are the effects of accounting ethics interventions transitory or persistent 1996 journal of...

8/12/2019 Are the Effects of Accounting Ethics Interventions Transitory or Persistent 1996 Journal of Accounting Education

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PergamonJournal of Accounting Education Vol. 14, No. 3, pp. 259-276, 1996Copyright 1996 Elsevier Science LtdPrinted in Great Britain. All rights reserved0748-5751/96 15.00 + 0.00S0748-5751(96)00022-X

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A R E T H E E FF E C T S O F A C C O U N T I N G E T H I C SI N T E R V E N T I O N S T R A N S I T O R Y O R P E R S I ST E N T

R. Michael LaGrone Ralph E. Welton and James R. DavisC L E M S O N U N I V E R S IT YA b s t r a c t : This paper examines whether an ethics intervention administered during a graduatecourse in accounting is effective, and if effective, whether the observed moral developmentgains are transitory or persistent. An instrument that identifies the subjects' stages of ethicalreasoning was used to assess the effectiveness of the intervention. An experiment and controlgroup completed the test instrument at the beginning of the term prior to the intervention. Atthe end of the term, and 6 months after completing the term, students repeated this task.

The results of this study indicate that the ethics intervention fosters the students ' abilities toconsistently consider ethical issues in their decision-making processes. However, gains inmoral development appear to be transitory. These findings suggest that accountants mayattain their highest state of ethical awareness if ethics issues are made a part of theircontinuing education programs. Copyright 1996 Elsevier Science Ltd

I N T R O D U C T I O NI n c r e a s e d e v i d e n c e o f e th i c al m i s c o n d u c t i n b u s i n e ss h a s e m p h a s i z e d t h e

need fo r s t ronger p ro fes s iona l e th ics . To mee t th i s cha l l enge , bus ines s ands o c i e t y h a v e c a l l e d f o r h i g h e r e d u c a t i o n t o b e c o m e i n v o l v e d i n e t h i c si n s t r u c t i o n . T h e T r e a d w a y C o m m i s s i o n ( N a t i o n a l C o m m i s s i o n o nF r a u d u l e n t F i n a n c i a l R e p o r t i n g 1 9 8 7 ) , t h e A A C S B ( 1 9 8 8 ) , t h e A I C P A( 1 9 8 8 ) , a n d t h e A c c o u n t i n g E d u c a t i o n C h a n g e C o m m i s s i o n ( 1 9 9 0 ) h a v eu r g e d b u s i n e s s a n d a c c o u n t i n g p r o g r a m s t o i m p l e m e n t e t h ic s i n s tr u c t io n . I nr e c e n t y e a r s e th i c s i n s t ru c t i o n h a s f o u n d i t s w a y i n to m a n y b u s i n e s sp r o g r a m s . W i t h t h i s in c r e a se i n c l a s sr o o m e x p o s u r e t o e t h i cs c o m e s t h e n e e dto as ses s the e f f ec tivenes s o f such ins t ruc t ion (Lo eb , 1991 ; W ebe r , 1990).

T h i s p a p e r e x a m i n e s t h e e x - p o s t e ff ec t s o f e x p o s i n g a c c o u n t i n g s t u d e n t st o p r o f e s s i o n a l e t h ic s d u r i n g g r a d u a t e s t u d y . A c c o u n t i n g e t h ic s r e s e ar c h e r s(W el ton e t a l ., 1994 ; A rm s t rong , 1993 ; H i l t ebe i t e l Jones , 1991) sugges tt h a t a p p r o p r i a t e l y d e s i g n e d e t h i c s i n t e r v e n t i o n s f o s t e r t h e s t u d e n t ' s a b i l i t yto cons ide r e th ica l i s sues in the bus ines s dec i s ion -mak ing p roces s . Ar lowand Ul r ich (1985) inves t iga ted the pe r s i s tence o f an e th ics t r ea tm en t onu n d e r g r a d u a t e a c c o u n t i n g a n d b u s i n e s s s t u d e n t s . P r e v i o u s r e s e a r c h h a s n o td e a l t w i t h t h e p e r s is t e n t e f fe c t o f e th i c s e d u c a t i o n o n a c c o u n t i n g g r a d u a t es tuden t s .

259


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260 R .M . LaG rone et al.

A G E N E R A L T H E O R Y O F M O R A L R E A S O N I N GM o r a l r e a s o n i n g i s c o n c e r n e d w i t h t h e p r o c e s s t h a t i n d iv i d u a l s f o l l o w i n

m a k i n g d e c i si o n s w i t h e t h ic a l i m p l ic a t io n s . F r o m t h e e a r ly w o r k o f P i a g e ta n d o t h e r s, K o h l b e r g (1 98 4) d e v e l o p e d a t h e o r y o f c o g n it iv e m o r a lr e a s o n i n g a n d d e v e l o p m e n t . H e d e f in e d th r e e le ve ls o f m o r a l d e v e l o p m e n ttha t a r e subd iv ided in to s ix invar ian t s t ages . A t the midp o in t o f th i sc o n t i n u u m , t h e c o n v e n t i o n a l l e v e l , a p e r s o n e i t h e r m a k e s m o r a l j u d g m e n t st h a t a r e c o n s i d e r e d t o b e g o o d w i t h i n t h e c o n t e x t o f in t e r p e r s o n a lr e la t ionsh ips and expec ta t ions (S tage 3 ) , o r beg ins to exh ib i t va lues tha tr e f l ec t a concern fo r l aw and o rde r (S tage 4 ) . As a conven ien t r e f e rencethese s t ages , w i th r e la ted l eve l s , a r e pa raphrased in Tab le 1 .

T h e m a j o r i t y o f in d i v id u a l s n e v e r d e v e l o p m o r a l r e a s o n i n g b e y o n d t h econven t iona l l eve l . Th i s i s un fo r tuna te because the pos t - conven t iona l l eve l(S tages 5 and 6 ) r ep resen t s an o r i e n ta t ion tow ard the r igh t s o f ind iv idua l s ,con cern fo r ju s t i ce , and the ap p l i ca t ion o f un ive r sa l mo ra l p r inc ip les .

K o h l b e r g b e li ev e s t h a t m o r a l d e v e l o p m e n t b e y o n d th e l a w a n d o r d e rphase (S tage 4 ) r equ i r es exposure to d ive r se exper iences . H is r e sea rch( K o h l b e r g , 1 9 8 4 , p p . 4 8 5 - 4 5 9 ) i n d i c a t e s t h a t p o s t - c o n v e n t i o n a l d e v e l o p -men t r a r e ly occur s be fo re ind iv idua l s r each the i r mid - twen t ies . Thus ,g r a d u a t e s c h o o l o r e a r l y i n a n i n d i v i d u a l s c a r e e r is a n a p p r o p r i a t e t im e t oa t t e m p t t o e n h a n c e m o r a l r e a s o n i n g .

T a b l e 1 . K o h l b e r g ' s s t a g e s o f m o r a l d e v e l o p m e n tP r e c o n v e n t | o n a l l e v e lS t a g e 1 . A d h e r i n g t o r u le s b e c a u s e p u n i s h m e n t c a n b e im p o s e d b y a s u p e r i o ra u t h o r i t y . R i g h t i s c h a r a c t e r i z e d a s w h a t i s i n o n e ' s o w n b e s t i n t e r e s t .S t a g e 2. F o l l o w i n g r u l e s w h e n i n o n e ' s b e s t in t e r e s t an d r e c o g n i z i n g t h a t o t h e r s a r e

d o i n g t h e s a m e , b a r g a i n i n g w i t h a u t h o r it y . T h e c o n c e p t o f w h a t is r i g h t isc h a r a c t e r i z e d a s t h e r e s u l t s o f a n e q u a l e x c h a n g e , d e a l , o r b a r g a i n e dp o s i t i o n .C o n v e n t i o n a l le v e lS t a g e 3 . S e e k i n g a p p r o v a l o f f r ie n d s a n d f a m i l y , t h e n e e d t o b e g o o d in y o u r o w ne y e s . W i t h i n i n d i v i d u a l r e l a to n s h i p s , r i g h t c o n s i s ts o f l i v i n g u p toe x p e c t a t i o n s o f t r u s t , l o y a l t y , r e s p e c t , e t c .S t a g e 4 . O b e y i n g l a w s a n d fu l f i l l in g d u t i e s i m p o s e d b y a g r e e m e n t t o a v o i d t h eb r e a k d o w n o f s o c i e ty , g r o u p s , o r in s t it u ti o n s . R i g h t i s m a k i n g ac o n t r i b u t i o n t o s o c i e t y , g r o u p s , o r i n s t i tu t i o n s .P o s t c o n v e n U o n a l l e v e lS t a g e 5 . A w a r e n e s s of o t h e r p e o p l e ' s r i g h t s , u n i v e r s a l p r i n c i p l e s o f j u s t i c e . C o n c e r nt h a t la w s b e b a s e d o n t h e c o n c e p t o f t h e g r e a t e s t g o o d f o r t h e g r e a t e s tn u m b e r .S t a g e 6 . C o n c e r n w i t h c o n s i s t e n t e t h i c a l p r i n c i p l e s , e q u a l i t y o f h u m a n r i g h t s a n dr e s p e c t fo r t h e d i g n i t y o f h u m a n b e i n g s a s i n d i v i d u a l s . A c t i o n s a r e i n a c c o r dw i t h th e s e p r i n c i p l e s w h e n l a w s v i o l a t e t h e m .


