Ethical Integration 

Education

CGA-Canada has been a leader in integrating ethics into its program curriculum.

FROM: JUL-AUG 2003 ISSUE | BY MICHAEL McDONALD

With the collapse of major dot-com companies, the ensuing investigations and, in a number of cases, criminal charges, issues surrounding accounting ethics have become the stuff of daily news. There is a lot of blaming going on — blame directed at domestic and international regulators, greedy brokerage houses, investors with get-rich-quick schemes and, unfortunately, the accounting profession.

Most accountants would rather see accounting ethics in a much more positive light. They view accounting as a profession built on professionalism, integrity and skill. Over their careers, they have had to rise to the ever-increasing challenges of being experts in the provision of reliable financial information to clients, employers and the public. They need to act and be perceived as acting as highly competent and trustworthy financial information professionals. Ethical as well as technical competence is at the core of accounting so it needs to be a part of any accounting curriculum including that of CGA-Canada.

Teaching Ethics

So how can a profession encourage ethical competence and excellence in its members? And what role should ethics education have in the accounting curriculum? To answer these two questions, consider ethical behaviour and the way in which education can support it. In various articles and books such as Moral Development: Advances in Research and Theory (1986), psychologist James Rest identified four key components in ethical behaviour:

• the ability to recognize a situation as having moral significance;
• the ability to make a judgment as to which action is right, fair, just and appropriate;
• a commitment to morally appropriate action; and
• possession of appropriate personal qualities (for example perseverance and courage) to carry out morally appropriate actions.

The first two components — recognizing and judging — essentially involve cognitive abilities, while the second two — commitment and personal qualities — are behavioural or action-oriented.

Obviously people are not born with these abilities, so how do they acquire them? They acquire them in the same way as anything else — through social conditioning, learning and lots of practice. Even though the foundations of ethical behaviour need to be laid down in childhood, its development should be an ongoing process that can and should continue throughout life. Much of this learning is, to use a phrase often heard in teaching circles, "caught rather than taught" by good mentors and by doing.

How then can a professional association like CGA-Canada use educational tools to help shape ethical professionals?

Education focuses more on the cognitive components of ethical behaviour than on the active components. The aim of ethics education should be to help accounting students to both think through and think about the ethical choices they will be making as professional accountants. Thinking through ethical choices often involves working through case studies or reading about how accountants in the past have dealt well or badly with ethical choices. Thinking about ethical behaviour requires reflection on the context of choices in accounting and on the multiple roles that professional accountants play in the public, private and not-for-profit sectors.

The ultimate test for ethics education is the same as for the rest of the accounting curriculum — real life! Here the graders will be fellow professionals, clients and the general public — few of whom are likely to be easy markers.

Integrating Ethics

In designing an approach to ethics education, CGA-Canada has faced some interesting choices. The first was whether to establish ethics as a stand-alone component in the CGA curriculum or to integrate it broadly across the entire curriculum. Each alternative had pluses and minuses. On the plus side, a stand-alone ethics component would provide a complete package of learning materials. But on the minus side, it would convey the message that ethics is separate from other accounting activities. As for the integration alternative, a strong positive feature was the message that ethics is an integral part of all accounting activities. However, there was a downside to a pure ethics integration strategy; the student would learn about ethics in bits and pieces in an unsystematic way.

The Association took a best-of-both-worlds approach. A large resource book of ethics readings, cases and study aids, called the Ethics Readings Handbook or ERH, is now available to students outside of Quebec. Quebec students receive an abridged version of ERH, which includes the set of ethics readings specific to the course they are taking. ERH takes students systematically from basic ethics through business and professional ethics to accounting ethics and provides valuable resource materials in each area. For example, a central question in basic ethics is "Does the end always justify the means?" Later on in professional and accounting ethics, the message that both the end and means are ethically significant is developed in terms of professional standards and the CGA Statement of Ethical Principles and Rules of Conduct.

So far CGA has produced two editions of ERH, in 1994 and 1997. A third edition is now in development. One aim with the third edition is to address the new ethical challenges facing accountants in areas such as information technology. In addition, ethics, like other academic fields, is undergoing rapid development. There is much more interest now in systemic issues, for example, why some organizations seem prone to ethical failure and others are generally ethically successful. The new developments in ethics have to be integrated with those in other areas within the accounting curriculum. This is the third objective — improving the fit between ERH and the courses in the accounting curriculum.

