Reading 2.2 Normative ethical theories
Normative theories can be classified into two groups – teleological and deontological
theories.
”Ethics” comes from the Greek word ethicos meaning relating to rightness-that is
whether behavior is right or wrong.
A. Teleological Theories – establish principles for determining whether behavior is
right or wrong based on the consequences of behavior – behavior is ‘ethical’ if it
results in desirable consequences to the behavior. The word ‘teleological’ comes
from the Greek telos meaning ‘end’.
Teleological theories has two issues
1. To agree on what is a good or desirable consequences and
2. To agree on whose point of view should be adopted in judging behavior
Four groups of teleological theories of ethical behavior:
a/ Ethical egoism (自我 / 利己主義) – This class of teleological theories is based on a
belief that people should act in a way that maximizes the net benefits of the person
making the decision.
i.
Bentham – Modern Utilitarian philosophy defines ‘good’ as ‘utility’,
which is any source of pleasure, happiness and benefit etc.
ii.
Adam Smith – the pursuit of maximum self-interest and it would lead to
the maximization of society’s interests.
iii.
Restricted egoism – suggests the behavior of individuals seeking to
maximize their self-interest should be constrained by the law and the
conventions of competition and “Fair Play”.
b/ Ethical elitism (精英主義)
c/ Ethical parochialism (狭益主義) – it assumes that ethical behavior should protect
the interests of the individual’s “in-group”.
The in-group could be the individual’s
family, friends, professional associates or cultural group. e. g. Professional codes
of ethics are based on implicit assumption of ethical parochialism.
d/ Ethical universalism suggests that ethical behavior should be concerned with the
good of all human kind and that individual are all equal value. Any behavior that
pursues the interests of an individual or a particular group of individuals at the
expenses of others would be unethical.
John Start Mill – His happiness principle meant that an individual should not act
to maximize personal utility but the utility of the community as a whole. Mill’s
utilitarianism is probably regarded as the most acceptable of the teleological
theories with more attuned to community standards.
B.
Deontological Theories
Deontological Theories – are based on duty and rights and these duties are set
down as rules that must be followed regardless of the circumstances or the
consequences. The word “Deontological “ comes from the Greek “Deon”
meaning ‘duty’.
Duties and rights are central to deontological theories.
Duty and right are two side of a coin. For example, an accountant has a duty to
look after the client’s interest, while the client has a right to the accountant’s
best efforts.
Deontological theories can be classified into several types. We may consider
three in this article.
a.
Theological ethics – Classical theory rely on religion. The rules were
established by God and the rules must be followed are set down in Bible.
b.
Rationalism – Kant’s Judaeo-Christian view of deontology has a major
influence on the development of western moral thinking.
The rule requires that people should not be “used” to achieve an end no
matter how worthy that end may appear to be.
c.
Social contract theory – Thomas Hobbes
A social contract is an unwritten agreement based on custom and
accepted without dissent.
The essential result of a social contract is
that individuals give up certain rights in exchange for benefits received
from other parties to the contract.
C.
The nature of ethical behavior
In the simplest terms, ethical behavior is that which is acceptable to the
community. It is the way in which the community believes, for example, the
accountants are business people ought to behave.
Ethical behavior is, therefore, determined by community standards, beliefs and
expectations. It means that ethical behavior may vary among communities if
the standards, belief and expectations of those communities differ.
Situational ethics (Russell): In a community where family loyalty of paramount
importance, reporting a relative to the police for theft would be unethical. In a
community where family loyalty is less important, failing to report a relative
for theft may be unethical. There may be difference between sub communities.
Judgment for the behavior of accountants
We must identify the “community” by whose standards that behavior is
assessed. There are at least three communities – the courts, the profession and the
general public.
1.
The first ‘community’ to assess the behavior of accountant s is legal system.
The behavior of accountants is assessed against the statute and common law of
the Land.
If accountants are found guilty of illegal behavior, they are
generally also judged by their profession and by the public at large to be
unethical. Although the courts may fail to convict the accountants of illegal
behavior, the public may still convict them of unethical behavior.
2.
The second ‘community’ that judges the behavior of accountants is the
accounting profession, which assesses behavior against a set of rules called a
‘code of ethics’. This code sets down the behavior expected of members of the
profession.
3.
The third ‘community’ that judges the behavior of accountants is the society in
which the accountant works. It includes clients, employers, employees,
investors and the public at large.
D.
Professional codes of ethics
Professional codes of ethics can be classified into two types: first, disciplinary codes,
which set down behavior that will not be tolerated and that results in disciplinary
action; second, aspirational codes, which set down high ideals to which all members
of the profession should aspire.
