Accounting 1994). Recent scandals in accounting ethics have

Accounting education in American universities provides the scholarly framework for graduates entering the profession. Accordingly, researchers suggest accounting educators must take some responsibility for ethical failures in modern accounting practice (Boyce, 2014; Craig & Amernic, 2002; (Gray, Bebbington & McPhail, 1994). Recent scandals in accounting ethics have led to much debate about the impact of ethics training and education. College-level ethics courses in business majors address skills and knowledge that accounting professionals need. Accounting students need to demonstrate ethical judgment and reasoning to be effective in resolving ethical dilemmas in the business world. The AICPA made the following statement in a recent literature review: “A sense of responsibility and accountability to not only society but to one’s own profession needs to be obtained in the beginning of the educational process and should begin with the nurturing of ethical and moral value.” (AICPA, 1: 10; Huff, Sullivan, & Prachyl, 2014). The need for additional ethics courses for accounting students is agreed upon by many researchers (Cameron, & O’Leary, 2015; Chunhui, Lee & Nan, 2012; Ellis, 2013; Larrán, 2017; Loeb, 2012). Increased demand for ethics training in business schools prevails due to events in society and the diminution of public trust in the accounting profession (Ferguson, Collison, Power, & Stevenson, 2011 Mastracchio et al., 2015; Waples et al., 2009). However, scholars and practitioners debate the issues of inclusion and effectiveness of accounting ethics education in higher education (Lampe & Engleman-Lampe, 2012; Felton & Sims, 2005).

Trust in the Accounting Profession

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Public trust is the foundation of the accounting profession and is essential for the survival of the accounting profession (Carnegie & Napier, 2010; Voynich, 2005). Core values of integrity, competence, and objectivity, as well as, the profession’s commitment to uphold the public’s trust continue to support the ethics of the accounting profession (Voynich, 2005). The American Institute of Certified Public Accountants (AICPA) Code of Conduct, written in 1988, establishes a fundamental responsibility of members to maintain the highest standards (AICPA, 2015). The institute’s members should adopt a sense of responsibility to the profession and to society early in the educational process (AICPA, 2015). Entry into the accounting profession requires technical competence, as well as the complete understanding of behavioral norms that move members toward the development of a strong professional commitment (Michaluk, 2011). Many companies adopt a code of conduct to declare organizational values held by employees and other stakeholders (Stuart, Stuart, & Pedersen, 2014). Professions exist today to produce trust required to support complex economic systems (Martinov-Bennie, & Mladenovic, 2015). Martinov-Bennie, & Mladenovic (2015) describe trust as the extent to which one desires to have confidence in the work of other people. This willingness affects the manner of behavior a person exhibits towards other individuals (Martinov-Bennie, et al., 2015). Trust is defined by Mayer (1995) as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer, et al 1995, p. 712). Interdependence is necessary in the working environment and, people must rely on others in various ways to accomplish individual and organizational goals (Mayer et al., 1995).

Ethics in Accounting Education

Ethical issues associated with the function of accounting arise within complex political/economic systems. For example, financial statements not only describe the financial condition of an organization but also define the “size, health, structure and performance, in other words, the reality of an organization” (Hines, 1988, p.258). Practitioners and accounting students, alike, may lack the ethical competencies needed to understand and analyze the broader organizational goals and political/economic functions and values of the changing accounting profession (Mayer, 1995; Martinov-Bennie, et al., 2015). Further, accounting education may even negatively affect the development of students’ ethical perceptions and awareness (Gray et al., 1994). Consequently, greater economic and social systems, including universal impacts of globalization within which unethical behavior occurs, must receive greater attention and investigation in ethics education (Boyce, 2014; Martinov-Bennie, et al., 2015). Global issues, such as trade barriers, exchange rates, distribution, and technological innovations that increase accessibility, create new challenges and opportunities for ethical decision making within organizations adjusting to such changes (Lawson, Blocher, Brewer, Cokins, Sorensen, Stout, & Wouters, 2014). Therefore, an important goal of ethics education is the student’s understanding of “the role the profession (collectively) plays in society, and the student’s personal responsibility to take an active part in developing and improving professional policies” (Armstrong, 2003 p. 81). Education in the accounting profession must meet the standards of the profession (i.e., preparation for proficient and accountable practice in the service of others) as well as the standards of the academy (Stewart et al, 2014). Craig and Amernic (2002) also argue the far-reaching aim of a university education is to educate graduates who will serve a useful purpose in society. In addition to serving society, a salient function of accounting education is to advance ethical decision making (Larran, 2017). Most importantly, education should enhance moral development of the student (Kohlberg 1969; Stewart, et al, 2014). Chunhui, et al., (2012) believes that there is a deficiency in accounting education when there is less formal and systematic training. The teaching of ethics can produce students with higher moral and cognitive capabilities if there were less informal hands-on training and usage of partnering in comparison to ethics education at the university level (Chunhui, et al., 2012). The underlying foundation for ethical research is largely influenced by the work of Kohlberg (1969), who established a theory of moral cognitive development, and Rest (1994), who developed a model of ethical action, culminating in a neo-Kohlbergian approach (Rest, 1994). Cognitive developmental researchers theorize that training and experience affect a person’s ability to identify ethical awareness, or ethical dilemmas (Jones, 2010). Felton and Sims (2005) believe that the moral course of action in regards to ethical considerations can be taught at the university level where it can still influence an individuals’ ethical reasoning.

