MODULE 1: INTRODUCTION TO PROFESSIONAL ETHICAL THEORIES

VALUES, ETHICS, AND ATTITUDE FOR UTILITARIANISM

PROFESSIONAL ACCOUNTANTS • teleological approach: focuses on the outcome
which is the benefit for the most number of
LECTURE 1: INTRODUCTION TO ETHICS people.
ETHICS o rule utilitarianism: action that conforms
• a branch of philosophy that involved defining, to the general rule that will result to the
developing, and defending concepts of what we best consequences. (e.g. lying, paying
know as right or wrong behavior. taxes)
• came from the Greek word ethos: custom or o act utilitarianism: it examines the specific
character action itself rather than the general rules
• came from the Latin word moralis: custom or governing the action to assess whether it
behavior will result to the greatest good. (e.g.
• we behave in conformity in what we think is right case-to-case assessment, should you pay
and avoid what is wrong taxes? it depends)
• personal ethics: own notion of what is right and • based on the outcome but more often difficult to
wrong. apply (trolley problem)

ETHICAL APPROACHES DEONTOLOGY

NORMATIVE ETHICS • duty or obligation of the agent and the right of
• norm: what should be right or wrong conduct the counterpart.
• in accounting, will you shutdown the segment or • what is more in line of my duty is more ethical.
continue the operations? • FIFO vs WA: faithfully represent the information
• there are three approaches in normative ethics and will make them relevant, choose the method
1. outcome (cost savings) based on your duty even though it will result to
2. agent or the person (owner of the lower income.
business and his values) o rule deontology: duty as a general rule;
3. relationships of the agent (duty of the categorical imperative: "act according to
agent to his stakeholders) that maxim whereby you can and will
that its should become a universal law,
METAETHICS the action that everyone should follow
• what do we mean by right or good (second order) (e.g. killing someone is unethical
• foundation and definition of the rules o act deontology: duty for a specific action
o dilemma of Socrates: euthythro (is the
pious loved by the gods because it is VIRTUE ETHICS
pious or is it pious because it is loved by • in line with good character or personal virtues
gods?) (principle based)
§ is the thing good because of a • cardinal virtues: an ethical action is that that will
higher being tells us that it is adhere to these virtues
good? (referent) 1. wisdom (prudence) - charioteer of all the
§ or is the thing good in itself that's virtues
why its i loved by the higher 2. courage
beings? (inherent) 3. temperance - trying to weigh what is the
• how do we determine good? is it by region, appropriate action for a specific decision
religion, sex, or culture? 4. justice

APPLIED ETHICS
• focuses on resolving controversial ethics
o computer ethics or the ethics of artificial
intelligence (who should be prioritized in
rescue operations?)
o issue of sustainability and contractual
workers (profit, planet, and people)
• bioethics, business ethics, and accounting ethics.

CA 51022: Governance, Business Ethics, Risk Management, and Internal Control

1
By: Marc Amiel C. Pascual | 3A1
LECTURE 2: PVEA AND ACCOUNTANTS current context of the PFRS:
§
generalization is misaligned.
SUMMARY § cost-benefit consideration in
ACCOUNTING AS PROFESSION determining disclosures but is not the
1. Mastery of Highly Technical Skills major determinant of disclosing items
2. Adherence to Code of Ethics in the financial statement.
3. Accountability to Society § view accounting in the lenses of cost-
ACCOUNTING METAPHORS benefit analysis and incremental
1. Accounting as Applied Finance analysis.
2. Accounting as Applied Ethics § act utilitarian approach
a. International Education Standards o As Applied Ethics View
b. ACCA Report (professional quotient § Pava views ethics as foundation of
framework) accounting and not only accounting
ethics as an afterthought.
INTRODUCTION: § application of the concept self-interest
• Math is not requirement to become a good vs public interest
accountant § more weight on public interest
• If mathematics is not a requirement, in what § self-interest comes secondary
areas should we be good at? § Dolfsma argues that applied ethics
resembles a deontological and
ACCOUNTING AS A PROFESSION: communitarian approach.
• professional: get paid for your skills (not accurate § to keep an account is a moral one.
in the macro view) § to know what we owe to whom
§ duty to the other party
INGREDIENTS OF A PROFESSION § adhere to GAAP and PFRS
1. Mastery of a Highly Technical Skill - it does not
stop here since it just the starting point ACCOUNTANTS AND ETHICS
2. Adherence to Code of Ethics - distinguishes • Study, Pass the Licensure Examination, and
professionals from non-professionals (General Practice
Code for Professional Accountants, Code of Ethics • When will professional development come in as
for Management Accountants, and Ethics an accountant?
Guidance for Accounting Systems Professional) o starts with the preparation of a bachelor's
3. Accountability to Society - we profess our degree
accountability to society as a whole; self-interest o Initial Professional Development (IPD)
to public interest; protection of public interest. (from study to pass) and Continuing
o first two points must serve the public Professional Development (CPD) (from
interest pass to practice).
ACCOUNTING METAPHORS: o Continuing Professional Development -
• capture our conceptual system/schema of the develop further as a professional
accounting profession. accountant
• each metaphor is not mutually exclusive since • Technical Skills (head) - IES 2, PFRS, PSA,
they must go hand-in-hand as you become a techniques in Management Accounting and
professional in the future. theories in AIS learners.
• equally present in our daily professional lives as • Professional Competence (hands) - soft skills
accountant. (communication skills, write disclosures and
• The Master Metaphor - most of the communication letters to the management);
accountants would implicitly subscribe to this bargaining and negotiation skills.
o As Applied Finance/Economics View • Professional Values, Ethics, and Attitude (heart
§ not discussed in the accounting and soul) - foundation of our personal and
academe. professional lives; aspect of our human lives that
§ job as accountant normally driven by will integrate our technical skills and professional
financial value (e.g. relevant costing, competence; must be present at both the IPD and
cost benefit analysis) CPD.
§ accounting disclosures are driven by
cost benefit analysis.