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Effects of Accoun ting Ethics Interventions 261

A l t h o u g h t h e t h e o r y o f m o r a l d e v e l o p m e n t is n o t s i t u a ti o n s pe cific ,exp osure to va r iou s l aws , o rgan iza t iona l po l i ci e s , code s o f e th ics , and thespec if ic s o f any g iven s i tua t ion a re inpu t s in the r eason ing p roces s . Indec i s ion mak ing , e th ica l confus ion i s no t a lways r eso lved in the d i r ec t ionof the h igher l evel s. K oh lb erg ' s s t ages a re s equen t ia l . A n ind iv idua l w hoh a s d e v e l o p e d t h e a b i l i t y t o r e a s o n a t a p o s t - c o n v e n t i o n a l s t a g e w i l l n o ta lways advoca te a so lu t ion cons i s t en t w i th tha t s t age . A l l lower s t agea l t e rna t ives a r e inpu t s to the ind iv idua l ' s dec i s ion p roces s . As the r esu l t o fth i s pa ra do x , an ind iv idua l ' s l evel o f m ora l r eason ing can o n ly bei d e n t i f i e d t h r o u g h r e p e a t e d o b s e r v a t i o n .

E V A L U A T I N G P R O F E S S I O N A L A C C O U N T A N T S ' L E V E L S O FM O R A L R E A S O N I N GU s i n g K o h l b e r g ' s s t a g e s , r e s e a r c h e r s h a v e c o n s t r u c t e d s e v e r a l p s y c h o -

m et r i c in s t rum en ts to me asu re an ind iv idua l ' s l evel o f m ora l r eason ing .T h e t w o m o s t c o m m o n l y u s e d i n s t r u m e n t s a r e t h e M o r a l J u d g e m e n tI n t e r v i e w ( M J I ) a n d t h e D e f i n i n g I s s u e s T e s t ( D I T ) . T h e s e i n s t r u m e n t sinc lude mu l t ip le s cenar ios so tha t an ind iv idua l ' s l evel o f m ora l r eason ingc a n b e i d e n t i f i e d t h r o u g h r e p e a t e d o b s e r v a t i o n . K o h l b e r g a n d h i sc o l le a g u e s d e v e l o p e d th e M J I w h i le R e s t (1 97 9), a p r o t e g e o f K o h l b e r g ,a n d h i s c o l l e a g u e s d e v e l o p e d t h e D I T . S i n c e t h e M J I r e q u i r e s p e r s o n a lin te rv iews i t i s l e s s popu la r than the DIT which i s a s e l f - admin i s t e r edo b j e c t i v e f o r m a t q u e s t i o n n a ir e . M u c h r e s e a rc h h a s b e e n c o n d u c t e d t ov a l i d a t e t h e D I T s t a g e -s e q u e n c e m o d e l o f e t hi c al d e v e l o p m e n t ( se e C e n t e rf o r t h e S t u d y o f E t h ic a l D e v e l o p m e n t , 1 99 0).

B ebe au e t a l. (1985) no te tha t K oh lberg ' s h igher s t ages o f mora ld e v e l o p m e n t ( S t a g e s 5 a n d 6 ) s e e m c o n s i st e n t w i th o u r s o c i e t y 's c o n c e p t o fb e i n g a p r o f e s s i o n a l . H o w e v e r , r e s e a r c h i n d i c a t e s t h a t t h e m a j o r i t y o fa c c o u n t a n t s , l i k e t h e g e n e r a l p o p u l a t i o n , d o n o t m a t u r e b e y o n d t h econven t iona l l eve l . Us ing the DIT , Arms t rong (1987 , p . 33 ) found tha tp r a c t ic i n g C P A s a p p e a r t o h a v e r e a c h e d t h e m o r a l m a t u r a t i o n l e ve l o fadu l t s in genera l , in s tead o f m a tu r ing even to the l evel o f co l l ege s tuden t s ,m u c h le ss t o t h e l e v el o f co l le g e g r a d u a t e s . S h e c o n c l u d e s t h a t t h e C P A s 'c o l le g e e d u c a t i o n m a y n o t h a v e f o s t e r e d c o n t i n u e d m o r a l g r o w t h .

B e y o n d t h e c o l le g i a te e x p e r ie n c e , t h e p r a c ti c e o f p r o fe s s i o n a l a c c o u n t -a n c y m a y n o t f o s t e r a d d i t i o n a l g a i n s i n m o r a l r e a s o n i n g . P o n e m o n ( 1 9 9 0 )f o u n d t h a t t h e le ve l o f m o r a l r e a s o n i n g a t t a i n e d b y a c c o u n t a n t s t e n d s t obe inver se ly r e la ted to the i r pos i t ions in the f i rm. He found tha t pa r tne r s inC P A f ir m s e x h i b i te d l o w e r l ev e ls o f m o r a l r e a s o n i n g t h a n s e n io r s, w h oexh ib i t ed the h ighes t l eve l s w i th in the f irm. M ore r ecen t ly , Shau b (1993)a l s o o b s e r v e d t h is p h e n o m e n o n r e p o r t i n g t h a t a u d i t o r s a t t h e st a f f le ve ls h o w s o m e p r o g r e s s i o n i n D I T s c o r e s , f o l l o w e d b y a r e g r e s s i o n a t t h esen io r l evel con t inu ing th rou gh to the pa r tn e r l eve l (p. 22 ).


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I M P A C T O F B U S IN E S S A N D A C C O U N T I N G E T H IC SI N S T R U C T I O ND o e s b u s i n e s s a n d a c c o u n t i n g e th i cs in s t r u c t io n a f fe c t s t u d e n t s ' m o r a lr e a s o n i n g d e v e l o p m e n t ? R e s u l t s o f p r i o r s tu d i e s a re m i x e d . I n g e n e ra l ,

w h e n r e s e a r c h e r s h a v e u s e d a g e n e r i c i n s t r u m e n t s u c h a s t h e D I T , m o s th a v e f a i l e d t o f i n d t h a t i n t e n s i v e c l a s s r o o m e x p o s u r e t o e t h i c s m a k es ignif icant d i f ferences in the s tudents ' ab i l i t ies to cons ider the e th icalimp l ica t ions o f bus ines s dec i s ions (Ponem on , 1993 ; Shau b , 1993 ; S t P ie r r eet a l . , 1990; Jon es, 1989). l

U s i n g t h e D I T a n d a p r e - / p o s t -t e s t d es ig n , P o n e m o n (1 99 3) a s s e s se d t h ee f f ec tivenes s o f a 10 -week e th ics in te rven t ion in h i s aud i t ing c lasses . H iss u b j e c t s , 7 3 s e n i o r a c c o u n t i n g m a j o r s a n d 5 3 g r a d u a t e s t u d e n t s w i t hnonaccoun t ing underg radua te deg rees , f a i l ed to exh ib i t s ign i f i can t lyd i f f e r e n t p o s t - t e s t s c o r e s o n t h e D I T . P o n e m o n a d v a n c e s f i v e a l t e r n a t i v ereasons fo r these t e s t r e su l t s and sugges t s tha t i t i s p rematu re to conc ludetha t e th ics in te rven t ions a re ine f f ec t ive . Pe rhaps the mos t a rguab le o fP o n e m o n ' s a l t er n a ti v e r e as o n s is t h a t t h e D I T m a y b e t o o c r u d e am e a s u r e t o c a p t u r e a c c o u n t i n g s tu d e n t s ' e th i c a l r e a s o n i n g ( p. 2 05 ). H efu r the r s t a t e s tha t an in s t rumen t based on e th ica l i s sues f r amed in thec o n t e x t o f a c c o u n t i n g o r a u d i t i n g m i g h t h a v e p r o v i d e d a m o r e p r e c is em e a s u r e o f t he m o r a l d e v e l o p m e n t o f h is s a m p l e.O t h e r r e s e a r c h e r s h a v e a l s o a d v a n c e d t h e a r g u m e n t t h a t t h e D I T , i n i t sa t t e m p t t o b r o a d l y g e n e r a l i z e e t h i c s , m a y n o t f a i r l y r e p r e s e n t p r o f e s s i o n a lenv i ronmen ts . The i r so lu t ion has been to deve lop p ro fes s ion - spec i f i c t e s tin s t rumen ts . These inc lude e th ica l s ens i t iv i ty t e s t s fo r the den ta l (Newel l e ta l . , 1985; B eb ea u e t a l. , 1985) , cou nsel ing (V olker , 1984) , nurs in g (W ai thee t a l . , 1989) , and t ax (Denn is -Escof f i e r & For t in , 1991) p ro fes s ions . Whereresea rcher s have deve loped bus ines s and accoun t ing spec i f i c t e s t in s t ru -m e n t s , t h e y n o t e s i g n i f i c a n t i m p r o v e m e n t i n t h e s t u d e n t ' s a b i l i t y t ocon s ide r the e th ica l imp l ica t ions o f bus ines s dec i s ions a f t e r e th icsi n t e r v e n t io n ( W e l t o n e t a l ., 1 9 9 4 ; H i t e b e i t e l & J o n e s , 1 99 1; A r l o w &Ulrich, 1980, 1985).U s i n g a t e s t i n s t r u m e n t d e v e l o p e d b y C l a r k ( 1 9 6 6 ) , A r l o w a n d U l r i c h(1980 , 1985) r epor ted in i t i a l improvemen t in e th ica l awarenes s o f bus ines ss t u d e n t s a f t e r t h e c o m p l e t i o n o f a c o u r s e t h a t h a d s u b s t a n t i a l e t h ic se x p o s u r e . H o w e v e r , 4 y e a r s l a t e r t h e y f o u n d t h a t t h e e t h i c a l a w a r e n e s s o fthe g roup had dec l ined to p re tes t l eve l s .