However according to research conducted by  Stuart, et al., (2014) an individual’s value system has been fully developed by the time a person enters college and continued education can do little to bring change. In a literature review by Charles Murray, he states that there is a “moral void” in educational curricula and values (Real Education: Four Simple Truths for Bringing America’s Schools Back to Reality, Three Rivers Press, 2008). Many factors have contributed to the reputation of the profession of accounting and, many times it is traceable to the ethical quagmire in all areas of our society.   There is an apparent need for ethical instruction and inquiries that that will benefit accounting students in the real world (Cameron & O’Leary, 2015; Ellis, 2013). Research has shown that ethical instruction is critical in accounting education. The question then becomes “Is the teaching of accounting ethics instilling core ethical values or simply just directing them? The research conducted by Ellis, (2013) showed the advantages of a stand-alone ethics course upon completion of accounting courses. The focusing on the critical analysis of ethical dilemmas via cases would result in application versus theory and, there will be a growth in moral reasoning (Ellis, 2013). There is also research as to how accounting and business students should react when confronted with an ethical dilemma. Research has shown that the college experience affects a student’s moral development, skills, abilities, and overall growth and supports student moral judgment enhancement through the inclusion of dilemma discussion (Cameron et al., 2015; Ellis, 2013). Ethical behavior entails one to see and adopt the moral point of view. A weakness within the current curriculum appears to be not enough time allocated for the teaching of thinking ethically in accounting subjects. Ethical issues in accounting need to be better understood and, it is necessary to analyze the dedication to higher education and accounting ethics (Michaluk, 2011). The current curriculum allocates curriculum hours to Cost Accounting, Financial Accounting and Management Accounting but does not plan or identify ethical behavior. The current accounting curriculum also does not include religion orientated and ideological subjects. The incorporation of these subjects will increase the students’ understanding of religious morals and help them develop their ethical personality.

For the accounting profession to regain it morality there needs to be a strict set of moral principles rather than a long list of rules to follow should one encounter an ethical dilemma. Empirical results suggest that a university education has a positive effect on the cognitive skills required to be successful (Tweedie, Dyball, Hazelton, & Wright, 2013). These results suggest that an accounting education that includes ethics at a university has a positive effect on the use of post-conventional modes of deliberative reasoning, and on making ethical decisions. Pedagogy and learning methodologies regarding accounting ethics education should be adapted accordingly because students also believed that learning about ethics in their degrees helped prepare them professionally (Tormo-Carbó, Seguí-Mas, & Oltra, 2016).

Accounting Education History

Historical knowledge of accounting education in the United States can provide insight into forces shaping present-day curriculum strategies (Abend, 2014; Black, 2012). Accounting departments profess a narrow viewpoint by linking themselves to the accounting profession and developing curriculum predominantly for accounting graduates seeking certification to enter the accounting profession (Black, 2012). The demand for a broader accounting curriculum is a problem for accounting educators who provide the students’ pathway into the profession (Black, 2012). In the Colonial era, teaching in higher education was considered a sacred function of training clergy and civic leaders in support of both the church and the commonwealth (Boyce, 2014). According to the researcher, ‘higher education and the larger purposes of American society have been—from the very first—inextricably intertwined” (Boyce, 2014, p. 1).