CA 51022: Governance, Business Ethics, Risk Management, and Internal Control

2
By: Marc Amiel C. Pascual | 3A1
IES 4: INITIAL PROFESSIONAL DEVELOPMENT LECTURE 3: KOHLBERG'S COGNITIVE MORAL
• After finishing your undergraduate studies, you DEVELOPMENT
must have an intermediate proficiency (combined • Human beings will progress from one level to
with a moderate level of ambiguity, complexity, another throughout his development as a human
and uncertainty) in these three areas: beings.
1. Professional skepticism and judgment - a • The levels are sequential and hierarchical.
questioning mind and critical assessment • Focuses on how decisions are made (linked to
of evidential matters (would not believe normative theories)
in first instance and would look for more • Development theory about moral reasoning that
corroborating evidences); application of an individual will undergo to make a decision.
training, knowledge, and experience in • Higher order moral reasoning is not available to
the context of making decisions in those persons in the lower level.
accounting and auditing.
2. Ethical principles - fundamental ethical LEVELS OF MORAL DEVELOPMENT
principles LEVEL 1: Preconventional
3. Commitment to public interest - concept o focus of analysis: self
of social responsibility, business and o decision is based on what satisfies the
good governance, law, and self, what is most convenient, what
consequences of unethical behavior. removes you from a very dangerous
situation.
DRIVERS OF CHANGE AND FUTURE SKILLS STAGE 1: Immediate self
• Professional quotient framework o Obedience to rules and avoidance of
o Technical and ethical quotient - punishment
knowledge of accounting and auditing o Example: Peter Pettigrew of the Harry
standards with ethical principles; Potter series since his actions were
techniques can be abused that's why it motivated by fear from Lord Voldemort.
must be incorporated with ethics. STAGE 2: Strategic self
o Intelligence quotient - thinking and o interest in the long-run
reasoning skills. o Satisfy personal needs, instrumental-
o Creative quotient - use existing relativist, rewards
knowledge in new situations therefore o Example: Dolores Umbridge since her
generating new ideas. decisions were motivated by her personal
o Digital quotient - knowledge of emerging satisfaction.
digital platforms and technologies (e.g.
auditing cloud systems, cloud system, LEVEL 2: Conventional
auditing algorithms). o focus of analysis: society's interest
o Emotional quotient - ability to identify o self-interest to others' interest.
and harness your emotions and others' o factor in the needs of the society and the
emotions. need for belongingness.
o Visual quotient - anticipate future trends STAGE 3: Immediate circle
(e.g. participation in strategic planning) o concept of a good boy/nice girl, fairness
o Experience quotient - understand our to others, what it means to be acceptable
clients to provide the desired outcomes as agirl or boy in your group.
and manage their expectations. o Example: Mean Girls, easiest way to fit in
is by copying, there are rules in their
immediate group.
STAGE 4: Society at large
o morality of law, duty to social order,
larger society.
o professional accountants are in this stage
o Example: Javert based his decisions on
the morality of law.

LEVEL 3: Postconventional
o focus of analysis: principles of the self
o principled morality

CA 51022: Governance, Business Ethics, Risk Management, and Internal Control

3
By: Marc Amiel C. Pascual | 3A1
 o ability to decide on principles that will
normally transcend self-interest and the
society at large.
STAGE 5: Values and spirit of the law
o social contract, own interpretations of
societal values, law is respected but
subjected to exceptions
o Example: Eliza Hamilton, dignity of a
human person, wanted to give the same
treatment to women and all other
preferences.
STAGE 6: Universal Ethical Principles
o very few people will transcend to this
stage
o guided by universal ethical principles of
justice, equity, and rights.
o Example: Jean Valjean, what it meant to
live an ethical life despite people
destroying his credibility.

CA 51022: Governance, Business Ethics, Risk Management, and Internal Control

4
By: Marc Amiel C. Pascual | 3A1