C la rk ' s bus ines s e th ics s ca le cons i s t s o f 11 shor t s cenar ios des igned toeva lua te an ind iv idua l ' s pe r sona l e th ica l s t andards . Wi th in a bus ines s

ISee Armstrong 1993) for a notable exception. Armstrong develops an ethics interventionthat results in improved DIT scores. Failure to employ an equivalent control group is alimitation of her study.


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Effects of Accounting Ethics Interventions 263

context, this scale purports to measure an individual's commitment topersonal integrity, honesty, and law.

Arlow and Ulrich's initial sample consisted of 120 upper-divisionbusiness majors enrolled in a business and society course. These studentswere pretested at the beginning of the semester. Course materialsemphasized the business-society relationship and social responsibility.The amount of time devoted to business ethics as a separate topic wasapproximately 1 week. However, other topics discussed throughout theterm had ethical implications. At the end of the course, the students wereagain surveyed to obtain post-test scores. Four years later, Arlow andUlrich obtained 73 usable follow-up surveys from these same students. Inthe study, account ing majors exhibited significantly higher scores on thepretest than management and marketing majors. Arlow and Ulrichattributed this finding to the additional training in accounting ethics thataccounting majors receive in such courses as auditing. The post-test didnot indicate a significant decline in accounting major's scores, while thescores of management and marketing majors increased significantly to thepretest level of the accounting majors. Four years later, Arlow and Ulrichfound that both groups had returned to their pretest levels. They concludethat while there may be a short-term effect of teaching business ethics toundergraduate business students, the effect is not persistent.Following this study, Hiltebeitel and Jones (1991) developed their owninstrument to test the effects of integrating ethics modules into accountingcourses at two universities. Their study involved 171 students in auditing,cost, and accounting principle classes. All students were pretested at thebeginning of the semester. Students enrolled in auditing and cost wereexposed to ethics modules, while the principles students served as anonequivalent control group. A minimum of 2 weeks followed theintervention and post-testing. The test instrument consisted of personaland professional dilemmas. For each dilemma, students were asked torank six considerations for resolving the dilemmas. The six considerationswere keyed to Kohlberg's stages. From their analysis, Hiltebeitel and Jonesconcluded that the accounting students exposed to ethics modules revisedthe manner in which they resolved professional ethical dilemmas givingmore weight to considerations representing Kohlberg's higher stages.However, this effect did not spill over to personal ethical dilemmas.More recently, Welton et al. (1994) developed a test instrumentpatterned after the DIT to test an ethics intervention that includedexposure to Kohlberg's theory of moral development, study of profes-sional accounting codes of ethics, and ethics cases. This interventioncomprised 34% of the course content and was administered to 26 masterof accountancy students. Another 31 master of accountancy studentsserved as a control group. These groups were homogeneous relative to age,gender, and pretest score distributions.


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264 R.M. LaGrone et al.

The test instrument contained four accounting decision scenarios, eachof which included a series of statements keyed to Kohlberg's stages ofmoral development. The first scenario required an evaluation as towhether an unqualified opinion could be issued. The second scenarioaddressed the extension of credit to executives of a former bankruptcompany. The third scenario presented an audit situation concerningcontingencies and the adequacy of a bank's loan loss reserve. The finalscenario involved the reporting and approving of expense reimbursements.Subjects were asked to identify and weight the four statements theybelieved were most relevant to each decision. These weightings, and therelationship of the statements to Kohlberg's stages of moral development,were combined across the four scenarios to produce a P score . This Pscore represented the subject's propensity to give weight to post-conventional considerations in their decision-making.The treatment and control groups were enrolled in different graduateaccounting courses. Both groups completed the decision scenarios as apretest at the beginning of the semester. At the end of the semester, bothgroups again completed the decision scenarios. The treatment groupexhibited a significant gain in mean P score, while the mean P score of thecontrol group did not show a significant decline. From their analysis,Welton et al. concluded that an appropriately designed ethics interventionfosters students' abilities to consistently consider ethical issues in theirdecision-making processes.

THEORY, HYPOTHESES, AND EXPERIMENTAL DESIGNTo date, no studies involving accounting students exist that track thepersistence of a successful ethics intervention. As previously discussed,

accounting researchers have observed increases in students' abilities toconsider ethical issues in their decision making after exposure toappropriately designed ethics interventions (Welton et al., 1994; Arm-strong, 1993; Hiltebeitel & Jones, 1991). However, is the effect persistent,or as with general business students does it dissipate (Arlow & Ulrich,1980, 1985)?

This study adopts and extends the methodology of Welton et al. (1994)by using their test instrument to gauge the persistence of an ethicsintervention through pre-, post-, and follow-up testing of accountinggraduate students. We selected this test instrument because it is accountingspecific. This addresses the concerns of Ponemon (1993) and others that,for accounting decision-makers, an accounting-based instrument mayprovide a better measure of moral development than the DIT. Welton etal. (1994) validated their instrument through independent evaluation andfield testing.


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Effects of Account ing Ethics Interventio ns 265

We hypothesize that the ethics intervention will raise the experimentalsubjects' ethical reasoning ability and that improvement will be exhibitedby shifts toward higher ethics test scores. Thus:Hi: Graduate accounting students receiving ethics instruction during

the accounting environment course will show more improvementin their P scores than other graduate students who do notreceive ethics instruction.

We also anticipate that the scores will decline over time, but permanentgains will occur. Thus:n 2

and3 :

Follow-up P scores of the experimental group will be less thantheir post-test P scores .Follow-up P scores of the experimental group will be higherthan their pretest P scores .

ubjectsThe subjects in our study were the population of graduate accountingstudents enrolled in an AACSB accredited Master of Accountancy degreeprogram. Those in the experimental group were enrolled in multiple

sections of an accounting environment course that were taught by thesame instructor. Students assigned to the control group were enrolled inother graduate accounting courses and had taken the environment course.The initial sample consisted of 81 students, 35 in the experimental groupand 46 in the control group. Fifteen respondents were lost to attrition orfailure to return the follow-up. Another 18 respondents were deleted fromthe sample because they failed the test instrument's consistency andvalidity checks. This resulted in 48 respondents at the end of the 6-monthfollow-up period. Demographic data for the remaining subjects ispresented in Table 2.

Ta b le 2 D e m ogra p h i c p ro f il e o f s ub j e c t s by g roupE x p e r i m e n t a l C o n t r o l T o t a l

I n i t i a l s u b j e c t s 5 4 6L o s t t h ro u g h a t t r i t i o n (4) (11 )F a i l e d c o n s i s t e n c y a n d v a l i d i t y c h e c k s ( 8) ( 10 )R e m a i n i n g s u b j e c t s 2 3 2 5

M e a n a g e o f r e m a i n i n g s u b j e c t s 3 1 .0 y e a r s 2 7 .4 y e a r sS t a n d a r d d e v i a t i o n o f a g e 9 .9 y e a r s 6 .5 y e a r sG e n d e r : F e m a l e 4 8 7 2M a l e 5 2 2 8

8(15)(18)48


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266 R .M . LaG rone et al.

ourse and Ethics InterventionT h e a c c o u n t i n g e n v i r o n m e n t c o u r s e f o c u s e d o n t h r e e a r e a s : ( 1 ) t h e

po l i t i c s invo lved in s e t t ing accoun t ing s t andards , (2 ) p ro fes s iona l e th ics ,and (3) the l ega l r e spons ib i li t ie s o f the p ro fes s ion . The u n i t o n p ro fe s s iona le th i cs i n c lu d e d e x p o s u r e t o K o h l b e r g s t h e o r y o f m o r a l d e v e l o p m e n t ,s t u d y o f p r o f e s s i o n a l c o d e s o f e t h ic s (e .g ., A I C P A , I I A a n d I M A c o d e s , a sw e l l a s p r a c t i c e s t a n d a r d s f o r t h e t a x a n d m a n a g e m e n t a d v i s o r y s e r v i c e s ) ,and ex tens ive use o f wr i t t en and v ideo e th ics cases .

T h e e t h ic s i n t e rv e n t i o n c o m p r i s e d t h e m i d d l e t h i r d o f th e c o u r s e . T h i su n i t w a s t a u g h t i n s e m i n a r f o r m a t w i t h t h e c l a s s c o m p a r i n g a n dcon t r as t ing an e th ica l conce p t , such as ob jec t iv i ty ac ros s a l l thep r o f e s s i o n a l c o d e s , a n d t h e n s e e k i n g t o a p p l y t h e c o n c e p t t h r o u g h c a s eana lys i s . Case d i s cus s ion a lw ays focuse d on f ive po in t s : (1 ) iden t i f i ca tion o fthe s t ak eho ld e r s , (2 ) iden t i f ica t ion o f the e th ica l is sues and con cep t s o f thecase , (3) a l t e rna t ives , (4) ana lys i s o f the l ike ly imp ac t o f each a l t e rna t ive ,a n d ( 5 ) a r e c o m m e n d e d s o l u t i o n . L i t t l e a t t e n t i o n w a s f o c u s e d o n t h er e c o m m e n d e d s o l u t i o n . R a t h e r , s t u d e n t s w e r e e n c o u r a g e d t o f o c u s o n t h es takeh o lde r s , an d the l ike ly imp ac t , inc lud ing con s t r a in t s o f the iden t i fi eda l t e rna t ives . Th i s foc us a lmo s t a lways l ed to the iden t i f i ca t ion o f a d i r ec to r ind i r ec t pub l i c r e spons ib i l i ty .

