Histrical Perspectives n Ethics - Essay Example

25 September 2008 Decision Making - Ethic Introduction Mdern business practices and actins are affected and influenced by ethical principles and legal rules. Business cannt perate withut cntact and interactin with the gvernment and its myriad f rules and regulatins. At n time in the histry have lcal, state, natinal, and internatinal gvernments played as extensive a rle in the regulatin, cntrl, and peratin f what takes place in the business and public sectrs f the ecnmy. Sarbanes-xley Act (2002) and ther accunting refrms was a respnse t crprate scandals and unfair plicies fllwed by such leaders as Enrn and Tyc Internatinal, WrldCm and Peregrine Systems. In 6 years, it is pssible t say that these actins and refrms initiate business management ethics which fllws strict legal rules values and wrk in cmpliance with internal and external ethical principles f business. Ethical dilemmas ften invlve uncertainty and, when rights and duties are in cnflict, it is difficult t find guidance. Ethics is receiving wide-ranging discussin in tday's ppular press as well as in accunting literature. Many accuntants find themselves perplexed by these arguments because they have nt been expsed t a practical methd f dealing with ethical dilemmas. N frmal training and few pprtunities in everyday wrking life have been prvided fr accuntants n a sustained basis. Histrical Perspectives n Ethics Greek ecnmic, philsphical, religius, legal, business, scial, and ther prblem areas and prpsed slutins are fund in their legal cdes and in their religius and philsphic writings (Frederick 62). The Scratic philsphers and military are the chief surces f the ecnmic, business, and scial thught f that day; their writings are intertwined with philsphy, ethics, and plitics. T btain a better feel fr precisely what impact these early writers and thinkers had n present day management and ethical, mral, and scial practices, tw f these Greek writers will be examined. First, the writings f Plat (427B.C. - 347B.C.) and then Aristtle (384B.C. -- 322B.C.) will be examined. The scpe f Plat's and Aristtle's writings was wide and represented the general thinking and beliefs f the Greek philsphers f that time; they delved int the ecnmic and scial system in its parts, hw it shuld wrk, and hw it shuld be used t achieve the desired gals and bjectives (Buchhlz and Rsenthal 62). Even thugh the early Greek and ther cultures have had a prfund influence n tday's business activity and scial respnsiveness, they run a far secnd t the impact that the Hebrew and Christian religins have had n ttal wrk, ethics, mrals, and scial respnsiveness. In many areas the Hebrew and Christian appraches t the ethical, mral, business, human, and scial prblems were cnsiderably different frm that f the Greeks and ther cultures (Dnaldsn 70). With the cllapse f the Rman Empire, the early and mid-perid saw the grwth f the feudal system, the grwth and increasing pwer f the Cathlic church, and the teachings f its fremst spkesman: Saint Thmas Aquinas. The feudal system existed in the latter days f the Rman Empire in a scattered frm and grew rapidly during the Dark Ages as a means f selfpreservatin and prtectin fr many f the prer peple. In rder t secure prtectin frm murder, rbbery, and vilence, many f the peple sld themselves int a level f subservience, including the lss f their individual freedm, t the peple wh were mre pwerful than they were and wh culd ffer them sme frm f prtectin (ppenheim 45). This "in between" grup was referred t by sme as the frerunners f ecnmic liberalism. In reviewing these peple and grups it shuld be nted that as mvement is made int the latter part f the perid and int the study f the views, philsphies, and writings f sme f the ecnmists, ther than fr the physicrats, there is a marked decrease in emphasis placed n the equality f mankind and the helping f ne's fellw man. The 1930s signaled a transitin frm a primarily laissez-faire ecnmy with industrial pwer and might in cntrl t a mre mixed ecnmy with unins and gvernment taking a mre activist rle. The Western Electric Cmpany Hawthrne studies alerted bth industry and labr t the fact that wrkers were nt just simple-minded peple whse nly cncern in life was ecnmic, but rather that the wrker was intelligent and was a scially riented human being with feelings and desires beynd a weekly paycheck. The Great Depressin f the 1930s weakened business' hld n labr and the ecnmy as a whle and shwed that business did nt have all the answers (Dnaldsn 65). This mvement prceeded fairly slwly during the early days f the cuntry's grwth but started t gather speed and strength in the 1930s after the Depressin and explded in a multitude f new legislatin at all levels f gvernment during the late 1950s, 1960s, and 1970s, after which it again slwed dwn smewhat. This heavy lad f new legislatin induced sme in gvernment t take a rute f deregulatin in varius areas f industry t help ffset sme f the multitude f new laws and regulatins; mst f this deregulatin activity has taken place during the 1970s and 1980s but still leaves the gvernment with an abundance f new legislatin (Dnaldsn 70). Impact f Ethics n Business and Crpratin T understand an ethical dilemma and t analyze the ptential reslutin f a specific prblem, ne shuld seek t evaluate the strength f the particular ethical system in use. As prfessinal peple increasingly under public scrutiny, accuntants find themselves expsed t cmplex ethical issues. By understanding