The same tenets demonstrated in the early years of higher education exist for accounting education. Joseph Sterrett, the first American-born partner of Price Waterhouse, portrayed accountancy as standing for “the slow but sure evolution of society into a state where honor and honesty shall not be mere abstractions” (Sterrett, 1905, p. 1). Sterrett believes accountants need more than technical skill, and he advocates a liberal education coupled with work experience to acquire critical thinking and develop a sense of justice (Sterrett, 1906a). Progressive accounting practitioners agree with this concept of education and these parameters guided accounting education at the turn of the 20th century (Merino, 2006). Criticism of the pedagogical approach to accounting education occurred soon after accounting achieved professional status and contributed to university curriculum (Lawson, et al., 2014). According to Sullivan (2005), criticism from early practitioners echoed their position that accountants need independence and should possess critical thinking skills; however, accounting educators were unable to adequately respond to this challenge (Gray et al., 1994).

Accounting educators established a variety of conflicting goals, which according to Gray et al. (1994), were impossible to meet. The inconsistent goals included teaching for technical knowledge to prepare graduates for the requirements of the professional certifications; to prepare for professional work in the field of accounting; and to develop graduates intellectually (Gray et al., 1994). Mintz (2017) observes “accounting graduates are neither practically trained individuals who can ‘be immediately useful in the office’ nor educationally developed individuals with a sophisticated capacity to inquire, reason, conceptualize and evaluate” (p. 10). The research criticizes educators for inconsistent goals (Larran, 2017). Furthermore, politicians began to rely on accountants as independent experts to protect the public interest, and through the licensing process, conferred upon accountants their professional status as accounting practitioners (Merino, 2006). As a result, the American Association of Public Accountants and its successor organization, the American Institute of Accountants, pressured academia for acceptance of accountancy in university curricula (Sullivan, 2005). This researcher describes the reformers message to educators as “shaping the future practitioner as a member of a specific community of practice, integrating learned competence with an educated conscience” (Sullivan, 2005, p.3925).

Accounting Scandals and Proposed Educational Developments

Accounting scandals of the late 20th century and early 21th century triggered calls for greater accountability in the profession and additional educational reform to broaden the accounting curriculum (Merino, 2006). The accounting profession’s moral responsibility to society became the paramount concern (Craig, et al, 2002; Boyce, 2014; Carnegie, et al, 2010 Merino, 2006). Public confidence diminished and could only be restored by ethical leadership from the accounting profession, business community, and government (Abend, 2014; Merino, 2006). Calls for ethics and social reform sparked a massive response, but efforts diminished after the intensity of the scandals’ impacts lessened (Merino, 2006; Carneigie, et al, 2010). Gray & McPhail, (1994) argue accounting educators are torn between two distinct roles—instruction in technical (vocational) knowledge for employment in the workforce or instruction concerned with more broad issues of environment (i.e., humanity) and service to society. The consequences of unethical behavior in the practice of accounting highlight the importance of including ethics in accounting education. Paul Volcker, former Chairman, Board of Governors, of the Federal Reserve System, at the 2003 Sarbanes-Oxley hearings, placed some of the blame of practitioners’ unethical behavior on higher education (The Implementation of the Sarbanes-Oxley Act and Restoring Investor Confidence, 2003). Further, PricewaterhouseCoopers (2003), in their position paper pertaining to educating for the public trust, called for change in the focus of accounting curriculum from a purely technical orientation to one, which values a culture of accountability, people of integrity, and a spirit of transparency. Moreover, the late-2008 financial crisis provoked similar complaints about the way business students are taught. 

Based on literature provided by Lawson, Blocher, Brewer, Cokins, Sorensen, Stout, & Wouters, (2014) the goal should now be to better understand how to deliver the education to students to advance understanding of the process of moral development. Previous literature enhances the need that accounting ethics should be understood as a practical study where students find what they need to learn, learn it and use what they learn to guide their actions. It has been determined that ethics education is extremely important for accounting educators and academicians, however, the results show that accountants think that students graduate with sufficient accounting knowledge (Lawson, et al, 2014). Others believe that the current lessons in accounting education does not help to meet the needs of companies and is not sufficient in understanding accounting procedures or financial structure. In the academic community, there has been much criticism leveled at the failure to incorporate sufficient ethics education into the accounting curriculum (Martinov-Bennie, 2015). Students have learned to identify ethical sensitivity and judgment since the inclusion of an ethical decision-making framework.  These frameworks consist of IFAC 2012 & APESB 2010 or as a standalone tool (AICPA 2012).