E v e n i n t h e a r ea s o f c o r p o r a t e a c c o u n ti n g , m a n a g e m e n t a d v i s o r yse rv ices , and t ax p rac t i ce , ind i r ec t pub l i c r e spons ib i l i t i e s can be found .W h e t h e r i n t h e p u b l i c s u l t i m a t e r e li a n ce o n t h e p u b l i s h e d f in a n c ia ls t a te m e n t s , a p r o d u c t o f m a n a g e m e n t , o r i n t h e t a x p r a c t i t i o n e r sr espons ib i l i ty to the t ax sys tem as we l l a s the c l i en t , these r espons ib i l i t i e sex i s t . S tuden t s were encouraged to iden t i fy these r espons ib i l i t i e s andc o n s i d e r t h e m a l o n g w i t h t h e c a s e c o n s t r a i n t s a s t h e y a s s e s s e d t h e l i k e l yi m p a c t o f t h e a l t e r n a t i v e s .

Test Instrument and MethodologyTh e t e s t in s t rum en t used (W el ton e t a l. , 1994) i s pa t t e rne d a f t e r R es t sDIT wi th s i tua t ions and i s sues des igned to e l i c i t and iden t i fy the sub jec t ss t a g e s o f e th i c a l r e a s o n i n g i n t h e c o n t e x t o f a c c o u n t i n g d e c i s i o n m a k i n g .A s w i t h t h e D I T , t h e w e i g h t e d m e a s u r e o f s t a g e 5 a n d 6 r e s p o n s e s ,

e x p r e s s e d a s a p e r c e n t a g e o f t h e m a x i m u m s c o re , re p r e s e n ts t h e r e la t iv ei m p o r t a n c e a s u b j e c t g i v e s t o m o r e p r i n c i p l e d ( p o s t c o n v e n t i o n a l )cons ide ra t ions in mak ing dec i s ions invo lv ing e th ica l d i l emmas , and i st e r m e d t h e P score . This P s c o r e s h o u l d n o t b e m i s i n te r p r e t e d t o b et h e s a m e a s t h e D I T P s c o r e . W h i l e t h e s c o r i n g p r o c e d u r e s a r e t h e s a m e ,t h e r e s p o n d e n t s r e fe r e n c e b a se is th e i r b u si n e s s e t h ic w h i c h m a y b ed i f f e ren t f rom the i r genera l mora l e th ic .

T o a v o i d t h e p o s s i b i l i t y t h a t e x p o s u r e t o t h e t e s t i n s t r u m e n t m i g h t


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c r e a t e u n i n t e n d e d t r e a t m e n t e f f e c t s , a n e q u i v a l e n t c o n t r o l g r o u p w a si n c o r p o r a t e d i n t o t h e e x p e r i m e n t a l d e s i g n . T h e r e s u l t i n g e x p e r i m e n t a ld e s ig n p r o v i d e d f o r a p r e- a n d p o s t - te s t o f th e a c t u a l t r e a t m e n t p e r i o d( o n e s e m e s t er ) w i t h a d e l a y e d fo l l o w - u p o f b o t h a n e x p e r i m e n t a l a n d ac o n t r o l g r o u p . C o m p a r i s o n s o f p r e - a n d p o s t - t e s t t r e a t m e n t s c o re sp r o v i d e d e v i d e n c e o f t h e e f f e ct iv e n e s s o f t h e e t h i cs i n t e r v e n t i o n . F o l l o w -u p t e s ti n g e x a m i n e d t h e p e r s is t e n c e o f t h e i n t e r v e n t i o n . A p a i r e d t -t es t sd e s i g n w a s u s e d .

R E S U L T S A N D A N A L Y S I ST h e p r e - , p o s t - , a n d f o l l o w - u p t e s t re s u lt s a r e p r e s e n t e d i n T a b l e 3 . 2T h e p r e t e s t m e a n s c or es o f th e e x p e r i m e n t a l a n d c o n t r o l g r o u p w e r e 2 7.5

a n d 3 1 . 3 ; t h e s e s c o r e s w e r e n o t s i g n i f i c a n t l y d i f f e r e n t ( t - t e s t p r o b a b i l i t y o f. 28 ). T h i s s u p p o r t s t h e a s s u m p t i o n o f e q u a l i t y o f i n it ia l m o r a l r e a s o n i n gl ev el b e t w e e n t h e e x p e r i m e n t a l a n d c o n t r o l g r o u p s . A n o t h e r f a c t o r ine s t a b l i s h in g e q u i v a l e n c e o f th e t w o g r o u p s w i t h r e s p e c t t o m o r a lr e a s o n i n g is m a t u r i t y . T h e m e a n a g e o f th e e x p e r i m e n t a l a n d c o n t r o lg r o u p s w e r e 3 1 . 0 a n d 2 7 . 4 , r e s p e c t iv e l y ; t h e i r a g e s w e r e n o t s i g n i f ic a n t l yd i f f e re n t ( t - te s t p r o b a b i l i t y o f .1 6 ). A d d i t i o n a l l y , e a c h g r o u p s p r e t e s ts c o r e s w e r e t e s t e d f o r g e n d e r d i ff e re n c e s. N o s i g n if ic a n t g e n d e r d i f fe r e n c e sw e r e f o u n d .

T h e e x p e r i m e n t a l g r o u p s h o w e d a m e a n i m p r o v e m e n t in P s c o re o f 7 .4( t o 3 4 . 9 ). T h u s , t h e r e w a s a s i g n i f i c a n t d i f f e r e n c e ( o n e - t a i l e d , p a i r e d t - te s tp r o b a b i l i t y o f . 0 2 2 ) b e t w e e n t h e p r e - a n d p o s t - t e s t . A t t h e s a m e t i m e t h ec o n t r o l g r o u p s c o r e d e c l i n e d .3 , w h i c h w a s n o t a s i g n i f ic a n t c h a n g e ( o n e -

T a b l e 3 . T e s t r e s u l t sP r e t e s t P o s t t e s t F o l l o w u p

P sc o r e m e a n sE x p e r i m e n t a l g r o u p 2 7 5 3 4 9 3 1 3C o n t r o l g r o u p 3 1 3 3 1 0 2 9 4S t a n d a r d e r r o r o f P s c o r e m e a n sE x p e r i m e n t a l g r o u p 2 5 3 0 3 7C o n t r o l g r o u p 2 4 2 9 2 4P s c o r e s t a n d a r d d e v i a t i o nE x p e r i m e n t a l g r o u p 1 2 2 1 4 4 1 8 0C o n t r o l g r o u p 1 1 8 1 4 4 1 2 0

2Paired t-test results were con sistent w ith analysis of variance and analysis of covariance testsresults.


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tailed, paired t-test probability of .93) . These results support thehypothesized effects of ethical instruction, H1. Thus, the results of thisstudy support previous findings (Welton et al., 1994; Armstrong, 1993;Hiltebeitel & Jones, 1991) that ethics interventions can significantlyimprove the moral reasoning ability of accounting students.The follow-up test P score mean for the experimental group was 31.3, adecrease of 3.6 over a 6-month period. The follow-up test P score meanfor the control group was 29.4, a decrease of 1.6 over the same period.These scores are neither significantly lower than the mean post-test score,nor significantly higher than the mean pretest score. Thus, //2 and H3cannot be supported. However, the movement of the changes in the Pscores of the experimental group for both hypotheses (//2 from 34.9 to31.3; /-/3 from 27.5 to 31.3) were in the predicted direction.

By analyzing the components of the experimental group's P scores(stage 5 and 6 scores), we observed that most of the movement in averageP scores across the three tests involved stage 6, the highest level. Since thetest scores for all stages total 100, P score changes will be inverselyreflected by changes in the other stage scores. For the experimental group,from pre- to post-test to follow-up, the stage 6 scores rose then lost half ofthe gain, while the lower stage scores declined and then returned to theirprevious levels. The experimental group exhibited no statisticallysignificant movement in stage 5 scores from pretest through follow-uptesting. These stage score results are presented in Table 4.

Thus, the post-test/follow-up test results suggest that the effects of ethicsintervention may be transitory. The observed trends are consistent with thefindings of Arlow and Ulrich (1980, 1985). However, additional researchneeds to be conducted to statistically establish the persistence or transitorynature of ethics interventions.

LIMITATIONSThis study's results are subject to several limitations, including smallsample size which impacts significance tests, the use of a single university,and potential self-selection effects. Matur ity of the subjects and gender mixof the groups may also be a limiting factor. While the mean age of thetreatment and control groups was 31.0 and 27.4 years, respectively, many

of the subjects were still in their early 20s as evidenced by respectivestandard deviations of 9.9 and 6.5 years. Based on prior research findings(Kohlberg, 1984), these subjects may still be finding their level of ethicalreasoning.

