This new edition of Accounting Ethics has been comprehensively updated to deal with the Brenda Shay Duska MT, CPA, is currently a manager at Del Pizzo. Accounting Ethics has 29 ratings and 3 reviews. Camilla said: Another book I had to read for school that I actually enjoyed. So for those of you who see. This new edition of Accounting Ethics has beencomprehensively updated to deal with the significant changes withinthe accounting profession.

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Skip to main content. Log In Sign Up. Michael Hoffman and Robert E. Frederick Written by an assembly of the most distinguished figures in business ethics, the Foundations of Business Ethics series aims to duskka and assess the fundamental issues that motivate interest in each of the main subjects of contemporary research.

In addition to a general introduction to business ethics, individual volumes cover key ethical issues in management, marketing, finance, accounting, and computing. The books, which are complementary yet complete in themselves, allow instructors maximum flexibility in the design and presentation of course materials without sacrificing either depth accountign coverage or the discipline-based focus of many business courses.

The volumes can be used separately or in combination with anthologies and case studies, depending on the needs and interests ethocs the instructors and students. Werhane and Tara J. Radin with Norman E.

Bowie with Patricia H. Werhane, Management Ethics 6 Lisa H. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Actwithout the prior permission of the publisher.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. Designations used by dusoa to distinguish their products afcounting often claimed as trademarks. All brand names and euska names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners.

The publisher is not associated acclunting any product or vendor mentioned in this book. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold on the understanding that the publisher is not engaged in rendering ehhics services. If professional advice or other expert assistance is required, the services of a competent accohnting should be sought.

Accounting—Moral and ethical aspects. This book is published in the following electronic formats: Elizabeth Catherine Duska and Catherine Shay A daughter and mother who put up with tax seasons and manuscript deadlines, and whose Irish eyes and smiles bring joy and love accounnting our lives without ever holding us to account for the cost to them of our writing this book.

However, what better challenge for a business ethicist than to tackle the field his wife dealt with in her day to day work, and who better to work with than an accountant with integrity who has no time for cutting corners. Against the advice of those who counseled against spouses writing a book together, we plunged in where angels fear to tread. So we accountiny grate- ful to both Mike and Bob for the opportunity, and trust the endeavor has worthwhile fruit.

We would also like to thank Beth Remmes for her constant attention, not to mention gentle prodding, which helped us get on with the work when the tedium got the duzka of us. They should not in any way be held accountable for the shortcomings of this book.

Gratitude is also called for toward the American College, Sam Weese its president, and Accountinb Stone and Ehics Woerheide, who allowed us to use some of my time in the completion of this work. Without her immense help this task would not have been accomplished. We are grateful to Wiley-Blackwell for the opportunity to publish a second edition Accounting Ethics. The first edition was well received. We are grateful ethis the prodding of Jeff Dean and Tiffany Mok, for keeping us on track.


Special thanks are due to Lynn Hayes, who has edited this second edition extensively, which has made it eminently more readable. Thanks are also due to Adam Scavette, our intern, who helped diska update cases as well as work laboriously on checking and correcting citations. Thanks are also due to the numerous reviewers of the first edition, in particular Jim Gaa, and Ellen L. Landgraf whose comments have been especially helpful. Thanks are in accounring to the American College, and its current president and CEO, Larry Barton, who along with Walt Woerheide, have given us encour- agement and opportunity to complete this task.

We would also like to thank Jim and Linda Mitchell who help in numerous ways to support the American College Center for Ethics in Financial Services and for encouraging our work during this project.

Thanks are also due to Norman Bowie, Ed Freeman and Pat Werhane — our colleagues in business ethics whose encouragement and friendship have been a constant over the years. Final thanks are due to one person, who over the years has given us encouragement in our endeavors, and who passed away recently – Tom Dunfee. Tom was a leader in business ethics and served on the Independence Standards Board. Tom also initiated the program for a doctor- ate in business ethics at the Wharton School of the University of Pennsylvania.

Preface Much has happened in the accounting profession since we completed the first edition of this book in The financial crisis of put more pressure on accountants, specifically relating to the pros and cons of mark-to-market and fair-value accounting. To address these new topics, we have added an Afterword, in which we eyhics the debates over the use of fair-value accounting and principles- versus rules-based standards.

