widely used even though it had a wide distribution across accounting programs.

However, while much work has been done on ethics in the classroom, additional work is needed. O’Leary and Stewart (2013) examine auditing students’ performance on ethical vignettes after passive and active learning techniques for ethics occur. They find that when the congruence between students’ self-assessed learning style and method of instruction is high, the best learning outcomes occur. Tweedie et al. (2013) detail the reality of ethics coverage in accounting-related textbooks and highlight the necessity of a broader approach to ethics education as cultural values vary across the globe and even within a classroom. These broader values are derived from different ethical frameworks that may impact student responses to ethical situations. Future research is needed to determine how long positive interventions’ effects last (i.e., how long the improved ethical reasoning or awareness persists beyond the class) and which teaching techniques are most appropriate for what types of accounting classes and students. With the rise in online accounting courses, how should instructors refine the delivery of accounting related ethics? Does separate tailoring for graduate master’s of accounting students need to be done as compared to undergraduates, since students usually sequentially complete these degrees? With accounting electives such as internal auditing, forensic accounting, and government and nonprofit accounting being offered, are there ethics scenarios and teaching that should be tailored to these environments?

Students appear to believe that ethics awareness and behavior are necessities for a successful accounting career. Students recognize the importance of ethics and acknowledge student honor code violations among students (e.g., Kerr and Smith 1995). Students are aware of the ethics violations but do not necessarily report them. Future research could examine the reasons for the resistance to reporting violations. Koumbiadis and Okpara (2008) survey students within an accounting program and find the fifth-year students more aware of the necessity of this than the four-year degree students (i.e., 120-hour majors). Graham (2012) details that second-year accounting students recognize the need for ethics education. Students appear to grow in their ethical sensitivity as they transition through an undergraduate program ( Jeffrey 1993). Accounting majors do appear to recognize significant ethical dilemmas particular to the major but with limitations on understanding the situations where more subtle manipulations are being performed (Fischer and Rosenzweig 1995).

Adkins and Radtke (2004) survey accounting students and faculty and provide evidence that students may be relying more on faculty members for guidance than faculty realize. Thus, even a lower-level goal by educators of more awareness of ethical dilemmas may impact student’s future lives. More concrete awareness-type goals for ethics education allow an alumnus from an institution to identify ethical issues when confronted with situations in the professional world postgraduation (e.g., Hiltebeitel and Jones 1992).

Criticisms and protest against teaching ethics in accounting have generated a debate within the literature where the naysayers’ arguments are rebutted (Bampton and Cowton 2002). Bampton and Maclagan (2005) rebut the skeptics’ arguments of “relevance, necessity, and effectiveness of teaching ethics” (290) to accounting students. They summarize extant reasons to not provide ethics education. These include: a lack of time in class, an assumption that auditing courses adequately cover the material, a lack of faculty confidence in teaching the subject, a lack of support materials, an assumption that practitioners will cover these items in more real world settings later, an assumption that students are not interested, and a lack of a documented long-term impact on students. Specifically, they counter these reasons with the arguments that ethics are indeed relevant (reflected by faculty with more industry experience being more likely than faculty without such experience to include ethics in their classes), necessary (the code of ethics/conduct for the professionals and organizations do not address the gray areas that arise in real life), and effective (as long as the goals are more modestly set than long-term changing behaviors of students). The reality is that “training in systematic thinking and reasoning about ethics” (296, emphasis in original) is what academics are capable of doing. At the other end of the spectrum, the reality of whether ethics should even be taught to students has been discussed as futile, as some believe that all ethical values have been instilled in students prior to their arrival at university (McDonald and Donleavy 1995; McDonald 2004; West, Ravenscroft, and Shrader 2004). Milam and McNair (1992) surveyed accounting faculty who expressed positive opinions for teaching ethics and who expressed a desire to see more ethics within the accounting curriculum. However, they did not explore why the faculty felt this way. Waddock (2005) outlines the moral imperative for ethics education by emphasizing that the profit maximization mantra for shareholders in management has resulted in auditors and other accountants ignoring consequences to other stakeholder when making ethical decisions. She calls on business schools to focus on how business operates within societal boundaries – not solely the world of business and the economy.

