Deontology and Utilitarianism in the Accounting Profession The American Association of Public Accountants first implemented ethical rules in 1905. Since then, accounting ethics has been heavily scrutinized. It has been said "that the relationship between personal values, codes of conduct and decisions to engage in financial misrepresentation are 'weak at best'" (Douglas, Davidson, & Schwartz, 2001), p. 101). It is essential for Accountants to make ethical decisions. In order to promote ethical decision making, it is vital that profession develop a strong ethical environment. The purpose of this paper is to look at two of the main ethical theories as they relate to the accounting profession. Specifically this paper will give a detailed description of utilitarianism and deontology. The organizational culture and the American Institute of Certified Public Accountants code of professional conduct will then be looked at from the context of the two ethical theories. Finally, I will present the ethics system I believe is most appropriate for the accounting profession. 1.0 Utilitarianism The term utilitarianism, as defined in this paper, is not a psychological theory that is based on what is. Instead, it is an ethical theory based on what should to be. Utilitarianism, also called universalistic hedonism, should not be confused with "Egoism or Egoistic Hedonism (which states the agent's [individual's] own happiness as the ultimate end of his actions" (Sidgwick, 2000, p. 254). Instead, utilitarianism is an ethical theory that advocates the idea that the happiness of some must, at times, be forfeited for the benefit of the larger quantity of people. This theory suggests that proper behavior seeks to maximize happiness for the... ... middle of paper ... ...eads to the perverse result that under certain circumstances a lie, for example, might be morally right if the individual contemplating the lie felt no compunction about lying and morally wrong only if the individual felt such a compunction" (Kelman, 1981, p. 34). As mentioned earlier, the accounting profession is working hard to regain the public's trust. This is because at some point the profession as a whole assumed the utilitarian based concept that ...the purpose, nature, and responsibility of business are to maximize profit or shareholder value. To the extent that an accounting firm is a business, it falls under the profit-maximizing rubric. But when an accounting firm sees itself primarily as a business, making a profit overrides its main function of attesting to the truth and correctness of financial statements. (Duska, Duska, Ragatz, 2011,p. 170)
Utilitarianism says that the right action is the one that brings about the most overall happiness. No other moral rule has universal validity. According to Rachels, Utilitarianism is known as “we should always do whatever will produce the greatest possible balance of happiness over unhappiness for everyone who will be affected by our action” (Rachels). Utilitarianism has three main principles. Consequentialism says that the actions are to be judged right or wrong solely by virtue of their consequences. Hedonism states that in assessing consequences, the only thing that matters are the amount of happiness/unhappiness that is caused. The Equality Principle states that each person’s happiness counts the same. The two most important objections to utilitarianism are Consequentialism and the Equality Principle. The replies to Consequentialism and the Equality Principle, shows that Utilitarianism is not a plausible moral theory, therefore, Utilitarianism should be rejected.
In Utilitarianism, J.S. Mill gives an account for the reasons one must abide by the principles of Utilitarianism. Also referred to as the Greatest-happiness Principle, this doctrine promotes the greatest happiness for the greatest amount of people. More specifically, Utilitarianism is a form of consequentialism, holding that the right act is that which yields the greatest net utility, or "the total amount of pleasure minus the total amount of pain", for all individuals affected by said act (Joyce, lecture notes from 03/30).
...urvey of ethical behavior in the accounting profession. Journal of Accounting Research, 9 (2), pp. 287-306.
Utilitarianism was first brought up along the nourishing of “The Greatest Happiness Principle” introduced by Jeremy Bentham and further developed by John Stuart Mill, who was a follower of Bentham (Sweet, 2013). Based upon its principle, Utilitarianism states that to be good is to generate the greatest possible amount of happiness for the greatest number. In contrast with rational egoism, Utilitarianism focuses more on maximizing the overall net happiness of the majority. When facing a decision to make, utilitarianism provide us the evaluations of actions taken based upon their consequences (Sweet, 2013). By weighing the consequence, the model often produces more practical results.
With every business activity come opportunities for fraudulent behavior which leads to a greater demand for auditors with unscathed ethics. Nowadays, auditors are faced with a multitude of ethical issues, and it is even more problematic when the auditors fail to adhere to the standards of professional conducts as prescribed by the American Institute of Certified Public Accountants (AICPA). The objective of this paper is to analyze the auditors’ compliance with the code of professional conduct in the way it relates to the effectiveness of their audits.