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We have preserved the section on the responsibilities of accounting firms, because although firms now face new challenges, the responsibilities have not changed. Julie has been researching new developments in accounting ethics and teaching accounting ethics to executive MBAs for the past several years.

The necessity of preserving this position of independence indicates certain standards of conduct. Rosemarie is the controller for a small construction company, Acme build- ers. She is new on the job and grateful to the CEO, Peter, for allowing her to work flex-time so that she can take care of her young daughter, who is in day care. Rosemarie is concerned about the collectability of receivables from Fergus Motel, for whom Acme has done extensive work. Rosemarie thinks that the allowance for these receivables should be adjusted.

When she expresses her con- cern to Peter, she learns that adjusting for the receivables might put the approval of a much-needed loan in jeopardy. John is a young accountant at a local CPA firm. He is wrestling with a prob- lem: Do you think most accountants would cover up such a mistake?

Would they be justified in doing so? Accounting Ethics, Second Edition. The managing partner, who is negotiating a consulting contract with CHC, is pressuring Leo to get the files to him as soon as possible. The audit has already taken significantly longer than was projected in the budget, and an investigation into the misstatement would involve a lot of time.

Leo talks to Adele, the audit manager, who tells him not to mention the adjustment in the working papers, because she sees no tax implica- tions — no harm, no foul.

They typify the ethical concerns that accountants face, whether they are management accountants, tax accountants, auditors, valuation specialists, or accountants performing any number of other accounting activities. Such situations occurred long before the now infamous Enron bankruptcy case, in which the auditors and consultants from the accounting firm of Arthur Andersen came under criticism for not appropriately carrying out their responsibilities as accountants.


While Andersen defenders declared that such activity was within the law and generally accepted accounting principles, critics maintain that accountants are obliged to do more. It simply brought to light ethical questions that had been simmering for well over a quarter of a century, and unfortunately continue to simmer. What is the appropriate behavior for accountants? What are accountants supposed to do?

What are their responsibilities? The scenarios given above, ironically, raise another important point. If you look at the citation, you will see that the scenarios were developed for a business ethics program sponsored by none other than Arthur Andersen.

Introduction 3 It was a project that brought together leading thinkers of the business ethics community to develop teaching tools for use in college courses on business ethics. Arthur Andersen had the reputation from his earliest days in Chicago for being a person of impeccable integrity, and from its inception, the com- pany was dedicated to doing the right thing.

What went wrong with his company is a accounring told many times from many perspectives. From our perspective, there are two main reasons. One is on the individual level. Accountants, at least in the Houston offices of Andersen, did not do what they were supposed to do. They made the common mistake of many auditors who think their main obligation is dusska please the client who hires them. Rather, as we will try to show, accounting has a public purpose.

It needs to serve the public good first. We will discuss this purpose at length in the book. The second reason is that Arthur Andersen succumbed to the systemic temptations that regularly beset the accounting firms, particularly the large firms.

Firms, or the human beings who run them, are susceptible to the pressures of incentives; we get what we reward. As an auditor, Arthur Andersen had a clear mission — to attest that the financial statements it was auditing reflected what was really going on in the company.

However, Ander- sen eschewed that mission in favor of fees. A venerable firm like Andersen had prided itself on its role as auditor; as an auditing firm, it filled an important public function.

Accounting Ethics Accounting Ethics, Second Edition | Azis Lali –

Along with other large accounting firms, however, Andersen apparently forgot its main function as it began to expand. What was the purpose dska the expansion? To bring in more profits.

If, however, consulting brings in more profit than auditing does, there will be pressure to do even more consult- ing.

Accounting Ethics

Some might say, if that results in soft auditing, so be it. But how can we reconcile giving in to such pressure with accounting ethics? Individuals and systems are much alike. They both give in to temptations. Hence, any serious treatise on ethics must look at the pressures the system exerts on individual accountants and their firms, and examine the rewards of the system to determine whether they align with its purposes.

These are the major issues we will address in this book on accounting ethics. Ethics is an overarching concern in all areas of life; it is involved in all human activity. Human activity is an activity for which an individual is responsible, one that he or she does deliberately and can control, one that helps or harms the individual or others, and one that is deemed to be either just or unjust, right or wrong.

In this book, we will examine the ethical dimensions of the human activity of accounting.