Determinants of ethical orientations of students within accounting programs provide some insight into the varied backgrounds of accounting students. Conroy and Emerson (2004) examine the impact of religiosity on the ethical awareness of students and find that self-identification as religious appeared to have more impact than a separate religion/ethics course did on students’ responses. Consistent with prior literature, Tormo-Carbo, Segui-Mas, and Oltra (2016) find that Spanish accounting students who are female or older and those who have taken a prior ethics course value business ethics exposure in the curriculum. O’Leary and Cotter (2000) provide accountancy student evidence from Australia and Ireland that it is not the underlying infraction that stops students from making an unethical choice but the detection realities that seem to change the student’s willingness to commit an ethical violation. Cheng and Crumbley (2018) find that students are willing to use publisher test bank questions to help improve their academic performance. Future research could examine why students believe ethics to be important but still perform academic violations.

From a research perspective, accounting ethics researchers have generated a broad list of publications in accounting and more broad-based business journals (see Uysal 2010; Apostolou et al. 2010; Apostolou, Dull, and Schleifer 2013; Apostolou, Dorminey, and Hassell 2013, 2020 for overviews of ethics publications). Bampton and Cowton (2013) specifically provide an overview of 520 accounting ethics-related articles, in a broad list of over 35 journals, from 1987–2008, noting an increasing trend in frequency, with a slight majority for empirical papers as opposed to other research methodologies. Over a 20-year period, this averages to 26 articles a year. Apostoulou, Dorminey, and Hassell (2019) examine 101 accounting education articles from 2018, a single year. This reflects that ethics-related publications occur at a slower rate than accounting education articles, which is not the predominate research channel for tenure-track accounting faculty. Thus, researching in accounting ethics has a reputation of being undervalued by institutions within the faculty tenure process, as these numbers reveal.

Research with accounting ethics does have its issues. Bampton and Cowton (2013) highlight criticism of empirical papers, such as failure to control for social desirability. They also highlight issues with behavioral research suggesting that “more qualitative work should be undertaken … focused on examining issues and research questions that are not amenable to investigation by questionnaire surveys using close-ended question” (p 561). The lack of a robust selection of accounting-based ethical scenarios in the published literature seems antithetical to the profession’s call for more training. The academic community could do better to capture those real-life situations that are the source of ethical stress for practitioners. Thus, there remains a need for more diverse research methodologies and topics to be published relating to accounting ethics education. Also, the general academic community should consider this research area to be as valued as financial or auditing-related research, as the application of ethics research can directly impact the next generation of accounting professionals. Arguably, ethics research contributes as much to the vibrancy of our capital markets as any other research area.

More can and should be done to promote ethics educations for instructors and students as the importance of ethics in the accounting field continues to increase during this time of change. While headlines with data analytics and technological innovation take center stage in business publications, the reality is that understanding ethics is critically important to the application of these tools and technological innovations like cloud computing. Data privacy is critical, because data may be shared with or could be accessed by third parties as companies outsource information technology to the cloud. Privacy is treated differently around the globe, as reflected by the European implementation of the General Data Protection Regulation, known more commonly as GDPR. Thus, even discussing GDPR and how/if it should apply to businesses with the United States or how it might impact the accounting industry shows how ethics continues to be intertwined with business today.

The classroom instructor is the primary delivery mechanism for accounting ethics within the curriculum, especially within the United States. More research can enhance an instructors’ ability to make ethics education more salient to today’s students. From our review of the literature, additional cases and teaching instructions on ethics will help to make instructors more comfortable in delivering this material that is so critical to the education of future accountants. The importance of teaching and applied research, along with more traditional discovery research, cannot be understated in ethics education.

Since the profession has struggled with the ethics of accounting since the first separation of the accounting function from the users of the information, there is no obvious, easy solution. It is imperative that instructors reach out to the profession and invite professionals into the classroom to discuss real world examples of ethical dilemmas. We can all play a role in valuing and promoting ethics education in all its forms within the classroom of today to ensure that future accounting graduates are better prepared to take on the challenges of business today.