Ethics in the Accounting
Classroom:
The Texas Experience
C. William (Bill) Thomas
KPMG/Thomas L. Holton Chair
J.E. Bush Professor of Accounting
Baylor University
Amendment to Public Accountancy Act in
Texas (2004)
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Added to “non-accounting course”
component of Educational
Requirements for certification by July
2005:

“3 passing semester hours be
earned as a result of taking an
approved course in ethics. The
course must be taken at a
recognized educational
institution and should include
ethical reasoning, integrity,
objectivity, independence and
other core values.”
Texas now one of five states to require
ethics education of CPA candidates
NASBA proposal in 2007

3 hour class or equivalent
Current Status of Ethics Education in
Accounting Nationally
States requiring ≥ 3 hour class
4
States requiring 3 hour class or
equivalent
1
States including ethics in list of
permitted courses under “related
business subjects”
8
States and territories requiring or
permitting no formal ethics course
43
States with some form of ethics CPE
requirement
10
States with ethics exam requirement
for licensure
24(AICPA)
10 (other)
Some thoughts and propositions…
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In Texas and other states, millions of dollars in
resources have been spent to add ethics to
business and accounting curricula.
Even if we change the focus of ethics education,
will it be effective in preventing moral failures in
business in the future?
After 5 years, there are some hopeful signs…
What’s happened in Texas
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Public Accountancy Act changed in 2003
Committee of State Board formed to approve
ethics syllabi and instructors
72 courses approved 2004-2006
Additional 37 schools from 2006 to 2010 (not
yet surveyed)
Approval process accompanied by “a
learning curve”
Description of Our Triangulated Case
Study

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Obtained and analyzed syllabi from Texas State
Board of Public Accountancy for schools with
“approved courses” (72) as of February 2006
Sent follow-up survey instrument to instructors
Informal interviews with TSBPA and staff
Purpose: to gather data about
 Course objectives
 Relative weightings given different topical coverage
 Pedagogical approaches that worked
 Instructor perceptions of what worked and what didn’t
 Methods employed to measure student learning
Study of Syllabi