The fundamental objective of Hedonistic Utilitarianism is to maximize happiness while minimizing pain (Sober 416). Supported by philosophers Jeremy Bentham and John Stuart Mill, the theory of Utilitarianism has been criticized, reformed, and researched in order to view the different situations in which this theory may produce positive or negative outcomes. Although this moral theory, was established with positive intentions, there have been ethical conflicts created by this theory. Such as the understanding that the hedonistic utilitarian moral theory maintains a very subjective motivation, destroys autonomy, and creates a false sense of self. One of those situational theories is the experience machine hypothesis.
Utilitarianism is a moral theory that seeks to define right and wrong actions based solely on the consequences they produce. By utilitarian standards, an act is determined to be right if and only if it produces the greatest total amount of happiness for everyone. Happiness (or utility) is defined as the amount of pleasure less the amount of pain (Mill, 172). In order to act in accordance with utilitarianism, the agent must not only impartially attend to the pleasure of everyone, but they must also do so universally, meaning that everyone in the world is factored into the morality of the action.
In philosophy, utilitarianism argues that a pleasure state of being is preferred over a painful state of being. Utilitarianism also notes that all human utility must be taken into account when making moral judgments. Using this moral theory allows us to think that all moral rules and actions should be determined by their worth and future outcome. Though the idea of “the greatest good for the greatest number” may seem moral and correct, the flaw in utilitarianism is that it allows us to use immoral judgments and actions to reach the desired outcome. This becomes a problem for “moral” decision making because we can use immoral actions to get a future outcome that is not necessarily promised.
Utilitarianism is a moral theory that approaches moral questions of right and wrong by considering the actual consequences of a variety of possible actions. These consequences are generally those that either positively or negatively affect other living beings. If there are both good and bad actual consequences of a particular action, the moral individual must weigh the good against the bad and go with the action that will produce the most good for the most amount of people. If the individual finds that there are only bad consequences, then she must go with the behavior that causes the least amount of bad consequences to the least amount of people. There are many different methods for calculating the utility of each moral decision and coming up with the best
Accounting ethics has been difficult to control as accountants and auditors must keep in mind the interest of the public while that they remain employed by the company they are auditing. The accountants should take into account how to best apply accounting standards when company faces issues related financial loss. The role of accountant is crucial to society. They serve as financial reporters to owe their primary constraint to public interest. The information provided is critical in aiding managers, investors and others in making crucial economic decisions. An accountant is responsible for any fraudulent financial reporting. Some examples of fraudulent reporting are:
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
As a philosophical approach, utilitarianism generally focuses on the principle of “greatest happiness”. According to the greatest happiness principle, actions that promote overall happiness and pleasure are considered as right practices. Moreover, to Mill, actions which enhance happiness are morally right, on the other hand, actions that produce undesirable and unhappy outcomes are considered as morally wrong. From this point of view we can deduct that utilitarianism assign us moral duties and variety of ways for maximizing pleasure and minimizing pain to ensure “greatest happiness principle”. Despite all of moral duties and obligations, utilitarian perspective have many specific challenges that pose several serious threats which constitute variety of arguments in this essay to utilitarianism and specifically Mill answers these challenges in his work. These arguments can be determinated and analyzed as three crucial points that seriously challenges utilitarianism. The first issue can be entitled like that utilitarian idea sets too demanding conditions as to act by motive which always serves maximizing overall happiness. It creates single criterion about “being motived to maximize overall happiness” but moral rightness which are unattainable to pursue in case of the maximizing benefit principle challenges utilitarianism. Secondly, the idea which may related with the first argument but differs from the first idea about single criterion issue, utilitarianism demands people to consider and measuring everything which taking place around before people practice their actions. It leads criticism to utilitarianism since the approach sees human-beings as calculators to attain greatest happiness principle without considering cultural differ...
This essay will talk about the ethical standards and code of conduct in the accounting profession, in particular for CPA Australia, the importance of ethical education for accounting students, the importance for ethical financial reporting and also addresses ways to deal with conflicts that arise from ethical issues in the
Utilitarianism is the theory that one ought to maximize the happiness and minimize the unhappiness of as many people (or sentient beings) as possible (Nina Rosenstand). According to Utilitarianism, an action is morally right if its consequences lead to
Accounting is a vital element of business. It records the way a business has grown and, after analyzing figures, suggests the way it should go in the future. Furtunes are gambled on the advice of accountants.