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ETHICS

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Personal Ethics Definition

Absolutism vs. Relativism

Deontological vs. Teleological/ Consequential Ethical decision-making models (AAA and Tucker)

Professional Ethics

Corporate Social Responsibility

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Is it unethical not to offer prayers?

Is it unethical to violate a traffic signal?

Is it unethical to steal?

Is it unethical to tell a lie?

Is it unethical to go to a dance party?

Is it unethical to accept a business gift?

If ethics is a personal matter why shouldprofessional bodies be concerned with this?

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Ethics is concerned with what society considers tobe right or wrong. It therefore

relates to standards of behaviour. At first this may

appear to overlap with one purposeof law, in that law seeks to address behaviour of

which society disapproves. However,

ethical principles may be adopted that discouragebehaviour that is undesirable but

legal.

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ABSOLUTISM RELATIVISM

Ethical foundations inreligion or deeply embeddedvalues, universally accepted

by society.

Ethical decisions as per thecircumstances andconsequences.

Not to kill It is right to kill if the causeis just

To always tell the truth To tell a lie if the purpose is

nobleBusiness gifts are bribe sounacceptable

Varies from culture toculture

Deontological (Duty) Teleological (End)

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A highly successful and dynamic chiefexecutive officer who has been caught up in ascandal relating to his personal life, reported

widely in the national newspapers and ontelevision, with resultant embarrassment to hisorganization. Should he resign?

Absolutism approach

Relativism approach

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Absolutism

Relativism

Definition of

basic dutiesandexplanationof somecommon

instances

Application ofethicalprinciples inspecificcircumstances

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A B C

D

Asks To do

In breach ofA Boss, Employer, Husband, Friend etc

B Manager/ person in ethical dilemmaC Unethical actD Standard, Code, Policy etc

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An accountant joined a multinational company as its FinanceDirector. The company had acquired a land on which it built itsindustrial units. The Finance Director discovered that prior tohis joining, one of the units had been sold at a very high pricethan the amount appearing in companys records. The

difference had been lent to another company, in which MD wasa major shareholder. Furthermore MD had kept his relationshipsecret from the Board.

The FD asked the MD to disclose this to Board. However the

MD refused.

Identify A, B, C, D in the above.

The ethical dilemma faced by Finance Director.

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AAA Model (American Accounting Association)

Step 1 What are the facts of the case?

Step 2 What are the ethical issues in the case?

Step 3 What are the norms, principles, and valuesrelated to the case?

Step 4 What are the alternative courses of action?

Step 5 What is the best course of action that isconsistent with the norms, principles, and

values identified in Step 3?

Step 6 What are the consequences of each possiblecourse of action?

Step 7 What is the decision?

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An auditor uncovers an irregular cash payment andreceives an unsatisfactory explanation for it from theclients finance director. He suspects the cash paymentis a bribe paid to someone but cant prove it. The clientthen offers to pay the auditor a large amount of moneyif he pretends not to have noticed the payment. Theamount of money offered by the client is large enoughto make a significant difference to the auditors wealth.

Should the auditor take the money?

Use AAA model to analyse the situation.

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Tuckers Model

Step 1 Is it PROFITABLE?

Step 2 Is it LEGAL?

Step 3 Is it FAIR?Step 4 Is it RIGHT?

Step 5 Is it SUSTAINABLE/ENVIRONMENTALLY RIGHT?

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Big Company is planning to build a new factory in adeveloping country. Analysis shows that the new factoryinvestment will be more profitable than alternativesbecause of the cheaper labour and land costs. Thegovernment of the developing country has helped the

company with its legal compliance, which is now fullycomplete, and the local population is anxiously waiting forthe jobs which will, in turn, bring much needed economicgrowth to the developing country. The factory is to be built

on reclaimed brown field land and will produce a lowerunit rate of environmental emissions than a previoustechnology.

Use Tuckers model to analyse the situation.

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Some more information has emerged about Big Companysnew factory in the developing country. The brownfieldland that the factory is to be built on has been forcefullyrequisitioned from a community (the Poor Community)considered as second class citizens by the government ofthe developing country. The Poor Community occupiedthe land as a slum and now has nowhere to live.

Use Tuckers model to analyse the situation.

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The American Accounting Association modelinvites the decision maker to explicitly outlinetheir norms, principles, and values, while Tuckers

model allows for discussion and debate overconflicting claims. Both are potentially useful tosenior decision makers.

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