Preface

The heart is not so easily changed, but the head can be persuaded.

—Grand Pabbie, from the Disney movie Frozen

Despite his passion for mathematics, Albert Einstein firmly believed that “everything that counts cannot necessarily be counted.” However, accounting education traditionally has ignored the wisdom of this admonition by focusing more on the computation of book values than the promotion of societal values.

In recent years, though, after being awakened by a serendipitous onslaught of scandals, the financial community now recognizes the importance of ethical conduct in maintaining public trust, fostering efficient capital markets, and preserving accounting as a distinguished profession. Nonetheless, the integration of ethics education into the accounting curriculum has not progressed without impediments and obstacles. To help surmount these challenges, this long-awaited book provides a comprehensive, authoritative, and thought-provoking examination of the myriad ethical issues encountered by accountants working in industry, public practice, nonprofit service, and government.

Even a cursory glance reveals the distinctive contributions of this book to the study of accounting ethics. Consider the following innovative features:

  • Readers are impelled to apply theory to real-world situations. Every chapter begins with an Am I Ethical? problem that poses a common professional dilemma that is explored and resolved in ensuing pages. The development of sound decision-making skills is further nurtured by the inclusion of practical questions and thoughtful solutions within the text itself.
  • Illustrations and problems encompass a diverse array of professional endeavors, including managerial accounting, tax compliance, investment planning, internal auditing, consulting, nonprofit management, trust and estate administration, and attest engagements. Because accounting careers often travel along divergent paths, ethical issues arising in public-company audits contribute to, but do not unduly dominate, the eclectic scope of the book.
  • Ethical issues are viewed through a prism that melds cutting-edge research from numerous disciplines, including social psychology, law, behavioral economics, cross-cultural studies, and neuroscience. This multifaceted approach creates self-awareness that helps readers identify, and in turn moderate, their own ethical indiscretions. This focus on improving behavior is embraced in novel chapters dedicated to understanding why we cheat, resolving conflicts of interest, motivating prosocial whistleblower conduct, and disrupting instinctive tendencies to act with unconscious bias.
  • One section of the book is dedicated to a detailed and up-to-date examination of both the AICPA's Code of Professional Conduct, as newly codified for 2015 and thereafter, and the International Federation of Accountants' Code of Conduct for Professional Accountants. This global, Code-focused approach makes this book entirely suitable for worldwide use and gives working professionals a valuable reference tool. Four distinct chapters thoroughly explore the concepts of discreditable acts, the duty of confidentiality, the Independence Rule, and the duty of loyalty regarding conflicts of interest. The moral character requirement and other key provisions of the Uniform Accountancy Act, as revised for 2014 and thereafter, also are discussed. Differences among governing jurisdictions and codes of conduct, including those promulgated by the Institute of Management Accountants, Chartered Institute of Management Accountants, Institute of Internal Auditors, and the Association of Government Accountants, are highlighted when pertinent. Excerpts from corporate codes of conduct are explored as well.
  • A contemporary focus immerses readers in ethical quandaries that abound in the worlds of sports, music, movies, fashion, romance, and social media. Recent scandals involving celebrity privacy, basketball point-shaving, auditor insider trading, and online dating, for instance, provoke and stimulate discussion. To further pique reader interest, ethics-oriented commentaries from modern writers and artists complement the more traditional recitations that have illuminated ethical discourse for centuries.
  • Because most accountants encounter tax-related issues throughout their careers, tax topics of global relevance are woven into most chapters, including those on fraud, cheating, confidentiality, contingent fees, and auditor independence. In addition, an entire chapter is dedicated to accountants' duties as tax return preparers, planners, and client advocates.
  • The final section of the book focuses on the various roles performed by members of the accounting profession. Specialized roles that impose professional responsibilities on accountants, such as serving as trustees, executors, money managers, employers, employees, consultants, and whistleblowers, are each discussed. Duties arising in more commonplace roles as internal auditors, external auditors, and tax practitioners are, of course, examined as well.

