Deontology and Utilitarianism Ethics Systems in Accounting - Thesis Proposal Example

Deontology and Utilitarianism Ethics Systems in Accounting Outline The study has focused towards two specific ethical theories. These two ethical theories have been described in the context of organizational culture and AICPA code of professional conduct. The whole description has been done with the assistance of professional literature. The study has come up with a thesis statement. At the end of the study most appropriate ethics system for the accounting profession has been chosen. Introduction Ethical problems in the context of accounting systems is a highly talked about matter. Various organizations across the world are finding it significantly difficult to manage their accounting ethics. There are several examples of the ethical issues are present in front of the global fraternity. Cases like Enron and Satyam have opened the eyes of the world people. Accounting ethics is a fundamental domain of applied ethics. It is a study related with judgment and moral values that should be applied in the context of accounting. Ethics in the field of accounting is highly important, for managing the right records and it has great importance for the stakeholders as well. Stakeholders invest their money for getting profitability out of their investments. Safeguarding stake holder’s interests are the primary requirements from the sides of the organizations. That is why most of the organizations across the world are trying to go by the books of accounting ethics. It has become needs of the hour for the global fraternity. Several ethical theories are present. The thesis will focus upon two important ethical theories. Those two ethical systems are Deontology and Utilitarianism. During the course of this study these two theories will be analyzed on the basis of organizational culture and accounting profession. AICPA Code of Professional Conduct will also be discussed on the basis of these two theories. The study will follow a structural format where extensive discussions of these two theories will be there. At the end of this study conclusion will be drawn which will select an ethics properly suitable for the accounting profession. The study will include a thesis statement which will guide the whole thesis. Thesis statement Thesis statement is one of the most important components of any essay. Here in this case of accounting ethics also the thesis statement will play an important role. Thesis statement controls the flow of whole essay. The main objective of the thesis statement is to brief the main points of the whole essay. Here in this case the thesis statement is “To manage accounting ethics in the context of organizational culture, organizations should select a proper ethics system which is suitably aligned with the AICPA professional code of conduct.” This thesis statement is absolutely suitable for the purpose of this study. With the help of this thesis statement the study will describe the whole subject properly. Description of the two ethics systems According to Koehn (1995), deontological ethics is an ethical position and generally it judges ethical morality of any action. This ethical system is highly important for any organizational culture. The author also has stated that, ethical practices are the bases of the organizational accounting systems. According to the author, deontological ethics considers various actions as the duties or obligations. The author also has stated that deontological ethics gives significant importance towards the relationship between the duty and morality of human actions. He also added that in the context of organizational culture, sense of duty and morality in the human action is utterly important. AICPA provides the outline for the CPAs to perform their accounting responsibilities towards the clients. This code of professional conducts establishes standards for the various accounting professionals. There are significant similarities between deontological ethics and these kinds of code of conducts. According to author, AICPA provides clear cut guidelines and obligations for accounting professionals and those guidelines are being followed in the organizational context. He also added that, accounting ethics is an integral part of the organizational culture and deontological ethics plays significant roles in that context. According to the author, morality of an action is being judged on the basis of some characteristics of that action (Koehn, 1995, pp. 4-6). According to Micewski & Troy (2007), making correct moral choices in the field of accounting systems are significantly important for cultural perspectives of any organization. They also added that deontological ethics gives significant focuses towards the fundamental reason for which any organizational action is being taken. The authors also have stated that the word deontology has been originated from a Greek word. The word has come from the Greek word deon. Meaning of this Greek word is duty. The authors have categorically stated that, deontology is a normative theory which has significant importance in modern day organization. According to them the ethical theory gives significant importance towards the required morality, permission and forbidden action. The theory has enough scope in the organizational culture. It is often being observed that people perform their organizational duties in unethical ways to gain personal interests. It means the organizations have significant scope for the introduction of deontological ethics to correct the situation. With the application of deontological ethics, organizations across the world can counter ethical issues of accounting. AICPA code of professional conducts is an accounting body which is responsible for drafting, reissuing and reviewing various codes related with the accounting ethics. It provides clear cut guidelines related with the ethical accounting practices and creates obligations for the accounting professionals. It means deontological ethics is evident in the functioning of the AICPA (Micewski & Troy, 2007, pp. 17-25). According to Weatherson (2008), deontological ethics judges nature of an action. He stated that the ethical system is much more focused towards the way of a particular action i.e. whether the action is ethical or not. This ethical system is not focused about the end result. According to the author deontological ethics considers the input and it does not have any connection and relationship with the output. He also added that the basic principal of this theory is whether the action of reaching the goals is proper or not, then automatically