The test instrument is also subject to limitation. While Welton et al.(1994) tested the instrument to insure its validity (pp. 38-41), thecorrespondence of the scenario statements to Kohlberg's stages rests ontheir ability to accurately correlate the statements and the stages. The


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T a b l e 4 . S t a g e 5 s t a g e 6 a n d P s c o r e r e s u lt sM e a n s c o r e s a n d t t e s t p r o b a b i l i t i e s

ProbabilityPretest/Post-test Com parison Pr e tes t Pos t - tes t C h an g e change=OG r o u p m e a n s c o r e sE x p e r i m e n t a lS ta ge 5 19 .1 20 .2 1 .1 .70S ta ge 6 8 .4 14 .7 6 .3 . 01P s c o r e 2 7 . 5 3 4 . 9 7 . 4 . 0 2C o n t r o lS t a g e 5 2 3 . 3 2 5 . 0 1 .7 . 5 4S t a g e 6 8 .0 6 . 0 2 . 0 . 53P s c o r e 3 1 . 3 3 1 . 0 . 3 . 9 2P r o b a b i l i t y o f P s c o r e e q u a l i t yb e t w e e n g r o u p s . 28 . 35 .0 9

ProbabilityPost-test/follow-upc o m p a r i s o n P o s t - t e s tFo llow- up C ha ng e change=OG r o u p m e a n s c o re sE x p e r i m e n t a lS ta ge 5 20 .2 20 .4 . 2 . 95S t a g e 6 1 4 .7 1 0 .9 3 . 8 . 0 9P s c o r e 3 4 .9 3 1 .3 3 . 6 . 36C o n t r o lS t a g e 5 2 5 . 0 2 3 . 7 1 . 3 . 6 4S t a g e 6 6 . 0 5 .7 0 . 3 . 86P s c o r e 3 1 . 0 2 9 . 4 1 . 6 . 5 7P r o b a b i l i t y o f P s c o r e e q u a l i t yb e t w e e n g r o u p s . 3 5 .6 7 .6 7

ProbabilityPretest/follow-upcomparison Pretest Fo l low-u p C h an g e change=OG r o u p m e a n s c o r e sE x p e r i m e n t a lS ta ge 5 19 .1 20 .4 1 .3 . 88S t ag e 6 8 .4 10 .9 2 .5 . 16

P sc o r e 27 .5 31 .3 3 .8 .41C o n t r o lS ta ge 5 23 .3 23 .7 .4 . 75S t a g e 6 8 . 0 5 .7 2 . 3 . 23P s c o r e 3 1 . 3 2 9 . 4 1 . 9 . 5 2P r o b a b i l i t y o f P s c o r e e q u a l i t yb e t w e e n g r o u p s .2 8 .6 7 .2 9

i n s t r u m e n t m a y a l so b e in s en s it iv e t o r e s p o n d e n t s c a p a b l e o f r e a s o n i n g a th i g h e r l e v e l s . A n i n d i v i d u a l w h o h a s d e v e l o p e d t h e a b i l i t y t o r e a s o n a t ap o s t c o n v e n t i o n a l s t a g e w i l l n o t a l w a y s a d v o c a t e a s o l u t i o n c o n s i s t e n t w i t ht h a t s ta g e . A l l l o w e r s t a g e a l t e r n a t i v e s a r e i n p u t s t o t h a t i n d i v i d u a l sd e c i s i o n p r o c e s s . A d d i t i o n a l l y , t h e i n s t r u m e n t m e a s u r e s t h e t e n d e n c yt o w a r d m o r e e t h i c a l r e a s o n i n g w h i c h m a y n o t p r e d i c t b e h a v i o r .


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I M P L I C A T I O N S A N D C O N C L U S I O NC o n s i s t e n t w i t h t h e r e su l t s o f p r i o r s t u d ie s ( A r m s t r o n g , 1 99 3; H i l te b e i t e l

& J o n e s , 1 9 91 ), t h is s t u d y p r o v i d e s ev i d e n c e t h a t a p p r o p r i a t e l y f r a m e de t h i c s i n t e r v e n t i o n s m a y s i g n i f i c a n t l y i m p r o v e t h e e t h i c a l r e a s o n i n g a b i l i t yo f a c c o u n t i n g s t u d e n t s . M o r e s i g ni fi c an t ly , th i s s t u d y r e p r e s e n t s t h e f ir s ta t t e m p t t o m e a s u r e t h e p e r s i s te n c e o f a s u c c e ss f u l e t h ic s i n t e r v e n t i o n o na c c o u n t i n g s t u d e n t s ' a b il it ie s t o c o n s i s t e n t l y c o n s i d e r e t h i c a l is s ue s i n t h e i rd e c i s i o n - m a k i n g p r o c e ss e s . W h i l e th e e x p e r i m e n t a l g r o u p ' s a v e r a g e P s c o r er e t u r n e d t o p r e t e s t l e v el s w i t h i n 6 m o n t h s o f t h e e th i c s i n t e r v e n t i o n , s l ig h ts h i f t s t o w a r d m o r e p r i n c i p l e d r e a s o n i n g p e r s i s t e d . T h i s w a s e v i d e n c e d b yd i m i n i s h e d , b u t p e r s i s t e n t , i n c r e a s e s i n t h e e x p e r i m e n t a l g r o u p s ' s t a g e 6s c o r e s f r o m t h e p r e t e s t t o t h e 6 - m o n t h f o l l o w - u p t e s t . I f f u r t h e r r e s e a r c hs t a t i s ti c a l l y e s t a b l i s h e s a t r a n s i t o r y n a t u r e o f et h i c s in t e r v e n t i o n , t h i s w i llh a v e i m p o r t a n t i m p l i c a ti o n s f o r t h e a c c o u n t i n g p r o f e s s io n a s i t re e v a l u a te sc o l le g i at e c u r r i c u la a n d d e v e l o p s c o n t i n u i n g e d u c a t i o n r e q u i r em e n t s a n dp r o g r a m s .

A I C P A a n d I I A s t a n d a r d s ca ll p r o f es s i o n al s t o a s s u m e an o b l i g a t i o nt o s e l f -d i s ci p li n e a b o v e a n d b e y o n d t h e r e q u i r e m e n t s o f l aw s a n dr e g u l a t i o n s ( A I C P A , 1 9 94 ; E T 5 1 .0 1 ; I I A , 1 9 8 8) , a p o s t c o n v e n t i o n a lo r i e n t a t i o n . H o w e v e r , th e m a j o r i t y o f t r a i n i n g f o r , a n d p r a c t i c e o f ,a c c o u n t a n c y i s g r o u n d e d i n a c o n v e n t i o n a l ( r u l e - b o o k ) o r i e n t a t i o n - -G A A P , G A A S , I n t e r n a l R e v e n u e C o d e & R e g u l a t io n s , o r p r e s e n t s f ai rl y ,i n c o n f o r m i t y w i t h g e n e r a l ly a c c e p t e d a c c o u n t i n g p r in c i p le s .

B o t h P o n e m o n ( 19 9 0) a n d S h a u b ( 19 93 ) h av e o b s e r v e d t h a t t h e l ev el o fm o r a l r e a s o n i n g a t t a i n e d b y a c c o u n t a n t s t e n d s t o b e i n v e r se l y r e la t e d t op o s i t i o n i n t h e f i r m . T h e g r e a t e r a n i n d i v i d u a l ' s d e c i s i o n - m a k i n g a u t h o r i t ya n d e x p e r i e n c e , t h e m o r e l i k e l y t h e i n d i v i d u a l w i l l a p p r o a c h d e c i s i o nm a k i n g f r o m a r u l e - b o o k o r i e n t a ti o n . T h e f o l l o w i n g is an e x c e r p t o f aS o u t h C a r o l i n a B o a r d o f A c c o u n t a n c y e d i to r i al ex p r e ss i n g t h a t b o a r d ' sf r u s t r a t i o n o v e r a n e x c e s s i v e r u l e s - o r i e n t e d d e c i s i o n a p p r o a c h .

D ay a f te r day the B oard ' s D irec tor and s ta f f l is ten to c ons tan t p e t tybickering, co m plain ing, and griping between acc ou nta nts versus clients,accountan ts ve r sus board s ta f f , accountan ts ve r sus each o the r , accountan tsve rsus compe t i tor s , and on and on . What has gone wrong? Where i s theprofessional ism? Ha ve we becom e so caught up in the whirlwind of dai lyact ivi ty tha t we hav e forgo tten ou r duties and responsibil it ies as profes-s iona ls? Are we so eager to ea rn anothe r do l la r tha t we over look ourprofe ssio nal responsibilities . . .When was the la s t t ime anyone read the AICPA Principles of ProfessionalConduct According to the preamble , pr inciples of professional conduct ca l lfor an unswerving commitment to honorable behavior , even a t the sac r i f iceof pe r sona l advantage . Those who re ly on CPAs expec t them to d ischargethe ir responsibilities w ith integrity, objectivity, du e profess ion al care, an d agenuine interest in serving the public . . .


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Effects of Acc oun ting Ethics Intervention s 271

The publ i c ' s t rus t i n the account ing profes s ion mus t be prese rved a t a l lcos t . I f the p ubl ic t ru s t i s los t there i s noth ing to se l l an d the pro fess ion wi l lbe c om e j u s t a no t he r t r a de o r oc c upa t ion . . . . A ll o f u s m us t ke e p in m i nd t hepr inc ip les of p rofes s iona l conduc t when apply ing the ru les and in te rpre ta -t ions and no t become so caught up in na r row in te rpre ta t ions and ru l ings tha twe over look the over r id ing pr inc ip les (South Caro l ina Board of Account -ancy , 199 3, p. 1).

