Transcript Ethics Chapter 3 Powerpoint Spring 2012

Morals
Morals define personal character, while ethics stress a
social system in which those morals are applied. In
other words, ethics point to standards or codes of
behavior expected by the group to which the individual
belongs.
Morals arise more as a set of rules passed down by
society that we must conform to in order to be
accepted by the civilized strata of society. For instance,
from childhood we are taught not to lie, steal, murder
and commit acts of debauchery. Following these
principles would qualify a human being as moral, and if
the individual does not follow these rules he is viewed
as an immoral person.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
Morals typically based upon individual’s “Philosophy of Life”
Individuals typically decide what is either “right” or “wrong” based upon
their philosophy of life or religion.
Moral codes are based on value systems that have been tried and tested.
The best examples of moral codes include the Eightfold Path of Buddhism
or the Ten commandments. It is believed that all of us, throughout our
lives, act from a developing moral core.
Ethics is thinking about a particular sort of behavior, while morals pertain to
the act in itself.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
Morals versus Ethics
To many people, morals and ethics seem like one and the same thing.
To them it simply means a system of principles that can be applied in
order to tell right from wrong.
But as one delves further into this subject of philosophy, the fine
differences between morals versus ethics start becoming clearer. It is
the context in which one applies these values and principles that the
real difference between morals and ethics becomes apparent.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
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What are ethics? The word itself is sometimes used to refer to
the set of rules, principles, or ways of thinking that guide, or
claim authority to guide, the actions of a particular group;
and sometimes it stands for the systematic study of
reasoning about how we ought to act.
Morals define personal character, while ethics stress a social
system in which those morals are applied. In other words,
ethics point to standards or codes of behavior expected by
the group to which the individual belongs.
While morals define our character, ethics dictate the working
of a social system. Ethics point toward the application of
morality.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
In society we are all faced with the butting heads of ethics and
morals.
 Abortion is legal and therefore medically ethical, while many people
find it personally immoral.
 Ethically a doctor cannot cause a patient’s death but morally the
doctor, the patient, or the family may feel that it would be better for
the patient to be euthanized.
 Euthanasia is the practice of painlessly putting to death
persons who have incurable, painful, or distressing diseases or
handicaps.
 The debate:
http://euthanasia.procon.org/view.resource.php?resourceID=000126
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L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
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Ethics and morals can also clash at the workplace
where company ethics can play against personal
morality.
Corporate greed that blurs its own ethical lines
coupled with unreasonable demands on time can
lead to having to chose between a stressful,
demanding and consuming work ethic, and family
obligations seen as moral obligations to a spouse
and children.
Conversely, people lose jobs every day because of
poor personal morals, employee theft being a
common reason for dismissal.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
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Ethics are usually used to denote the expected behavior of a group
with which an individual works or belongs.
It can be a business organization, a Government, a country, or even
a political party. The point is that they all live within a certain code
of conduct that they are not allowed to breach. Within that code of
conduct, anything goes.
Morals versus ethics makes us think about which is superior, and the
truth is that collective ethics override personal morals many times.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
FIGURE 3.1
THE ETHICAL REASONING PROCESS
Philosophical Theories
Utilitarianism/Consequentialism
Deontology
Justice & Fairness
Virtue Ethics
Ethical
Dilemma
Practical Ethical
Decision Making
Behavior
Practical Constraints
Personal Characteristics
Organizational Features
Environmental Forces
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
Utilitarianism
Consequentialism
Utilitarianism: the moral worth of an action is determined solely by its utility
in providing happiness or pleasure as summed among all people. It is a form
of consequentialism.
Consequentialism is based on the concept that the moral worth of an action
is determined by its outcome. And that the consequences of one's conduct are
the true basis for any judgment about the morality of such conduct. Thus, from
a consequentialist standpoint, a morally right act, or failure to act, is one that
will produce a good outcome, or consequence. This view may also be
expressed as "The ends justify the means".
Look to consequences of all stakeholders.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
Deontology
Deontological moral systems are characterized by a focus upon
adherence to independent moral rules or duties that are typically religious
in nature. An action may be proper even if it does not produce a net
balance of a greater good for society or the decision maker.
To make the correct moral choices, we have to understand what our
moral duties are and what correct rules exist to regulate those duties.
When we follow our duty, we are behaving morally. When we fail to follow
our duty, we are behaving immorally.
Perhaps the most significant thing to understand about deontological
moral systems is that their moral principles are completely separated
from any consequences which following those principles might have.
Thus, if you have a moral duty not to lie, then lying is always wrong —
even if that results in harm to others.
Look to motivation of decision maker rather than the consequences of the
decision.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
Justice & Fairness
Procedural justice is the method in which resources, or benefits and burdens, are
allocated. There are different kinds of justice.
Distributive justice refers to the extent to which society's institutions ensure that benefits
and burdens are distributed among society's members in ways that are fair and just.
Retributive justice refers to the extent to which punishments are fair and just. In general,
punishments are held to be just to the extent that they take into account relevant criteria
such as the seriousness of the crime and the intent of the criminal.