Code of ethics are favored by professions for two reasons
First, they can be used to pre-empt externally developed regulations usually
imposed by a government agency. Codes of ethics developed by professionals may
result in rules whose application benefits members of the profession. This sort of
ethical parochialism is evident in the Australian Code of Professional Conduct:
Members must conduct themselves in a manner consistent with the good reputation
of their profession and refrain from any conduct which might bring discredit to their
profession.
Second, as the profession can control the disciplining of those who breach the rules,
it can exercise discretion about who is charged and the penalties, if any, that are
imposed.
Code of ethics of the AA Profession
B - Fundamental principles of professional conduct
B1 The Public Interest
It is the core of the Code. It contains the basic requirement for ethical behavior.
B2 to B7 requires “M” to safeguard the interests of their clients and employers.
B2 Integrity
B3 Objectivity
B4 Independence
B5 Technical and Professional standards
B6 Competence and Due care
B7 Ethical Behavior
B – Fundamental principles of professional conduct (Cont’d)
B1 The Public Interest – Member must at all times safeguard the interests of
their clients and employers provided that they do not conflict with the duties
and loyalties owed to the community and its laws.
It has the following implication:
1. it is not an example of restricted egoism as it does not put the welfare of the
accountant as the main objective. It does restrict the pursuit of welfare of
clients and employees with some notion of the public interest in the same way
that restricted egoism is constrained by the public interest.
2. it provides no guidance about what an accountant should do when there is
conflict between the interests of the client or employer and the public.
3. Therefore B1 is uncompromising. It is a breach of the code for an accountant to
continue to look after a client’s or employer’s interest if that behavior is in
‘conflict with the duties and loyalties owed to the community and its law.
B2 Integrity
Rule B2 requires that members must be straightforward, honest and sincere in their
approach to professional work. The Codes does not indicate what is meant by the
phrase. It is probably intended that these qualities should be judged by reference
to contemporary community standards.
B3 Objectivity
Rule B3 requires members to be fair and… not allow prejudice, conflict of interest or
bias to override their objectivity.
The exact meaning of the words ‘objective’ and ‘impartial’ in this context is unclear.
Presumably, these words mean that accountants should not be influenced by factors
other than the facts of the case.
They should not give one set of advice to one
client and a different set to another client in the same circumstances. Their work
should not be influenced by the identity of the client or the consequents of that
advice to themselves or their clients or employer.
or correct’ in all circumstances.
They should do what is “right
B – fundamental principles of professional conduct (Cont’d)
B3 Objectivity – Conflict of interest
A conflict of interest arises for an accountant in public practice if:
1.
Safeguarding the interests of one client may cause harm to another client;
e.g.
A conflict may arise if two clients are negotiating a contract or are in dispute.
or
2.
Safeguarding the interests of a client may cause harm to the accountant.
e.g.
The accountant may believe that the merger is in the best interests of the
client, but may be reluctant to give that advice cause the accountant may lose the
client if the merger occurs.
B4 Independence
It requires that members must be and should be seen to be free of any interest
which might be regarded, whatever its actual effect, as being incompatible with
integrity and objectivity.
B5 Confidentiality
Members must respect the confidentiality of information acquired in the course
of their work and must not disclose any such information to a third party without
specific authority or unless there is a legal or professional duty to disclose it.
B6 Compliance with accounting and auditing standards
B7 Competence and Due care
A member has a continuing duty to maintain professional knowledge and skill at
a level required to ensure that a client or employer receives the advantage of
competent professional service based on up-to-date developments in practice,
legislation and techniques.
Prescriptive models of ethical choice
1. The Langenderfer and Rockness Model – Analysica model
a. Facts of the case
b. Ethical issues in the case
c. Nomrs, principles and values relates
d. Alternative course of action
e. Best course of action consistent with c above
f. Consequences of each possible course of action
g. Decide the course of action
.
2. The Rion Model – it is more of an ethical checklist for decision maker to work
through and it is a practical approach.
3. The Ross Model – firmly grounded in duties and obligations and deontological
framework.
4. The Garrett Model – should consider ethical dimensions of the intentions, and the
means and the ends. Granrett believes the analysis should be concerned only
with foreseen harm and risks.
5. The Gavin and klinefelter Model – separate the environmental influences from
the decision-making processes. They recommend a consideration of aims,
obligations and outcomes of each possible decision.
Benefit and cost of unethical behavior
Cost of unethical behavior is not usually defined as the benefits.
Three types of cost:
1. Conscience-driven costs – feelings of guilt and remorse at having failed to
uphold the ethical standards;
2. Society-imposed cost – penalty from three sources
a. court may impose penalty; b. breach of professional code of ethics and c.
break of social standard; and
3. Loss of freedom of choice – the loss of freedom of choice in future decision
about whether or not to behave unethically.