the whole process will follow a proper ethical values and moralities. He categorically stated that this ethical theory is significantly hardcore in nature because its gives significant importance towards the individual obligations and duties. Accounting system is the backbone of any organizational culture. Prosperity and growth of the organizations are highly dependent upon proper accounting ethics. To manage the accounting ethics accounting professional of the organizations should follow clear cut guidelines and must perform their duties properly. AICPA code provides that guidelines to the accounting professionals. Section 200 of the AICPA code focuses towards the general principals of the accounting standards. This section acts as the guiding star for managing accounting ethics in the organizations (Weatherson, 2008, pp. 540-545). According to Steiker (2005), deontology is a strong ethical theory which is significantly applicable in the context of accounting ethics. The author has stated that, the theory is concerned with what the people do and not at all concerned with the end results or consequences of people’s actions. According to this theory doing the right thing is always advisable and there is no other way of alternative to manage ethical morality. He also added that, with help of this theory one good result cannot be justified only with the good outcomes of the actions. According to this ethical theory the way of actions are taken are being judged. As the theory does not consider consequences, it is often known as non-consequentiality ethical theory. It is often being observed that organizations are only concerned with the end results i.e. profitability. During the course of earning profitability, organizations often compromises with the accounting ethics. It is not at all permissible by deontological ethics system. That is why a strict authority is required which can show the right ways or proper responsibilities to the accounting professionals. AICPA plays that important role. The authority describes the acts which are discreditable in the accounting domain (Steiker, 2005, pp. 751-760). According to Spielthenner (2005), deontology is more of proactive ethical theory which focuses towards the starting point of any action. According to the author, deontology theory identifies some acts as right and some acts as wrong because right or wrong elements are associated with those acts. Due to the proactive nature of this theory people do not have to wait for the end results. Actions of the people can be adjusted or stopped in between of the action process only. According to the author scope of moral rules are significantly high in the context of deontology. The author has categorically stated that, people who follow deontological ethics often consider right actions before starting their works. AICPA code of professional conduct assists the organizations across the world to maintain their accounting ethics properly. It always reminds accounting professionals about the right thing to do. It creates an environment of obligations and sense of duty among the accounting professionals. This code of conduct helps the organizations to build transparent accounting practices in their business operations. It is being observed that to eliminate any accounting issue the organizations follow these standard codes and deontology has enough reflection on this particular code (Spielthenner, 2005, pp. 217-222). According to Basu and Mitra (2007), utilitarianism is a normative ethical theory which tries to maximize utility out of one action. The author has categorically stated that the theory is much more consequential in nature. According to the authors, happiness of the maximum number of people out of any action has significant ethical values. The authors have stated that whatever may be the nature of the action is, if the action is doing well for the most of the people in the society or organizations, then that action is highly ethical in nature. Here in this theory of ethics morality of an action is being judged on the basis of the consequences of the action. In every organization there are lots of stakeholders. Organizations across the world try to create maximum benefits for their stakeholders. In the process of that they often took short cuts or unethical measures. Conducting unethical accounting practices is one of the most common unethical practices that the modern day organizations are facing. It is often being noticed that for the optimum utilization of limited resources, the organizations often flouts various accounting principles stated by the AICPA. It may lead to short term profitability for the organizations but in the long run it can be counterproductive for the companies (Basu and Mitra, 2007, pp. 350-360). According to Bonevac (1990), the connections between actions and outcomes are significantly dependent upon the external circumstances or environments so there is very less scope of moral principles is present in this theory. The author has categorically stated that the theory of utilitarianism is highly consequences centered instead of morality. He also added that this ethical theory is a classical example of result based ethics. The author has further stated that, with the limited resources it is very difficult to gain maximum benefits for maximum people. The tradeoff between limited resources and maximum benefits often leads to the unethical business practices like inflated or manipulated accounting practices in the organizations. It is often being observed that to create utilitarianism the organizations often manipulate their balance sheets to attract more investments from the investors. In the long run they fail to manage various accounting compromises that they have already done. It can hurt the organizational image. Investors can lose their trusts in the organization. Proper accounting practice is highly required for the long run business success of any organization. To achieve this success following AICPA code of professional conduct is highly important and there is no other alternatives are available. But it is significantly difficult to manage utilitarianism and AICPA code of conduct together simultaneously (Bonevac, 1990, pp. 229-235). According to Weymark (2005), utilitarianism is a reductionist approach related with the human ethics. The approach gives significant importance towards the consequences rather than the actions. If result of any action is providing maximum benefits to the maximum possible people then the action is morally correct. On the other hand if consequences of an action are not providing maximum benefits to the maximum people then