Compensatory justice refers to the extent to which people are fairly compensated for
their injuries by those who have injured them.
Justice usually has been used with reference to a standard of rightness, fairness often
has been used with regard to an ability to judge without reference to one's feelings or
interests.
Fairness means that equals are treated equally and unequal parties are treated in
relation to their relative differences: "Individuals should be treated the same, unless they
differ in ways that are relevant to the situation in which they are involved.“ Fairness may
be subjective and relative to both society's norms and customs.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
Virtue Ethics
Virtue ethics focuses on whether a person acting is expressing good
character or moral virtues when making a decision.
This ethical approach emphasizes the character of the moral agent, rather
than rules or consequences, as the key element of ethical thinking.
Contrast with other Ethical Theories:
Consequentialism: holds that the consequences of a particular act form the
basis for any valid moral judgment about that action.
Deontology: derives rightness or wrongness from the character of the act itself
rather than the outcomes.
The difference between these three approaches to morality tends to lie more in
the way moral dilemmas are approached than in the moral conclusions
reached.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
Comparison
A consequentialist may argue that lying is wrong because of the negative
consequences produced by lying — though a consequentialist may allow
that certain foreseeable consequences might make lying acceptable.
A deontologist might argue that lying is always wrong, regardless of any
potential "good" that might come from lying.
A virtue ethicist, however, would focus less on lying in any particular
instance and instead consider what a decision to tell a lie or not tell a lie
said about one's character and moral behavior.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
TABLE 3.14
CODE GUIDANCE ALTERNATIVES
AND THE CONTROL/MOTIVATION SIGNALED
GUIDANCE PROVIDED
CONTROL/MOTIVATION SIGNALED
Obey these rules
Imposed Control
Seek advice before acting
Act on your best judgment,
but disclose what you have done
Guiding principles which indicate
“this is what we are and what
we stand for”
SOURCES: Clarkson & Deck, 1992, Clarkson, Deck & Leblanc, 1997.
Self-control
Business Application of Ethics
Credo
Short inspirational statement on key values
Code of Ethics
Deals with ethics principles (short)
Code of Conduct
Deals with principles plus additional examples, etc
Code of Practice
Detailed rules of practice
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
TABLE 3.15
SUBJECTS FOUND IN CODES
Ethical principles – honesty, fairness, compassion, integrity, predictability, responsibility
Respect for stakeholder rights, and duties owed to each stakeholder
Vision, mission, and key policies tied into the above
Ethical decision making frameworks, sniff tests, rules of thumb, and guidance on making
tradeoffs between competing objectives
When to seek counsel, and whom to seek it from
Specific topics found in over 5% of employee, supplier and joint venture codes:
 Bribery/improper payments or influences
 Conflict of interest
 Security of proprietary information
 Receiving gifts
 Discrimination/equal opportunity
 Giving gifts
 Environmental protection
 Sexual harassment
 Antitrust
 Workplace safety
SOURCE
 Political activities
 Community relations
 Confidentiality of personal information
 Human rights
 Employee privacy
 Whistle-blowing and protection programs
 Substance abuse
 Nepotism
 Child labour
: The Conference Board Research Report, Global Corporate Ethics Practices, 1999, 29.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
TABLE 3.18
MECHANISMS FOR COMPLIANCE ENCOURAGEMENT MONITORING,
AND REPORTING WRONGDOING
Compliance encouragement
Awards, bonuses
Inclusion in performance reviews, remuneration decisions, and promotion
Reprimands, suspension, demotion, fines, dismissal
Monitoring
Ethics audit or internal audit procedures
Reviews by legal department
Annual sign-off by all or some employees
Employee surveys
Facilitation of reporting of wrongdoing
Assurance of a fair hearing process
Protection: absolute confidentiality, whistle-blower protection plan
Counselling/information: ombudsperson program, hotline, human resources
Committee oversight assured: ethics committee of board, audit committee
FIGURE 3.2
INTERSECTION OF BUSINESS, LAW, & ETHICS
BUSINESS
1
4
LAW
2
7
6
5
3
ETHICS
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.
MAP OF CORPORATE STAKEHOLDER ACCOUNTABILITY
Shareholders
Activists
Governments
Creditors
Lenders
Employees
Corporation
Customers
Suppliers
Others, including the Media,
who can be affected by or who can
affect the achievement of the
corporation’s objectives
Accounting ethics is primarily a field of applied ethics and the study of
moral values and judgments as they apply to the practice of
accounting. It is an example of professional ethics.
Just like the professionals in the field of medicine or law, an accounting
professional also needs to strictly adhere to the ethics that have
become a norm in accounting. The people who receive the services of
an accounting professional not only rely on his skill and ability, but
also on his professional integrity. People using the service of
accounting professionals rely on their professional competency to
make decisions and in the process also relies on the ethics followed by
them.
L.J. Brooks, Business & Professional Ethics for Directors, Executives, & Accountants, 3e, Thompson, South-Western, 2004.