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Time period in which course approved
Type of course model chosen
Course objectives
Topical coverage
Pedagogical methods
Grade determination criteria
What the 72 syllabi tell us
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67% of courses follow “mixed model” (social responsibility,
codes, stakeholder theory, virtues)
26% (mostly outside accounting) follow social responsibility
models (hard to find Board mandated topics)
Decided shift toward mixed model since form was implemented
Most mandatory ethics courses are covered in accounting, rather
than business or A&S curricula
Once required topics are covered, professor dictates content
Pedagogy is more varied than in typical courses
 41% exams
 18% cases
 16% papers and essays
 14% presentations and participation
No emphasis measurement of student learning outside grades
What the syllabi tell us
Topic
Business issues
Moral theories
Acc./Aud.issues
Reasoning/decision making
Codes
Independence
Cheating
Integrity
Objectivity
Ethical failures
Social issues
Enforcement
Organizational influences
Frequency (%)
49 (83%)
48 (81%)
40 (68%)
40 (68%)*
34 (57%)*
29 (49%)*
28 (48%)
27 (46%)*
27 (46%)*
25 (42%)
24 (41%)
16 (27%)
11 (19%)
* Required by Texas State Board
Inclusions from some creative syllabi
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The history of accountancy profession
Ethical conflicts of famous persons in history
Ethical failures
Ethics journal (in search of personal ethics)
Personal ethical dilemmas
Lessons from cinema (Wall Street, Jerry
Maguire, Rogue Trader, Boiler Room, etc.)
Survey Instrument
http://www.baylor.edu/business/surveys/index.php?id=25223
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Formal and informal instructor training
Enthusiasm and motivation for course
Appropriateness of Rule 511.58 (specificity)
Relative importance of various topics
Best texts and other materials
Most effective pedagogies and learning activities
Is ethics course for accountants a good idea?
What department should cover ethics for accountants?
Measurement methods for student learning
Improvement of student decision making ability
Probability course will prevent future unethical conduct
Formal training of instructor
No
6 hours or
response or less
none
6-12 hours
Greater than
12 hours
26
(39%)
11
(16%)
10
(15%)
20
(30%)
CPE Training of Instructor
No
10 or fewer
response or hours
zero
10->40
hours
32
(48%)
22
(33%)
13
(19%)
Instructor enthusiasm and motivation
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High enthusiasm (8.4/10)
Mostly volunteered (76%)
Were requirements of Rule 511.58
appropriate?
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40 of 67 persons responded
Mean response
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4.9/7.0 for new instructors
5.7/7.0 for experienced (>1 time) instructors
Some open-ended responses
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Sufficiently flexible to fit needs and preferences
Includes appropriate general and specific
principles
Too vague; hardly enforceable
Perceived importance of topics
(1= unnecessary; 10 = absolutely mandatory)
Mean
Min
Max
StdDev
Integrity
9.35
7
10
1.54
Honesty
9.33
5
10
1.59
Ethical reasoning
9.18
5
10
1.29
Choices under
pressure
9.09
5
10
1.38
Independence
9.06
6
10
1.74
Objectivity
8.95
5
10
1.64
Impartiality
8.71
4
10
1.44
Codes
8.68
2
10
1.77
Moral examplars
8.34
4
10
2.03
What pedagogies work best?
(0 = not effective; 5 = extremely effective)
Mean
Min
Max
Std Dev
Group case
4.16
2
5
1.39
Individual
case
3.97
1
5
1.23
Team
presentation
3.73
1
5
1.60
Lectures
3.59
1
5
1.08
Debates
3.51
1
5
1.62
Guests
3.28
1
5
1.60
Role plays
2.49
1
5
1.63
Is a separate ethics class for accounting
majors a good idea?
Percent
Strongly agree or
agree
Neutral
64.1
Disagree or
strongly disagree
16.5
19.4
Probability that your course will prevent
future unethical conduct?
76% of respondents feel there is less than
a 60% chance of course preventing future
unethical conduct.
What is the best way to cover ethics?
(separate course or integrated throughout curriculum)
Frequency
Percent
Both separate
and integrated
40
59.7
Integration
6
9.0
Separate course
15
22.3
Other
2
3.0
No response
4
6.0
What department should cover ethics?
Frequency
Percent
Accounting
38
56.7
General business
18
26.9
None of the above
4
6.0
Philosophy
0
0
No response
7
10.4
Comments on who should teach ethics
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“If accounting profs don’t think they can teach
ethics, all detractors will point and say,
‘indeed they have no moral compass to pass
on to anyone.’”
“Though the faculty member need not be an
accountant, being housed in the department
sends a message that this work is too
important to send somewhere else.”
How did students’ ethical decision making
change?
Frequency
Percent
No change
3
4.5
Slight improvement
32
47.8
Significant
improvement
18
26.8
No response
14
20.9
How satisfied are you as to your
assessment technique(s)? (0-10 scale)
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17 (25.4%) failed to answer
Mean = 5.3
Mode = 5
Median = 5.5
Std. Dev. = 3.06
Biggest challenges?
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Striking balance between philosophical and
professional dimensions of ethics
Developing materials and determination of topics
Keeping course focused on issues rather than rules
Problems of backgrounds and interests when mixing
accounting with other business students
Moral relativistic attitudes of students
Will the importance of ethics really sink in?
Biggest rewards?
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Students personal growth
Students grasp of ethical issues
Students favorable responses
Suggestions?
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Be convinced yourself that ethics is important
and that your course can make a difference.
Relax, have fun and be creative in class.
Do your homework! Prepare!
Get ready for a lot of work.
Don’t get bogged down in theory. Use lots of
applications.
Run for your life if anyone asks you to teach
it!
Preliminary conclusions
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Teaching ethics to accountants is probably a good idea, BUT
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Those who teach it need more and better training
Teaching ethics correctly will involve resource issues
Perhaps we should
 develop model curriculum
 Decide what to cover and why?
 Decide who should teach it?
 Decide how to measure effectiveness?
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The most creative inputs may not translate to better outcomes
“You can’t improve what you can’t measure”
Impact of ethics education in Texas?

It must be remembered that mandatory ethics
education has taken two forms:

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Required ethics education for new candidates
Double the CPE ethics education requirement for
licensees

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4 hours mandatory ethics CPE every 2 years
One interesting statistic: administrative and
disciplinary rates (next slide)
Disciplinary and Administrative Rates for Actual Violations
00
63
62002
59822
59464
60459
61026
57840
57471
56500
55616
54697
00
53755
0.024039845
52801
0.01778891
0.016649614
0.015451327
00 0.011268726
0.012388857
0.011132786
0.008523513
0.008659022
0.008467469
0.0078400240.007881886
0.006
0.0011905870.0011700820.0007371980.0011504420.0007134030.0009508990.0011267320.0013707330.0007773860.000753777
0.000530293
0.00043547 0.000
00
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
20
ees
52801
53755
54697
55616
56500
57471
57840
59464
59822
60459
61026
62002
63
e 0.01126873 0.01664961 0.01778891 0.02403984 0.01545133 0.01238886 0.00852351 0.01113279 0.00865902 0.00784002 0.00788189 0.00846747 0.006
0.00053029 0.00119059 0.00117008 0.0007372 0.00115044 0.0007134 0.0009509 0.00112673 0.00137073 0.00077739 0.00075378 0.00043547 0.000
Year
Student perceptions of BU’s ethics course
(0 = strongly disagree; 11 = strongly agree)
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Ability to recognize issues increased (7.74)
Ethical reasoning improved (7.93)
Improved understanding of independence (9.02)
Improved understanding of profession (8.62)
Ability to make better ethical decisions (7.85)
Have framework for making ethical decisions (9.09)
Consider ethics of more decisions (7.96)
Course was positive learning experience (7.41)
Required more effort than worth (7.37)