A s l eg a l c a se s b e a r o u t , t h is r u l e - b o o k a p p r o a c h is s o c i e ty ' s m i n i m u me x p e c t a t i o n f o r t h e p r a c t ic i n g a c c o u n t i n g p r o f e s s i o n a l . B e b e a u e t a l. (1 9 8 5 )n o t e t h a t a p o s t c o n v e n t i o n a l o r i e n t a t i o n t o m o r a l r e a s o n i n g s e e m sc o n s i s t e n t w i t h o u r s o c i e t y ' s c o n c e p t o f b e i n g a p r o f e s s i o n a l .

C a n f u t u r e p r o f e s s i o n a l s b e t a u g h t t o c o n s i s t e n t l y c o n s i d e r t h e h i g h e rs t a g e s o f e t h i c al r e a s o n i n g i n t h e i r b u s in e s s d e c i s i o n - m a k i n g p r o c e s s e s?R e s e a r c h r e s u lt s s h o w t h a t t h e y c a n , b u t t h a t t h e e f fe c t m a y n o t b ep e r s i s t e n t . G i v e n t h i s r e s e r v a t i o n , a n d t h e e v i d e n c e t h a t t h e p r a c t i c e o fp r o f e s s i o n a l a c c o u n t a n c y m a y n o t f o s t e r a d d i t i o n a l g a i n s i n m o r a lr e a s o n i n g , p e r h a p s i t is ti m e t o c al l f o r m a n d a t o r y c o n t i n u i n g p r o f e s s i o n a le d u c a t i o n i n e th i c s. S i n c e t h e e f fe c ts o f e th i c s in t e r v e n t i o n s d i m i n i s h o v e rt i m e , a c c o u n t a n t s m i g h t a t t a i n t h e i r h i g h e s t s t a te o f e t h i c al a w a r e n e s s i fe th i cs i ss u es a re m a d e a p a r t o f t h e ir c o n t i n u i n g e d u c a t i o n p r o g r a m s .M a n y s t a t e b o a r d s r e q u i r e a c e r ta i n a m o u n t o f c o n t i n u i n g e d u c a t i o n t o b ec o m p l e t e d i n s p ec if ic p r a c t i c e a r e a s o n a n a n n u a l o r b i a n n u a l b a s is . W h yn o t e t h ic s ? T h e p o i n t o f t h e se r e q u i r e m e n t s i s t o h e l p p r o f e s s i o n a l s t om a i n t a i n a n d e n h a n c e t h e i r c o m p e t e n c e .

E t h ic s c o n t in u i n g e d u c a t i o n m u s t b e m o r e t h a n j u s t d o i n g t he t i m e .U n l e s s t h e e t h i c s i n t e r v e n t i o n i s a p p r o p r i a t e l y d e s i g n e d , i t m a y n o t b ee f fe c ti v e. T h e r e i n l i es a n o p p o r t u n i t y a n d c h a l l en g e f o r a c c o u n t i n ge d u c a t o r s .

R E F E R E N C E SAccoun ting Edu cation C hange Com mission. (1990). Objectives of education for accountants:position statement number one. Issues in Accounting Education 5 307-312.Am erican A ssembly of Collegiate Schools of Business [AACSB]. (1988). Accreditation council

policies procedures and standards. St L ouis: AAC SB.Am erican Institute of Certified Public Accou ntants [AICP A]. (1988). Education requirementsfor entry into the accounting profession. New York: AICPA.Am erican Institute of Certified Public Accountants [A ICPA ]. (1994). Professional standards(Vol. 2). New Y ork: AIC PA.Arlow , P. & Ulrich, T . A. (1980). Business ethics, social responsibility and business students:an empirical comp arison of C lark's study. Ak ron Business and Economic Review 11 17-22.Arlow, P. & Ulr ich, T. A. (1985). Business eth ics and business sch oo l graduates: alongitudinal study. Ak ro n Business and Economic Review 16 13-17.


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A r m s t r o n g , M . B . ( 1 9 8 7 ) . M o r a l d e v e lo p m e n t a n d a c c o u n t in g e d u c a t i o n . Journal ofAccounting Education, 5, 27-43.Arm st rong , M . B. (1993). E th ics and p ro fess iona l i sm in accoun t ing educa t ion : a sam plecourse . Journal of Accounting Education, 11, 77-92.Bebeau , M . J . , Res t , J . R . , & Ya m oor , C . M. (1985) . M easur ing den ta l s tuden ts ' e th ica lsensitivity. Journal of Dental Education, 49, 225-235.Ce n t e r f o r t h e S tu d y o f E th ic a l D e v e lo p m e n t . ( 1 9 9 0 ). Guide for the defining issues test.Minneapo l i s : Un ivers i ty o f Minneso ta P ress .

Cla rk , J . W. (1966) . Religion and the moral standards of american businessmen. Cincinnati :Sou th -Wes te rn Pub l i sh ing Company .Denn is -Escof f ie r , S . & For t in , K. A. (1991) . Tes t ing m ora l dev e lopme nt in the tax cu r r icu lum.Collected papers of the 43rd annual meeting of the Southeast Region American AccountingAssociation (pp. 208-211). B irmin gham , A laba m a.

Hi l tebe i te l , K. M . & Jones , S . K . (1991) . In i t ia l ev idence on the impac t o f in teg ra t ing e th icsin to accoun t ing educa t ion . Issues in Accounting Education, 6, 262-275.

Ins t i tu te o f In te rna l Aud i to rs [ I IA] . (1988) . Code of ethics. Altamonte Spr ings , F lo r ida : I IA.Jones, T . M. (1989). Can business e thics be taught? Empir ical evidence. Business and

Professional Ethics Journal, 8, 73-94.Kohlberg, L . (1984). The psychology of moral development. N e w Y o r k : H a r p e r & R o w .Loeb , S . E . (1991). The eva lua t ion o f ou t com es o f accoun t ing e th ics educa t ion . Journal of

Business Ethics, 10, 77-84.N a t io n a l Co m m is s io n o n F r a u d u l e n t F in a n c i a l Re p o r t i n g ( T r e a d w a y Co m m is s io n ) . ( 1 9 8 7 ) .Report of the National Commission on Fraudulent Financial Reporting. W a s h in g to n , D C:N a t io n a l Co m m is s io n o n F r a u d u l e n t F in a n c i a l Re p o r t i n g .New el l , K. J . , You ng , L . J . , & Yam oor , C . M. (1985) . M ora l reason ing in den ta l hyg ienestudents. Journal of Dental Education, 49, 79-84.Pone mo n , L . A. (1 990 ) . E th ica l judgm ents in accoun t ing : a cogn i t ive -deve lopmentperspective . Critical Perspectives in Accounting, 1, 191-215.

Ponemon , L . A. (1993) . Can e th ics be taugh t in accoun t ing? Journal of Accounting Education,11, 185-209.

Rest, J. E. (1979). Development in judging moral issues. Minneapo l i s : Un ivers i ty o f Minneso taPress.Shaub , M . (1993). An analys is o f the assoc ia t ion o f t rad i t iona l dem ograph ic va r iab les wi ththe mora l reason ing o f aud i t ing s tuden ts and aud i to rs . Journal of Accounting Education,12, 1-26.

Sou th Caro l ina Bo ard o f Accou n tancy . (1993). Newsletter (March) , 1 .S t P ie r re , K. , N e lson , E . , & Gabb in , A . (1990) . A s tudy o f the e th ica l deve lopm ent o f

accounting majors in re la t ion to other business and nonbusiness discipl ines . TheAccounting Educators Journal, 23-35.

Volker , J . M. (1984) . Counseling experience, moral judgment, awareness of consequences, andmoral sensitivity in counseling practice. Unp ubl i shed doc to ra l d i s se r tat ion , U n ivers i ty o fMinneso ta .W ai the , M . E . , Du cke t t , L . , Schmi tz, K. , Cr i sham, P . , & Ryden , M . (1989). Deve lop ing cases i tua t ions fo r e th ics educa t ion in nurs ing . Journal of Nursing Education, 28, 175-180.W eber , J . (1990) . M easur ing the im pac t o f teach ing e th ics to fu tu re managers : a rev iew,assessment, and recom m endatio ns. Journal of Business Ethics, 9, 193-190.Wel ton , R. E . , LaGrone , R. M. , & Dav is , J . R . (1994) . P romot ing the mora l deve lopment o facco untin g grad uate s tudents: an instruct io nal design and assessment. AccountingEducation, 3, 35-50.


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E f f ec t s o f A c c o u n t i n g E t h i c s I n t e r v e n t i o n s 2 73

PPENDIXTEST INSTRUMENT

pinions about accounting and business decis ionsT h e p u r p o s e o f t h i s q u e s t i o n n a i r e i s t o h e l p u s u n d e r s t a n d h o w i n d i v i d u a l s t h i n k a b o u t

a c c o u n t i n g a n d b u s i n e s s d e c i s i o n s . D i f f e r e n t i n d i v i d u a l s h a v e d i f f e r e n t o p i n i o n s a b o u t t h ei m p o r t a n c e o f p a r t i c u l a r f a c t o r s i n d e c i s io n - m a k i n g . T h e r e a r e n o r i g h t a n s w e r s t o su c hd e c i s io n s i n t h e w a y t h a t m a t h p r o b l e m s h a v e a s i ng l e c o r r e c t s o l u ti o n . W e w o u l d l ik e y o u t ot e l l u s w h a t y o u t h i n k a b o u t s e v e r a l s c e n a r i o s .

