Prepared by L. Murphy Smith

Professor of AccountingTexas A&M University

For permission to use or adapt this presentation,

please contact Dr. Smith,

Lmsmith@tamu.edu

Presentation on Ethics in Business and Society

Ethics:

What’s the Fuss?

When evaluating one’s goals and objectives, a vital question must be

asked: What is your highest aspiration?

A. WealthB. Fame

C. Knowledge D. Popularity

E. Integrity

If integrity is second to any of the

alternatives, then it is subject to sacrifice in situations where a

choice must be made. Such

situations will inevitably occur in every person’s life.

Why talk about ethics?

Why talk about ethics? In the aftermath of major corporate failures and

questionable accounting practices, American Accounting Association

President G. Peter Wilson said that in the classroom, educators need to

increasingly emphasize the value of integrity, what has long been a mainstay

of accountants’ reputation

In a recent Wall Street Journal

article, Psychology professor Steven Davis says that

cheating by high school students has increased from about 20 percent in the 1940’s to 75 percent

today.

“Students say cheating in high school is for grades, cheating

in college is for a career.”

If students lack ethics in high school and college, then there should be little surprise that

they lack ethics in their careers. Greed and over-reaching

ambition often end in disastrous personal consequences.

Convicted inside trader, Dennis Levine, in a Fortune magazine

article wrote:“I have painful memories of Sarah learning to walk in a prison visiting room, and of Adam pleading with a guard

who wouldn’t let him bring in a Mickey Mouse coloring

book.”

Many institutions of higher education have instituted policies regarding ethics education. For example, the Faculty Handbook of the Mays Business School at Texas A&M University includes the following statement:

“Therefore, faculty and staff have a responsibility for creating an academic environment that promotes honest academic inquiry and teaches students ethical behavior in the process.”

"We Will Not Lie, Steal Or Cheat, Nor

Tolerate Among Us Anyone Who Does"

-- Which do you think is the harder part:

Line 1 or Line 2? Why?

Educational Institutions have established ethics codes for their students, e.g. the U.S. Air Force Academy:

What do profs think?

In a survey of college faculty, 187 professors responded to several statements about teaching ethics:

1. The importance of ethics and personal integrity should be stressed in the courses I teach. 4.75

2. The basis for ethics and personal integrity should be discussed (e.g. benefit to society as a whole, moral and religious foundations of society, etc.)

4.11

Note: Scores are based on a scale from 1: Strongly Disagree to 5: Strongly Agree

American Institute of CPAs Code of Professional Conduct, Principles Article I:

In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.

Is there an ethics crisis in America?

One recent national election day poll indicated that 56 percent of voters thought

that America’s problems are “primarily moral and social.” Only 36 percent thought that the nation’s problems were

“primarily economic.”

Can ethics be taught?

Teddy Roosevelt said, “To educate a person in mind and

not in morals is

to educate a menace

to society.”

In his best-seller, The Closing of the American Mind, Allan Bloom says that the eternal conflict between good and evil has been replaced with “I’m okay, you’re okay.” Students unthinkingly embrace a blind tolerance in which they consider it “moral” never to think they are right because that mean someone else is wrong.

[Allan Bloom, The Closing of the American Mind, New York, Simon and Schuster, Inc. 1987]

More than 200 years ago, Professor Alexander Tyler wrote of the Athenian Republic, which had fallen 2,000 years earlier:

“A democracy cannot exist as a permanent form of government… The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through this sequence: From bondage to spiritual faith, to great courage, to abundance, to selfishness, to complacency, to apathy, to dependency, and back again to bondage.”

“In the quest for educational reform, we would do well to turn not only to the great books, but the great exemplars of wisdom with which our country is blessed. To help reclaim our destiny as human beings and citizens, we need to rediscover the generation that really can claim to be the best and the brightest in American history, at least from the moral and political point of view: the founders of the American Republic.”

--Professor C.R. Kesler

Ethics is essential to the functioning of a free society: 2nd U.S. President John Adams observed: “We have no government armed with power capable of contending with human passions unbridled by morality and religion. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

U.S. Declaration of Independence The second paragraph of America's founding

document states:

"We hold these truths to be self‑evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness."

Where Do We Start?

Upon What Can We Agree?

Whether we derive a code

of ethics from

religious beliefs, a study of

history and literature, or

personal experience

and observation: We can all agree upon some basic

values.

In an issue of Management Accounting, James Brackner stated: The universities are

responding with an increased emphasis on ethical training for decision making. For the most part, however, they ignore the

teaching of values. For moral or ethical education to have meaning there must be

agreement on the values that are considered “right.”

Be sure you are right, then go ahead.

Davy Crockett

1786-1836

A nation or a culture cannot endure for long unless it is undergirded by common values such as valor, public spiritedness, respect for others and for the law; It cannot stand unless it is populated by people who will act on the motives superior to their own immediate interest.

Chuck Colson, Against the Night

When the situation needs improvement, Gandhi offers guidance: “You must be the change you wish to see in the world.”

Michael Josephson, in Chapter 1 of Ethical Issues in the Practice of Accounting,

describes the “Ten Universal Values: “Honesty, integrity, promise keeping, fidelity,

fairness, caring, respect for others, responsible citizenship,

pursuit of excellence, and accountability.”

“Until about 50 years ago, it was commonly accepted that

universities were to provide students not only with knowledge

and skills, but also moral guidance based on the essentials

of the Western tradition.”

Business Prof Geoffrey Lantos

If we want to produce people who share the

values of a democratic

culture, they must be taught

those values and not be left to acquire them by chance.

Cal Thomas, The Death of

Ethics in America

Can you make a

difference?

“To sin by silence when they should protest makes

cowards of men.”

Abraham Lincoln

Do you think this relates to line 2 of the U.S.A.F.

Academy Code of Honor?

“To see what is right and not to do it is want of courage.” (Confucius)

‘The right way is not always the popular and easy way. Standing for right when it is unpopular is a true test of moral character.’- Margaret Chase Smith, first woman elected to both houses of the U.S. Congress

“Leadership is a potent combination of strategy and character. But if you must be without one, be without strategy.” General H. Norman Schwarzkopf

The reputation of a thousand years may be determined by the conduct of one hour.

Japanese proverb

At a Congressional Hearing on Accounting and Business Ethics, distinguished entrepreneur, Truett Cathy, the Founder of Chick-Fil-A, quoted Solomon– "A good name is more desirable than great riches; to be esteemed is better than silver or gold." The truth is that fame and fortune are nothing compared to personal honor.

President

Lincoln said:

Honor is

better than

honors.