Teaching Virtues and Values to Accountants
Business schools and professional training bodies are stepping up education in accounting ethics, after a series of high-profile financial scandals brought audit failures to light.
These include the collapse of British sub-contractor Carillion, the fraud at German payments group Wirecard and a corruption scandal at Brazilian oil company Petrobras – despite all their accounts having been signed by one of the so-called “big four” audit firms.
At the same time, in-house management accountants are facing increasing scrutiny of non-financial information amid allegations of “green laundering” or misrepresentation of environmental credentials – as has happened. at German asset manager DWS Group.
These scandals have intensified concerns that an underdeveloped approach to teaching behavioral skills, as opposed to hard skills, lowers ethical standards and professional independence. Failures have included auditors failing to test assumptions or the accuracy and completeness of management reports. Business leaders have also been accused of prioritizing their own financial rewards over transparency.
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Training organizations and academic institutions note that they are not responsible for the decisions made by their graduates, but say they want to help restore confidence in accounting.
Many reinforce the ethical component of the accounting program with practical simulations, so students can practice making ethical decisions. Even so, some critics say they should go further and rethink their approach if they want to make the financial world safer.
Berend van der Kolk, associate professor at the School of Business and Economics at the Vrije Universiteit (VU) Amsterdam, explains that one of the reasons why companies present misleading figures is that teaching practices separate ethical considerations from technical aspects of accounting. He says ethics is usually an “add on”. The result is that students treat ethics as an afterthought when making accounting decisions. “We need to build ethical considerations into core courses, to make sure students see the trade-offs between economic and moral reasoning,” van der Kolk says.
In the wake of recent scandals, regulators plan to revamp auditing and corporate governance in the UK by making company heads more accountable for internal controls and forcing the Big Four to share audits with smaller companies. businesses.
But behavior regulation is “the missing piece”, says Giulia Redigolo, assistant professor of accounting at Barcelona’s Esade Business School – pointing to an opportunity for training providers to fill the void.
“We need to reshape and reinvent the education we offer in business schools,” she says, adding that this can mean taking an interdisciplinary approach and applying social psychology. For example, Redigolo says students should be aware of corporate cultures and fairness incentives related to accounting metrics that can lead to unethical behavior.
“Business schools often prioritize performance over purpose,” she points out. “We need to come up with a more nuanced definition of success that’s not just about profitability and personal gain, but also impact on stakeholders and the environment.”
New York University’s Stern School of Business has offered the Professional Responsibility course since 1994. It previously focused on the regulatory and legal requirements of business, but now also explores its role in society.
“It is difficult today to teach accounting as a technical discipline without exploring the underlying assumptions about what is perceived to be financially important,” says Alison Taylor, adjunct teacher, referring to the pressure on companies to share non-financial data.
She adds that accounting students have been a powerful driver in the shift to a more holistic teaching of ethics. “We recently had partners from a Big Four accounting firm in our office who were extremely concerned about young recruits asking them why they work for oil and gas companies, but also how they deal with financial value .”
Students now want practical tactics they can apply on the job. As part of the ACCA Accountancy Qualification (provided by the Association of Chartered Chartered Accountants), candidates complete an interactive online module that tests their responses to ethical dilemmas.
“Rather than being able to recite the code of ethics and conduct, everyone should be able to apply the theory,” says Helen Brand, ACCA’s chief executive.
The professional body ‘separates’ its content so that companies can ensure the continued professional development of their ACCA-qualified staff.
Demand is also high for short courses on sustainability reporting, following allegations of corporate greenwashing. ACCA is also placing greater emphasis on “digital ethics,” including data privacy, as accountants automate routine processes.
Privately, some academic institutions cite a tension between the need to teach “soft” behavioral skills and “hard” technical abilities when space is limited in the curriculum. However, Brand cautions, “The element of ethics and professionalism is something we would never water down to fit into another module of a technical nature.”