the ratinal methds by which ethical issues may be examined, the prfessinal accuntant is better prepared t cpe with cmplex ethical situatins that are likely t arise in the prfessinal wrking envirnment. As in all prfessins, this aspect f independence is a wellestablished ethical nrm in public accunting (De Gerge 43). The law is a guarantr f scial stability. If driving were nt regulated we culd chse which side f the street t drive n r munt the sidewalk when cnvenient. The law prvides fr cllective safety and security. But it has mre than a stabilizing functin fr sciety--it als embdies values. Telling the truth is the rt f all cntracts. It is als fundamental t criminal law; that is why we swear (smetimes n the Bible) t be hnest in a criminal trial. The law reflects ur scial mres: schl desegregatin is an illustratin. And ften the law demnstrates ur imperfectins and uncertainties. That is why affirmative actin is such a cntrversial tpic. ur sciety, and thus ur law, is nt yet settled n this difficult prblem (De Gerge 43). The law, abve all, embdies scial principles, ideals that must nt be vilated easily r at all. Just as biblical authrity tell us, "thu shalt nt steal," s des secular law prhibit burglary and theft. When the law is brken, we see, in the cases that reach a curt, the mral drama f a sciety trying t right a wrng. Individuals rarely crss the brder frm legal t illegal behavir. But crime is a fact f ur everyday life. Murder, rape, kidnapping, rbbery, assault--these are widely publicized and ften the grwth f such crime creates anxiety. But crime that is at nce less vilent, and less publicized, has (until quite recently) nt been a surce f much scial cncern (Anand 44). . The ultimate mral agent is man, nt the system. The system f values in tday's advanced capitalist scieties is an undetermined system, with very few specific values. A cnstant "prductin" f values takes place in them, in a srt f "market prcess" in which each new value is admitted, prvided that we d nt pretend t impse it n ther peple. In the last decade f ur century, the prevailing values seem t be the pssessin and cnsumptin f gds, individual freedm (especially regarding prductin and cnsumptin), and the psitive evaluatin f success when achieving these bjectives. Insfar as an immral sciety is an unstable sciety, ur Western sciety will need t recver values and institutins with greater ethical cntent, s that the market ecnmy system, that des nt seem t need substantial changes as a resurce allcatin mechanism, cntinues t prduce the psitive effects it characterizes. ther scieties and cultures will be able t receive the beneficial influences f ur sciety. We have fund an efficient ecnmic system, cmpatible with freedm and justice. But there is a risk f passing n, tgether with this system, a different set f ideas and values and the establishment f an inadequate institutinal framewrk. Legislative Impact and Issues The rle f gvernment in business and scial actins tday is brad in scpe. It extends all the way frm lcal cmmunity laws and regulatins t internatinal laws and regulatins. Multinatinal cmpanies are invlved with laws and regulatins at all levels f gvernment frm lcal laws t internatinal laws, while dmestic cmpanies are influenced and cntrlled primarily by lcal, state, and natinal laws (Batright 72). In all cases, the lcal business must still cmply with these additinal laws and regulatins at a cst t smene. Lwer taxes, an abundant and/r lw cst labr supply, cnvenience t raw materials and/r markets, r ther desirable factrs may ffset the ther mre restrictive laws and regulatins f a particular lcatin. All f this must be taken int cnsideratin when chsing a plant r business lcatin (Beauchamp and Bwie 92). This situatin is, f curse, nt restricted t the United States. Accunting and audit prblems have als been bserved in Eurpe (Bstehman 66). T restre the financial cmmunity's cnfidence in the financial reprting prcess, legislatrs felt they were bliged t take regulatry actins quickly. Perhaps due t the sheer magnitude f the uncvered scandals, the United States is amng the first cuntries in which this prcess (after a relatively shrt time f intense discussins) has already led t mdified rules fr the accunting industry (Lander 22). be influenced als by the SA) and its current suggestins (e.g. n the jint ffering f audit and nnaudit services (NAS) fr the same client) are nt as strict as the rules f the SA. These regulatry debates display sme remarkable features f auditing. The SA gives the impressin that sme f the mst cntrversial issues f the last fifty years have nw been reslved in just a few mnths f discussin. The Enrn debacle appears t have cnvinced many parties that audit firms shuld basically be prhibited frm ffering bth NAS and audit services t the same client. Despite the imprtance that has unanimusly been attributed t NAS fr many decades, there is surprisingly little cnceptual knwledge regarding the specific relatinships and interdependencies by which NAS, auditing, and reprting are intertwined. As my discussin makes clear, the develpment f hyptheses and the explanatin f empirical results in this area may benefit frm mre theretical research. What is needed is a cmprehensive cnceptual apprach that links demand, supply, and incentive effects f auditing and NAS. In additin, results that emerge frm such analyses shuld be cmbined with ther research dealing with auditrs' incentives (e.g. research n auditr liability), which wuld prvide a cmprehensive picture f