Ethics and corporate social responsibility as stand-alone courses in the accounting curricula are still relatively underdeveloped, and it is not sufficient to meet the present demands of society (Larran, 2017). To achieve this objective, the National Association of the Boards of Accountancy (NASBA) and the Advancement of Collegiate Schools of Business (AACSB) are now requiring additional ethics courses in the business and accounting curricula. On June 1, 2014, the AICPA Code of Professional Conduct was re-codified and became fully effective on December 15, 2014. The significant change was the creation of “Ethical Conflicts.” This code has now linked independence to the conflicts of interest provision (Mintz, 2017). The AICPA recently adopted a requirement of 150 credit hours for membership as well as to sit for the CPA exam.

Ethics in accounting education more often than not examines how to make ethical decisions when conflicts of interest arise. Utilitarianism is a standard ethical reasoning method that benefits the choosing of one course of action to balance the harms over another. In practice, choosing a utilitarian analysis can be problematic (Mintz, 2017). There is no balancing of harms and benefits that should out rule the need to meet the obligations of public interest or be used to rationalize away any conflict of interest. If so, the intended action is ethical because it promotes a universal standard of behavior. To develop future accounting professionals, the standard ethical reasoning method is an important tool for ethical analysis is necessary for accounting ethics education. Social control is crucial to the accounting profession since the inception of a CPA’s license to practice. Professional ethical prescriptions have a public relations component that strengthens societal trust in the profession’s independent auditing services. Likewise, the ethics education provisions and the ethics education requirements of various boards support the role of ethics education in the profession’s social control process and, thus, strengthen societal trust in the profession (Loeb, 2012).

The National Commission on Fraudulent Financial Reporting (commonly referred to the Treadway Commission), after studying the financial reporting system in the United States during the 80’s, fraudulent financial reporting was recognized as a serious problem and recommended additional coverage of ethics in the accounting and business curricula (Loeb, 2012). The report states participants in all educational and training sessions, for business and law students, should be exposed to the knowledge, skills and ethical values that may potentially help them prevent, detect and deter fraudulent financial reporting (Pathways Commission, 2015). Moreover, the Treadway Commission recommended additional liberal arts requirements in the business and accounting curriculum (Pathways commission, 2015). The National Institute of Education, the Association of American Colleges, and the American Accounting Association agreed additional emphasis on analytical and problem-solving skills, ethical values, and historical and cultural awareness for participants would be useful to future members of the accounting field (Pathways Commission, 2015).

The accounting practice and business environment change over time and accounting education must adjust to the changes. The literature review exposes challenges in accounting education and makes acceptable recommendations. However, the problems continue. There remains a gap between what educators teach and the competencies practitioners need for a productive career in accounting (Siegel et al., 2010a). Additionally, academia continues to experience challenges with effectively assimilating ethics into accounting and business curriculum (Martinov-Bennie, et al., 2015); and broadening the focus of disciplinary boundaries with ethical accounting education (Boyce, 2014)


The general topics developed through a review of the literature include the role trust plays in the accounting profession and within a changing business environment. The discussion of trust substantiates the important purpose of the academy to advance ethical accounting education (Lampe, et al, 2012). Likewise, a review of the history of accounting education explains why a narrow viewpoint of developing graduates solely for an entry-level position sustains outdated curriculum strategies (Black, 2012). The final general topic explores renewed goals of accounting education, including the development of ethical competencies, contributing to prospective curricular expansion. Three theories, which frame the problem and purpose of the study are Kohlberg’s theory of cognitive moral development, stakeholder theory, and organizational mindfulness. Kohlberg’s theory of moral development provides an understanding of an individual’s moral developmental patterns over time (Kohlberg, 1969). Consequently, Kohlberg’s framework guides educational goals and curriculum development (Geary & Sims, 1994). Second, stakeholder theory, a managerial approach, emphasizes the relevance of investing in relationships and sharing of core values with those who have a stake in the organization (Freeman, 2004). Stakeholder theory supports the premise of corporate social responsibility and provides the underlying logic in making ethical business decisions (Stuart et al., 2014). Last, organizational mindfulness addresses the manner in which organizations analyze and respond to promptly meet their goals (Thomas, 2012).