Nobel Prize-winner Albert Camus once observed that “a man without ethics is a wild beast loosed upon this world.” Please jump on board as we embark on a journey to tame these most beastly of behaviors.

Organization and Guidance for Instructors

This book covers all topics commonly prescribed by state Boards of Accountancy regarding ethics literacy and is organized to achieve maximum pedagogical flexibility.

Most accounting programs will choose to utilize this book in a one-term course in Accounting Ethics. However, this book has sufficient content to be used in a two-term course. Reviewers have suggested that this book is suitable for second-year undergraduates through graduate students. Alternatively, selected chapters can be integrated into related courses that already are in the accounting curriculum. For example, some accounting programs may wish to incorporate the chapters on Independence and the Sarbanes–Oxley Act into their Audit curriculum, the chapter on Duties of Tax Professionals into their Tax curriculum, or the Duties of Fiduciaries and Duties in the Accounting Workplace into their business law curriculum. Each chapter stands on its own and can be assigned separately without any loss of continuity.

Instructors especially interested in preparing students for the CPA exam may wish to focus on the four chapters in the Professional Rules of Conduct section, as well as the chapters on Duties of Tax Professionals and Duties of Public-Company Auditors.

This book contains approximately 500 student examples and exercises, ranging from short, focused questions to more comprehensive problems. As a result, sufficient problems are available for instructors to rotate assignments among academic terms throughout the year. Topic headings within chapter-end sections enable instructors to select problems related to subject areas that they wish to emphasize. These topic headings appear in the same order as the related chapter text material. Many of these chapter-end problems pose open-ended issues, making them suitable as writing exercises.

An Instructor's Manual written by the author provides authoritative, comprehensive solutions to all questions for which there are definitive answers. Questions that yield various alternative solutions are intended for classroom discussion and are marked accordingly.

The Instructor's Manual also provides helpful guidance for conducting class discussions. In the great Socratic tradition, follow-up questions are provided to assist instructors in challenging commonly held student viewpoints and stimulating others to offer opposing viewpoints.

The Instructor's Manual also includes role-playing projects and video links that result in students observing for themselves that they are prone to unconscious biases, such as confirmation bias, overconfidence, and moral seduction. These projects also allow students to gain a better understanding of whether they tend to make deontological or utilitarian decisions and whether sensitivity to alternative viewpoints might improve their ethical decision making. These projects can be used in collaborative team settings or be performed individually by each student.

PowerPointTM slides aid the instructor in stimulating and framing class discussions, and Web Quizzes enable students to test their comprehension.

For further information on these and other supplemental materials, please contact your Wiley sales representative or visit www.wiley.com/college/klein.

Comments and feedback from users of this text are highly valued. Please e-mail me at [email protected] to share your thoughts.

Acknowledgments

I want to express my gratitude to Elisabeth Browne, Donald Barsky, Rachel Kupan, Lauren Haigh, Jeffrey Klein, Benjamin Klein, Larry Iser, Ryan Miller, and Eric Sussman for their superb research and editorial assistance. Additionally, I want to thank Leslie Campanella, M.D., for contributing this book's unique cognitive science perspective on how our brains process moral dilemmas. Her selfless dedication and compassion for those in need epitomizes the meaning of the word ethics.

In addition, I would like to thank the following reviewers for their thoughtful contributions to the development and refinement of this book:

  1. Richard Campbell, University of Rio Grande
  2. John Coulter, Western New England University
  3. Carol Dickerson, Chaffey College
  4. Donald Kent, The College at Brockport
  5. Edward Ketz, Pennsylvania State University
  6. Taylor Klett, Sam Houston State University
  7. James Lager, University of Maryland
  8. Joan Lee, Fairfield University
  9. Bruce Maule, College of San Mateo
  10. Kenneth Merchant, University of Southern California
  11. Robert Prentice, University of Texas, Austin
  12. Robin Radtke, Clemson University
  13. Joanne Rockness, University of North Carolina, Wilmington
  14. Jim Shelton, Harding University
  15. Charles Stanley, Baylor University
  16. David Teagarden, Virginia Tech
  17. Dave Welch, Liberty University
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