Moral Reasoning of Public Accountants in the Development of a Code of Ethics

Graffikin and Lindawati (2012) present an overview of accountants’ moral reasoning when confronted with the difficulty of financial integrity, objectivity, and independence. The article investigates managers’ perspectives of moral reasoning in the application of a financial code of conduct among Indonesian public accountants. Accountants and other financial professionals must meet a high ethical standard in order to ensure financial integrity and transparency in the financial sector. The article identifies the key factors that affect professionals in the financial sector in implementing ethical standards for auditing practice. It also explores the steps by professional financial managers in creating awareness of professional values in the financial sector; hence achieving financial ethics and integrity.

The study used Kolberg’s model of moral development and the Code of Conduct of the American Institute of Certified Accountants (AICPA), and primary data collection methods involving 15 financial managers in different types of companies. The results of the study suggest that moral development plays a significant role in shaping the moral reasoning of financial managers and public accountants. Furthermore, the degree of moral reasoning of financial managers affects their level of professionalism and abilities to observe the ethical codes of conduct. Lastly, the article found out that moral reasoning among individual accountants and financial managers enables them to implement company codes of conduct effectively. Therefore, moral reasoning plays an important role in influencing ethical awareness of financial managers and public accountants; and financial companies should adopt an effective compliance monitoring system that pays close attention to a code of ethics to survive in the emerging global economy.

Ahid, M. and Ayuba, A. (2012). The Roles and Responsibilities of Management Accountants in the Era of Globalization. Global Journal of Management and Business Research, 12(15), 1-12.

Ahid and Ayuba (2012) explore the roles and responsibilities of management accountants in light of the evolving and tumultuous global economy. The role of financial managers and accountants has evolved through the waves of globalization. The article also focuses on the future roles of financial managers in dealing with the effects of globalization. In the past, management accountants were not integrated into the key operations of the company, with little interaction with clients. However, as the era of globalization brings new competitive forces in the industry, companies have learned to include accountants in decision making of the organization.

Ahid and Ayuba (2012) suggest that financial managers and accountants play the role of providing information for effective decision making. Rather than only generating financial statements, budgets and expenses reports, modern accountants provide information for effective decision making. They help executive managers by giving information about methods and materials of production, appropriate wages, and methods of cutting costs and marketing products to improve customer satisfaction. The expansion of financial management and increased need for compliance has also demanded accounting professionals to reposition themselves technologically and competitively through innovative financial management tools.

This article also suggests that the increase of competition and technology advancement in the 21st century have shaped management accounting concepts and practices. Rather than just providing information, financial managers participate in decision making. For example, financial managers may use financial analysis tools such as life cycle costing to help the organization manage its resources efficiently and compete effectively in the face of globalized markets. The management accountants and financial managers also play a strategic role in the management of the organization by implementing strategic moves to help the company focus on key customers and capabilities in the market.

References

Ahid, M. and Ayuba, A. (2012). The Roles and Responsibilities of Management Accountants in the Era of Globalization. Global Journal of Management and Business Research, 12(15), 1-12.

Graffikin, M. and Lindawati, A.S.L. (2012). The Moral Reasoning of Public Accountants in the Development of a Code of Ethics: the Case of Indonesia. Australasian Accounting Business and Finance, 6(1), 1-26