I have worked with course authors over the past 10 years to integrate ethics into virtually every course. Students are tested on their knowledge of ethics in the particular course context, whether it is auditing, management information systems or accounting theory. This reinforces the message that ethics is an integral part of being a CGA in good standing.

Course authors are guided in designing the strategies that will make ethics an essential part of their courses. Each course is different, both in terms of content and expected background knowledge and skill levels. One objective is to progressively raise the bar for students with respect to ethical knowledge as they progress through the CGA program.

A Student-Centred Approach

A major challenge in designing suitable ethics materials for the curriculum is the incredible diversity of CGA-Canada's student population. CGA draws its students not only from within Canada, but also from around the world. These students in turn will increasingly be working with a significant diversity in clients and employers. Sensitivity to the student's cultural, occupational and personal background applies to ethics more than to other subjects in the accounting curriculum. Ethics materials, particularly those involving case studies, have to be informative enough to convey to this diverse audience sufficient information about the social and personal context of choice. In particular, study materials should help the student identify the unspoken assumptions that are often major ingredients in good decision-making. For example, in some societies gift-giving is a normal part of human interaction, but in other societies such gifts might be seen as bribery. Helping students understand the differences in cultural contexts is important for distinguishing core norms that are cross-cultural (such as trustworthiness) from those that are culturally specific (such as politeness).

A second challenge in designing a curriculum is determining how to convey good judgment skills. Ethical choices can be "difficult" in two quite different ways. The most familiar way is in situations where doing the right thing is likely to be quite costly personally. An example would be having to tell a major client that he will have no help in fiddling his tax return. A professional needs courage and integrity to make this choice. Stories about professionals courageously doing the right thing in difficult circumstances provide role models for students.

The other way in which an ethical choice can be difficult is the situation in which there is no black-and-white solution, but rather shades of grey. In making a choice, a professional needs good judgment. The situation is similar to the choice accountants face in selecting among alternative approaches that are consistent with generally accepted accounting standards (GAAS) or principles (GAAP). Just as a wiser and more experienced accountant will make better choices in applying accounting standards or principles to particular cases, so too will the ethically wiser and experienced accountant make better decisions in managing ethically difficult choices. Good judgment is not only a difficult thing to teach, it is also undermined by excessive preaching. Accounting educators must present illustrative cases and show how better judgment makes a positive difference. Such cases can be used to help students sharpen their analytical skills at identifying the ethically salient features of tough situations.

Accounting is more than mastering technical skills. It involves skills in understanding complex situations in which various stakeholders may have conflicting expectations and demands. Consider, for example, the tradeoff between information relevance and reliability. Accountants often face a choice between either providing information that is timely, fresh and relevant or supplying information that is relatively complete and reliable. The choices an accountant makes have significant ethical consequences, grounded by obligations to serve the client or employer and to tell the truth. It is important for students to think about these obligations, particularly the needs and expectations of users of financial information. Students need to consider what sort of assurance they may be offering information users and whether they have been candid about important gaps or uncertainties in the information provided.

Leader in Learning

Accountants believe they provide added value over and above other financial information professionals. Ethics is a key value-added factor in their services. That is, the identification of a person as an accounting professional should provide greater assurance of competence, dedication and trustworthiness.

In designing ethics materials for accounting students, the objective, like the objective with any curriculum development, is to increase knowledge and skills. Just as there is more to mathematics than counting and more to writing than knowing the alphabet, ethical development is not complete without professional education and real-life experience. A foundation in the basics is essential, but the basics have to be used in further skills development to realize their full value.

CGA-Canada has taken a leadership position in Canada in terms of its integration of ethics into the accounting curriculum. It has avoided the risks of either separating ethics from the rest of the curriculum or providing over-simplified ethics materials. Instead, CGA-Canada has adopted a best-of-both-worlds strategy through the creation of a smart integrative approach to accounting ethics. The challenge now is to keep up the momentum and to rise to the continuing and increasing ethical demands placed on accounting professionals.

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Michael McDonald, PhD, occupies the Maurice Young Chair of Applied Ethics in the W. Maurice Young Centre for Applied Ethics, University of British Columbia. Since 1992, he has worked with CGA-Canada as an ethics education consultant.