For each of the fo l lowing four scenarios we wi l l ask you to do the fo l lowing:( I ) C a r e f u l l y r e a d t h e s c e n a r i o .( 2 ) P l a c e a c h e c k m a r k i n t h e s p ac e p r o v i d e d , t o a n s w e r t h e q u e s t i o n p o s e d b y t h e

scen a r i o .( 3 ) I n d i c a t e t h e i m p o r t a n c e o f e a c h i te m n u m b e r e d 1 - 1 2 to y o u r d e c i si o n i n t h e s c e n a r io b yp l a c i n g a c h e c k m a r k i n t h e p r o v i d e d s p a c e s. F o r e x a m p l e , i f y o u b e l i e ve s ta t e m e n t 1 i so f p r i m e i m p o r t a n c e t o y o u r d e c i s io n c h e c k g r e a t . I f s t a t e m e n t 1 w o u l d n o t i n f lu e n c ey o u r d e c is i o n c h e c k n o . F o r e a c h sc e n a r i o , y o u m a y h a v e m u l t i p l e i t e m s w h i c h a r e o f

g r e a t , m u c h , s o m e , l i tt l e , o r n o i m p o r t a n c e t o y o u r d e c is io n .4) Indicate the four most important items and their relative order of importance to y o u r

d e c i s io n b y p la c i n g t h e i r i t e m n u m b e r s i n t h e b l a n k s l a b e le d m o s t i m p o r t a n t ,s e c o n d m o s t i m p o r t a n t , t h i r d m o s t im p o r t a n t , a n d ' f o u r t h m o s t i m p o r t a n t .

T h e op i n i onS u s a n B o n n e t , C P A , s e r v e d a s t h e p a r t n e r - i n - c h a r g e o f t h e c o n s u l t i n g t e a m t h a t i n s t a l l e d

t h e c o m p u t e r i z e d a c c o u n t i n g s y s t e m f o r M i d w e s t S a l e s , a p u b l i c l y h e l d c o m p a n y . M i d w e s th a s b e e n a c l i e n t o f h e r n a t i o n a l C P A f i rm f o r 1 5 y e a rs . D u r i n g t h i s p e r io d , M i d w e s t h a se x p e r i e n c e d r a p i d g r o w t h , a n d i s n o w p l a n n i n g a $ 1 5 m i l l i o n s t o c k o f f e r i n g .

K e i t h P a s k e t , a n a u d i t p a r t n e r , i s n e a r i n g c o m p l e t i o n o f t h e p r o c e d u r e s i n t h e a u d i tp r o g r a m f o r M i d w e st . A l t h o u g h t h e a u d i t h a s f o u n d n o d i sc r e pa n c ie s in t h e a c c o u n t i n g d a t aa n d f i n a n c i a l r e p o r t s , s e v e r a l c ri t ic a l w e a k n e s s e s w e r e n o t e d i n t h e i n t e r n a l c o n t r o l s t r u c t u r eo f t h e c o m p u t e r i z e d a c c o u n t i n g s y s t e m . M r P a s k e t d o e s n o t w a n t t o g i v e a n u n q u a l i f i e do p i n i o n u n l e s s t h e a u d i t s c o p e i s e x p a n d e d .M s B o n n e t , w h o h a s d e v o t e d m a n y h o u r s t o t h e d e v e l o p m e n t o f t h e c o m p u t e r i z e da c c o u n t i n g s y s t e m , i s v e r y d e f e n s i v e o f t h e s y s t e m a n d a s s u r e s M r P a s k e t t h a t e v e r y t h i n g i su n d e r c o n t r o l . T h e c l i e n t i s i n a g r e e m e n t w i t h M s B o n n e t a n d i s u n w i l l i n g t o p a y f o r a ne x p a n d e d a u d i t .Sho uld Pask e t g i v e an u n q u a l i f i ed opinion?

S h o u l d g iv e C a n ' t d e c id eI m p o r t a n c eG r e a t M u c h S o m e L i tt le N o

S h o u l d n o t g i v e

( 1) A n y p r o b l e m s a r e t h e f a u lt o f t h e C P A f ir m a n d t h ef i n a n c i a l r e p o r t o f M i d w e s t s h o u l d i n n o w a y b ej e o p a r d i z e d .( 2 ) W h e t h e r e x p a n s i o n o f s c o p e i s t h e o n l y a l t e r n a ti v e

u n d e r G A A S .( 3 ) M i d w e s t ' s g o a ls s h o u l d b e p la c e d a h e a d o f d if f er -e n c e s c o n c e r n i n g t h e t y p e o f a u d i t o p i n i o n .


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2 74 R . M . L a G r o n e e t a l.

(4 )(5)(6)(7)(8)(9)

_ _ 1 0 )

_ _ 1 1 )

_ _ 1 2 )

F r o m t h e l i s t o f q u es t i o n s ab o v e , se l ec tM o s t i m p o r t a n tS e c o nd m o s t i m p o r t a n t

W h e t h e r M r P a s k e t i s b i a s e d b e c a u s e t h e w o r k w a sc o m p e t e d b y M s B o n n e t .W h e t h e r P a s k e t k n o w s a b o u t t h e a n t i c i p a t e d s t o c koffer ing .W h e t h e r M i d w e s t w i l l b e t r e a t e d t h e s a m e a s o t h e rc l i en t s i n s i mi l a r s i t u a t i o n s .W h e t h e r i n t e r n a l c o n t r o l c o n e r u s c a n b e s o l v e d s o le l yw i t h a m a n a g e m e n t l e t t e r .W h e t h e r r e n d e r i n g a n u n q u a l i f i e d o p i n i o n w i l lc o n f l ic t w i t h P a s k e t ' s p e r s o n a l s e n s e o f i n t e g r i ty .W h e t h e r c o n s u l ti n g r ev e n u e s a r e d o m i n a n t w i t h in t h eC P A f i r m .H o w w o u l d t h e s t o c k b r o ck e r s i n t er e st e b e s ts e r v e d ?W h e t h e r p e r f o r m i n g cr it ic al c c o u n t i n g a c t iv it ie s nt h e c o m p u t e r v e r s u s m a n u a l l y v i ol a te s A A P .W h e t h e r t h e C P A f i r m s o b l i g a t i on t o th e cl ie ntc o nf l ic t s i t h t h e i r o b l i g a t i o n t o t h e s h a r e h o l d e r s .

t h e f o u r m o s t i m p o r t a n t :T h i r d m o s t i m p o r t a n tF o u r t h m o s t i m p o r t a n t

ankruptcyF u n B i cy cl e, a r e c e n t ly f o r m e d c o m p a n y , h a s a p p r o a c h e d A t o p M e t a ls , a c o m p a n y w i t h

8 m i l l i o n i n s a l e s , f o r a l i n e o f c r e d i t f o r t h e p u r p o s e o f s u p p l y i n g t u b e s t e e l f o r t h em a n u f a c t u r e o f b i c yc l es . T h e t h r e e o w n e r s o f F u n w e r e t h e f o r m e r o w n e r s o f K i d d i e T r i cy c le ,a c o m p a n y t h a t d e c l a r e d b a n k r u p t c y 3 y e a r s a g o . A t o p M e t a l s h a d t o w r i t e - o f f 2 80 ,0 00 o fb a d d e b t s b e c a u s e o f K i d d i e ' s b a n k r u p t c y . T h e t h r e e o w n e r s o f F u n h a v e e x p e r i e n c e s a n db a c k g r o u n d s i n e n g i n e e r i n g , m a r k e t i n g , a n d a c c o u n t i n g . T h e n e w c o m p a n y h a s s u f f i c i e n tex p e r t i se t o man u fac t u re an d se l l b i cy c l e s . Th ey ex p ec t f i r s t y ea r t u b e s t ee l n eed s t o b eap p ro x i m a t e l y 8 0 0,00 0 , an d t h e re fo re h av e a sk ed fo r l i n e o f c red i t t o t a l l i n g 4 0 0,00 0 .S h o u l d A t o p e x t e n d c r e d i t t o F u n Bicycles?

C a n ' t d e c id e S h o u l d n o t e x t e n dh o u l d e x t e n dI m p o r t a n c eG r e a t M u c h S o m e L it tl e N o ( 1 ) Y o u s h o u l d d o f a v o r s f o r f o r m e r c u s t o m e r s , e v e n i ft h e y p r e v i o u s ly h a v e h a d e c o n o m i c d i f f ic u l t ie s .

( 2 ) W h e t h e r F u n ' s r i s k o f d e f a u l t i s a s s es s e d a s b e i n gwi t h i n accep t ab l e l en d i n g l i mi t s .( 3) W h e t h e r A t o p g e ts a t a x b r e a k w h e n i t w r i t e s o f f b a d

d eb t s .( 4) W h e t h e r t h e ow n e r s o f A t o p a n d F u n a r e re la t ed .( 5) S o c i e ty s h o u l d p r o t e c t c o m p a n i e s f r o m b a n k r u p t c y ift h e i r o w n e r s a n d m a n a g e r s a r e t r yi n g h a r d t osucceed .

( 6 ) W h e t h e r F u n i s t r e a t e d t h e sa m e a s o t h e r c r e d i tc u s t o m e r s .