relevant effects. The fact that, despite the regulatry imprtance wrldwide, there is currently a relatively small bdy f theretical research n bundling SA, and auditing is evidence that the difficulties f cnstructing infrmative mdels capable f addressing these issues are larger than they are in ther areas. Mrever, shuld the SA be viewed as a "final" regulatry slutin t the NAS prblem in the United States, it seems unlikely that (due t the respnsiveness f the recent U.S. research n regulatry discussins) mre significant research n NAS issues will cme frm the U.S. scene (Crane and Matten 101). Ethics Influence n Business Practices Fr accuntants, cnflicts emerge when cuntervailing claims frce a dilemma. If an emplyer begs, "dn't tell this time; I had n chice but t act unethically," the subrdinate is thrust int a grave difficulty. If he respects the request, ethically unsund behavir is secnded. If he disregards the statement, a jb might be lst, a family might be placed in financial jepardy. But these are nly the lcal manifestatins f the dilemma. What abut thse unknwn faces--cnsumers, ther cmpanies, plitical bdies, the public at large--wh can be affected by ne's activities Carrll and Gannn 49). Accuntants are bliged t care fr the public welfare, especially the interests f sharehlders and ther "wners" f crprate prperty, by telling the truth and by resisting unethical prpsitins. When an accuntant rejects a client's prpsal f tax alteratin r tax fraud, r when an accuntant sees a cnflict f interest r feels his independence jepardized and acts respnsibly--these are scial acts rted in a principle and a view f cnsequences. The principle is veracity (truth telling); the assumptin abut cnsequences is that airing a grievance will lead t cnflict reslutin and that all parties, including sciety per se, will be better ff if legal and mral nrms are adhered t (Rbbins 123). Finally, we must certainly set high standards fr accunting ethics. But they cannt be unattainable. We cannt expect mre frm accuntants than we can, say, frm lawyers r dctrs. It is unfair t cndemn an entire prfessin n the basis f several acts f individuals r even firms. Accuntants are prbably better at and mre practiced at "blwing the whistle" than ther prfessinals (Trevi et al 132). The mandatry cnfidentiality f her auditr rle strikes hard against her pacifism. Thugh the auditr is nt a cmpany insider, she is persnally cnnected t many crprate prfessinals. She is especially friendly with a vice president, a wman whm she regards as quite cnservative (plitically), yet pen and supprtive f change in the crpratin. What shuld she d If she discusses the matter with her pacifist friends, r with any ther persn, she has vilated the rule f cnfidentiality. But if she stays silent, she has aided and abetted the cause f war, frm her perspective (Sims 68). In sum, a cnflict surrunding cmpetence can be quite prfund if the allegedly incmpetent clleague is als a persnal friend r a mentr. But if the persn whse abilities seem cmprmised is a cmpetitr, additinal difficulties develp. T bring t light suspected incmpetence f a cmpetitr invites an accusatin f unfair business practices. And since cmpetence is ften subjectively assessed, it is difficult t maintain ne's desired bjectivity in facing these cmpeting mral claims. Cmplicating the interpersnal dimensins f dealing with cmpetence, f curse, is the cmpetitive atmsphere, bth within and amng accunting firms. Every sciety builds thrughut time the institutinal, legal, and scial framewrk in which its ecnmic system perates, as a reflectin f its system f ideas and values. Lgically, different scieties and cultures build different framewrks. But nt all institutinal framewrks are cmpatible with a market ecnmy, and nly thse with sund ethical fundatins are feasible in the lng-term, because individuals learn, and this apprenticeship causes changes in behavirs, institutins, and values. Works Cited Anand, S. Sarbanes-Oxley Guide for Finance and Information Technology Professionals. John Wiley & Sons; 2nd Edition edition, 2006. Beauchamp, T., and Bowie, N. (eds). Ethical Theory and Business, 7th edn, Upper Saddle River, NJ: Prentice Hall, 2003. Boatright, J. Ethics and the Conduct of Business, 2nd edn, Upper Saddle River, NJ: Prentice Hall, 1997. Bostehman, J.T. The Sarbanes-oxley Deskbook (Practising Law Institute's Corporate and Securities Law Libr). Practising Law Institute (PLI), 2004. Buchholz, R. and Rosenthal, S. Business Ethics, Upper Saddle River, NJ: Prentice Hall, 1998. Carroll, S. and Gannon, M. Ethical Dimensions of International Management, Thousand Oaks, CA: Sage, 1998. Crane, A. and Matten, D. Business Ethics: A European Perspective, Oxford: Oxford University Press, 2004. De George, R. Business Ethics, 5th edn, Englewood Cliffs, NJ: Prentice Hall, 1999. Donaldson, T., et al. Ethical Issues in Business, 7th edn, Upper Saddle River, NJ: Prentice Hall, 2002. Frederick, R. (ed.) A companion to business Ethics. Blackwell Publishers, 2002. Lander, G. What is Sarbanes-Oxley McGraw-Hill Professional; New title edition, 2004. Oppenheim, A. Questionnaire Design, Interviewing and Attitude Measurement, London: Pinter, 1992. Robbins, S. Organizational Behavior. Pearson Higher, 2002. Sims, R.R. Ethics and Corporate Social Responsibility: Why Giants Fall. Praeger, 2003. Trevio, L.K., Weaver, G.R., Gibson, D.G., et al. Managing ethics and legal compliance: what works and what hurts", California Management Review, 1992, vol. 41, no. 2, pp.131-151. Read More