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Accountants face up to the moral maze

By Ian Fraser

Published: Financial Times

Date: January 3rd, 2008

Image courtesy of ign.com

David Molyneaux was leading an ethics course for senior Vietnamese accountants and regulators in Hanoi in August when one participant asked him a tricky question. The delegate had earlier been given a pirated copy of the latest Harry Potter novel and wanted to know whether it was morally acceptable for him to read it.

Mr Molyneaux, a practising Church of Scotland minister and a former partner at Coopers & Lybrand, thought he had resolved the dilemma when he offered him his own copy of Harry Potter and the Deathly Hallows. However, the accountant still wanted to know what to do with the illegal copy. Should he destroy it, sell it or give it someone else? Mr Molyneaux’s response was: “I leave that to your conscience.”

This may sound like a cop-out. But for Mr Molyneaux there are shades of grey to many ethical decisions. In this instance, he points out that the cover price of an official copy of the J.K. Rowling book is $38 in Vietnam, against an annual average salary of $600.

What matters, he believes, is that people should be equipped to think through ethical dilemmas for themselves and that they have a moral framework against which to base their decisions.

Mr Molyneaux — who occasionally still leads services at St Machar’s Cathedral in Aberdeen but today focuses on the teaching of ethics at Edinburgh and Aberdeen University business schools — was in Vietnam with staff from the Institute of Chartered Accountants of Scotland to advise the country’s accountancy profession and regulatory bodies about standards and structures.

Traditionally, it was taken for granted that professionals such as chartered accountants would have high moral standards. However, the collapse of Andersen in 2002 and the frauds at Enron, WorldCom and Parmalat have shattered such notions. “The professional and training bodies realised that they could no longer assume that everyone was going to be ethical,” says Mr Molyneaux.

Over the past five years, ethics have been rapidly moving up the agenda for regulators, corporate and accountancy bodies worldwide. Ethical codes have been revamped or introduced and ethical training courses have become mandatory across a wide range of disciplines.

There is a degree of self-interest involved. Professionals such as accountants are acutely aware that unless they can demonstrate a firm commitment to raising and policing ethical standards, some of their special privileges, including the monopoly they enjoy over auditing, could be stripped away.

However, putting together an effective ethics training programme is more difficult than it seems. One challenge is the plethora of views as to how ethics should be taught.

Areas of debate include whether the subject should be introduced as a standalone course or integrated into the wider curriculum; whether ethics training should start from a pragmatic business perspective or from a philosophical standpoint; and whether a Kantian rules-based approach, utilitarianism (focused on outcomes) or virtue ethics (based on the competence of the moral agent) is likely to work best.

Mr Molyneaux, who helped to put together a pioneering ethical education programme for Icas’s 3,000 UK and international students in 2005, is confident that the best way for ethics to be taught is through open-ended case studies.

In these, trainees are required to weigh up and debate how to respond to challenging real-life moral dilemmas. “Instead of coming up with answers, they raise difficult questions — then they leave listeners to make up their own minds,” he says.

Others disagree. Ian Thompson, honorary research fellow at Edinburgh University and a consultant in corporate ethics, says: “It makes ethical decision-making subjective and occult rather than a rational process — primarily a matter of personal insight rather than skill and competence.

“Whether insight can be taught may be questioned, but skills and competences certainly can, and they can also be assessed and performance evaluated against objective standards. This is the challenge that the International Federation of Accountants is trying to address,” he adds.

New York-based Ifac is playing an important role in persuading accountancy institutes round the world to raise their game where ethical training is concerned. Prof Thompson believes that business has much to learn from the world of medicine, where doctors and nurses have had intensive ethical training since the 1970s.

However, Prem Sikka, professor of accounting at Essex University, believes that more radical change will be necessary before professions such as accountancy can claim to be truly ethical. He dismisses ethics courses such as that of Icas as a form of window-dressing that is unlikely to alter accountants’ behaviour.

“The trouble is that the very language of accountancy militates against ethical behaviour,” says Prof Sikka. “To describe pensions, labour and tax as ‘costs’ means they are seen as a burden rather than as contributions to society. That is class-loaded and based on an antagonistic view of the world.”

  • This article was published in the Business Life pages of the Financial Times on Thursday January 3rd 2008. To view article on FT.com site click here

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