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E f f ec t s o f A c c o u n t i n g E t h i c s I n t e r v e n t i o n s 2 7 5

From the list of questions above selectM o s t i m p o r t a n tS e c o n d m o s t i m p o r t a n t

( 7 ) W h e t h e r t h e l a w f o r b i d s d i s c r i m i n a t i o n in c r e d i td e c i s io n s o f i n d i v i d u a l s w h o h a v e p r e v i o u s l y d e c la r e db a n k r u p t c y .

( 8) W h e t h e r A t o p i s e x t e n d i n g c r e d i t f o r s e lf is h r e a s o n s( t o m a k e a p r o f i t ) o r i s a t t e m p t i n g t o h e l p a n e wbus i ness ge t s t a r t ed .

( 9 ) W h e t h e r F u n ' s o w n e r s w e r e g u il ty o f fr a u d i n t h eb a n k r u p t c y o f K i d d i e T r i c y c l e .

( 10 ) W h e t h e r e x t e n d i n g t h i s c r e d i t v i o l a t e s c o m p a n yp o l i c y o f e x t e n d i n g c r e d i t t o o f f i c e r s o f b a n k r u p tc o m p a n i e s .

( I 1 ) W h e t h e r o t h e r t u b e s t e e l s u p p l i e r s h a v e a l r e a d yr e j e c t e d F u n ' s r e q u e s t f o r c r e d i t .

( 12 ) W h e t h e r e x t e n d i n g c r e d i t t o F u n w i l l a l lo w t h e m t oc r e a t e n e e d e d j o b s i n t h e c o m m u n i t y .

the four most i m p o r t a n t :T h i r d m o s t i m p o r t a n tF o u r t h m o s t i m p o r t a n t

T h e b a n k a u d i tJ o n e s C o . , C P A s , a r e c o n d u c t i n g a n a u d i t o f 1 st B a n k a n d T r u s t , a c l i e n t o f 1 5 y e a r s. T h eo p e r a t i o n s o f 1 st B a n k a r e i n t w o l o c a ti o n s , b u t p r e p a r a t i o n f o r e x p a n s i o n i n t o a t h i r d m a r k e t

t h r o u g h a p u b l i c s t o c k o f f e ri n g i s u n d e r w a y . O n e o f th e t w o e x i s t in g m a r k e t s i s a g r o w i n g t o w nw h i c h s u p p o r t s a n e i g h b o r i n g m i l i t a r y b as e . U n d e r th e p r e s s u r e o f r e d u c e d f e d e r a l f u n d i n g , t h eP e n t a g o n h a s p l a c e d t h i s b a s e o n a l i s t o f p o t e n t i a l c l o s i n g s . O v e r t h e y e a r s , 1 s t B a n k h a si n v e s t e d h e a v i ly in t h i s c o m m u n i t y . L o a n s t o b u s i n e s s e s i n t h i s c o m m u n i t y c o m p r i s e t h r e e -f i f th so f i t s b u s i n e s s l o a n p o r t f o l i o . I f t h e b a s e i s c l o s e d , l o s s e s w i l l b e s u b s t a n t i a l . P u b l i c l y , t h eC o n g r e s s i o n a l d e l e g a t i o n i s e x p r e s s i n g c o n f i d e n c e t h a t t h e y w i l l w i n t h e f i g h t t o k e e p t h e b a s eo p e n . 1 s t B a n k ' s d i r e c to r s w a n t J o n e s t o a d o p t a w a i t a n d s ee a p p r o a ch . .Shou ld Jon es insist that 1st Ba nk signif icantly increase i t s loan loss reserve?

C a n ' t d e c i d e S h o u l d n o t i n c r e a s eh o u l d i n c r e a s eI m p o r t a n c eG r e a t M u c h S o m e L i tt le N o ( 1) W h e t h e r J o n e s h a s i n c re a s e d l e g a l e x p o s u r e in t h i s

s i t ua t i on .(2 ) W h e t h e r t h e P e n t a g o n i s b e i n g s h o r t- s i g h t ed in

t a r g e t i n g t h i s b a s e f o r c l o s i n g .( 3) W h a t d o e s G A A P r e q u i r e i n th i s s i tu a t io n ?( 4 ) W h e t h e r th e w r i te - d o w n w il l j e o p a r d i z e 1 st B a n k ' s

an t i c i pa t ed s t ock of fe r i ng .( 5) W h e t h e r 1 st B a n k m e e t s t h e le g a l l o a n l o s s re s e r v e

r e q u i r e m e n t .( 6) W h e t h e r f a i l u r e t o d i s c lo s e t h i s s it u a t i o n w o u l d

c o n f li c t w i t h t h e a u d i t o r ' s p e r s o n a l c o n c e p t o fh o n e s t y .( 7 ) W h e t h e r J o n e s ' s o b l i g a t i o n to t h e c l ie n t c o n f l ic t s w i t ht h e i r o b l i g a t i o n t o t h e s h a r e h o l d e r s i n t h i s i n s t a n c e .

( 8 ) D o e s a m a j o r i t y o f s o c ie t y b e l ie v e a u d i t o r s s h o u l ds c r u ti n iz e b a n k s m o r e c l o se ly t h a n o t h e r o r g a n i z a -t i ons?


18/18

2 76 R . M . L a G r o n e e t a l.

F r o m t h e l i s t o f ques t i ons above , s e l e c tM o s t i m p o r t a n tS e c o nd m o s t i m p o r t a n t

( 9 ) W h e t h e r t h e w ill o f th e p e o p l e is ex e r c is e d t h r o u g hC o n g r e s s .

( 10 ) W h e t h e r 1 s t B a n k w ill l o o k f o r a n o t h e r a u d i t o r i fJ o n e s i n s i s t s o n a w r i t e - d o w n .( 11 ) W h e t h e r f in a n c i a l s t a t e m e n t u s e r s b e li e v e c o n t i n g e n c ydi sc l osure s a re use fu l .

(1 2) W h e t h e r J o n e s h a s p r e v i o u sl y b e e n i n v o l v e d i nd i s p u t e s w i t h 1 s t B a n k o v e r t h e s i z e o f t h e l o a n l o s sreserve .

th e fo u r m o s t i m p o r ta n t :T h i r d m o s t i m p o r t a n tF o u r t h m o s t i m p o r t a n t

R e i m b u r s e m e n tJ o e , a n e m p l o y e e , a t te n d s a n o u t - o f - t o w n c o n v e n t io n . O n l y t h e tr a v e l a n d a c c o m m o d a t i o n

e x p e n s e s o f e m p l o y e e s a r e t o b e r e i m b u r s e d u p o n t h e a p p r o v a l o f d o c u m e n t a t i o n s u b m i t t e dt o T e r ry . J o e s s p o u s e a c c o m p a n i e d h i m a n d t h e y s t a y ed a n a d d i t i o n a l n i g h t r e su l ti n g ins u b s t a n t i a l r e d u c t i o n s i n a i r fa r es . J o e h a s s u b m i t t e d th e t o t a l t r a v e l a n d a c c o m m o d a t i o n b i l l sw i t h o u t r e d u c t i o n f o r s p o u s e r e l a t e d e x p e n s e s .S h o u l d T e r r y a p p r o v e th e r e i m b u r s e m e n t?

S h o u l d a p p r o v e C a n t d e ci d eI m p o r t a n c eG r e a t M u c h S o m e L i tt le N o

F r o m t h e l is t o f q u e s ti o n s a b o v e s e l e c tM o s t i m p o r t a n tS e c o n d m o s t i m p o r t a n t

S h o u l d n o t a p p r o v e

( 1) W h e t h e r T e r r y k n o w s t h a t J o e is d o i n g a n e x c e l le n tj o b .

( 2 ) W h e t h e r c o m p a n y p o l ic y i s g o i n g t o b e fo l lo w e d .( 3 ) W h e t h e r f u t u r e r e v ie w s a r e l ik e l y t o q u e s t i o n T e r r y s

a p p r o v a l o f t h i s i t e m .( 4) W h e t h e r T e r r y s c e r t if i c a ti o n c o d e o f e t h i c s g i v es

g u i d a n c e o n t h i s i t e m .( 5) H o w w o u l d t h e s t o c k h o l d e r s i n t e r e s ts b e b e s t s e r v ed ?( 6) W o u l d i t b e f a ir t o o t h e r e m p l o y e e s w h o c h o o s e t ot r a v e l w i t h o u t t h e i r s p o u s e s ?( 7) W h e t h e r th i s t y p e o f r e q u e s t is a p p r o v e d i n o t h e r

u n i t s o f t h e f ir m .( 8) W h e t h e r t h e i n c o n v e n i e n c e o f o u t - o f - t o w n t r a v e l

a l l o w s o n e t o c o m p e n s a t e v i a s p e c ia l p e r q u i si te s .( 9 ) W h e t h e r J o e is a c lo s e f r i e n d o f T e rr y .

( 10 ) W h e t h e r a n i n - h o u s e t r a i n i n g s es s io n st r e s se d th i si s sue a s one t o be g i ven ca re fu l r ev i ew.

( 11 ) W h e t h e r t h i s d e c is i o n c r ea t e s co n f l ic t s w i t h T e r r y sc o n c e p t o f h o n e s t y .

( 12 ) W h e t h e r s o c ie t y i s p r o a c t i v e i n e s t a b l is h i n g c o d e s o fe thics .th e fo u r m o s t i m p o r ta n t :

T h i r d m o s t i m p o r t a n tF o u r t h m o s t i m p o r t a n t

are the effects of accounting ethics interventions transitory or persistent 1996 journal of...

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