morality of the action is irrelevant. The author has categorically stated that due to the consequential nature of this theory the theory often faces lots of criticism from various experts. He also added that the theory is more of a reactive theory. The scope of adjustment during the process of action is very less in this theory. The author also stated that, through utilitarianism organizations try to maximize pleasures by carrying minimum possible pain. To maximize the pleasure often organizations select shortcuts and avoid morality and ethics in their accounting principles. Consequences are short term benefits for the stakeholders which can attract lots of investments. But in the long run consequences can be dangerous. AICPA provides ethical guidelines to the account professionals. But often all those guidelines are not taken care of by the organizations to manage utilitarianism into their business practices (Weymark, 2005, pp. 527-532). According to Rosset (2010), utilitarianism ethics is different from the other ethical theories. When other ethics talk about the motive of the agent, this particular ethics doesn’t focus towards the motive of the action. He also added that as far this ethical system, out of bad motivations also good consequences can be achieved. The theory talks about the maximum benefits for the maximum people. Under this ethical theory morality of the in-between actions are somewhat less important. He added that in this ethical theory values of actions are comprehensively determined by their utilities. The concept is significantly different with the theory of deontology. According to author it is a simple theory and the theory can be applied easily. Utilitarianism ethics plays important role in the organizational context. Accounting profession is a very sensitive duty as far as the organizational culture is concerned. There are lots of minute details are to be taken care of by the accounting professionals of the companies. Utilitarian ethics is totally consequence oriented. But in the context of organizational culture often consequences of a manipulative accounting action is not clear apparently. It causes significant problems for the organizations. Often top level managements of the organizations pressurize accounting professionals to record their accounts in such way that will create maximum benefits for the most of the people. For achieving this thing very often AICP codes are being ignored intentionally (Rosset, 2010, pp. 73-97). According to Lang (2004), utilitarianism ethics creates lots of dilemmas in the mind of the people. People with high sense of individual morality and ethical believes often does not follow this ethical system. He also has added that the theory has significant dependency on the consequences, which often compromises the sense of right and wrong related with the actions. He categorically stated that this consequence oriented theory often creates ethical illusions for the people. He also criticized that this ethical concept sometimes ignores justice. But the theory is certainly focuses towards the collective interests of the people. The scope of individuality is not at all there in this ethical system. AICPA code of professional conduct is an American authority which has been designed for the introduction of ethical and standardized accounting practices in the organizations. It is very difficult, in sometime impossible to manage these two things together simultaneously. There are certain provisions and guidelines are present in AICPA code of professional conducts which have opposite characteristics to the utilitarianism ethical system (Lang, 2004, pp. 221-239). Conclusions In the above paper elaborated discussions related with these two ethical theories have been done. These two ethical theories have been discussed on the context of organizational culture and its accounting. During the course of this discussion these two ethical theories have been judged on the basis of the AICPA code of professional conduct. All the discussions are clearly indicating that deontological ethical system is much more suitable for the accounting profession. Deontological ethical system gives significant importance towards the moral obligations related with an action. It gives less important to consequences of an action. That means under this ethical system, accounting professionals will be confined within certain sets of moral guidelines which is quite similar with the basic principles of AICPA code of professional conduct. All these guidelines will control the action taking procedures of the accounting personnel. This ethical system can bring sense of positive motives in the accounting profession. This ethical theory is properly fitted with AICPA code, because there are significant similarities between the ethical code of conduct and the basic characteristics of deontological theory. AICPA code of conduct creates an environment of obligations in the accounting profession. Deontology also talks about the moral duties and give significant importance on doing right things. All the above discussions and arguments are clearly indicating that there is a high degree of compatibility between deontological ethics and AICPA code of professional conducts. This suitable alignment and high degree of compatibility is making deontology ethics most appropriate for the accounting profession. References Basu, K. and Mitra, T. (2007). Utilitarianism for infinite utility streams: A new welfare criterion and its axiomatic characterization. Journal of Economic Theory. Vol. 133(1). pp. 350-360. Bonevac, D. (1990). Paradoxes of fulfillment. Journal of Philosophical Logic. Vol. 19 (3): pp. 229 - 252. Koehn, D. (1995). A role of virtue ethics in the analysis of business practice. Business ethics quarterly. Vol. 5(3). pp. 4-6. Lang, G. (2004). A dilemma for objective act-utilitarianism. Politics, Philosophy and Economics Vol.3 (2):pp. 221-239. Micewski, E. R. & Troy, C. (2007). Business Ethics – Deontologically Revisited. Journal of Business Ethics. Vol. 72(1). pp. 17-25. Rosset, D. L. (2010). Getting Priority Straight. Philosophical Studies. Vol. 149 (1): pp. 73 - 97. Spielthenner, G. (2005). Consequentialism or deontology?. Philosophia. Vol. 33(4). pp. 217-222. Steiker, C. S. (2005). No, capital punishment is not morally required: deterrence, deontology, and the death penalty. Stanford Law Review. Vol. 58(3). pp. 751-760. Weatherson, B. (2008). Deontology and descartes’s demon. The Journal of Philosophy. Vol. 105(9). pp. 540-545. Weymark, J. A. (2005). Measurement theory and the foundations of utilitarianism. Social Choice and Welfare. Vol. 25(3). pp. 527-532. Read More