Synthesizing Wisdom, Intelligence and Creativity in Accounting Ethics
Michael K. Shaub
Texas A&M University
Mays Business School
Department of Accounting
TAMU Box 4353
College Station, TX 77843-4353
(979) 458-1375
mshaub@mays.tamu.edu
February 2010
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Synthesizing Wisdom, Intelligence and Creativity in Accounting Ethics
The purpose of this paper is to describe an approach to ethical decision making in accounting
that is rooted in Sternberg’s (2003b) WICS (Wisdom, Intelligence, and Creativity, Synthesized) model of
leadership. Sternberg argues that creativity is rooted in intelligence, that a certain level of intelligence is
required in order to be creative. However, intelligence is a necessary, but not sufficient, condition for
creativity. In addition, many people who are intelligent are not wise, largely because they do not think
dialogically nor dialectically, and thus they fall prey to the five fallacies of thinking: egocentrism,
omnipotence, omniscience, invulnerability, and unrealistic optimism (Jordan and Sternberg 2006).
Wisdom involves balancing intrapersonal, interpersonal, and extrapersonal interests to achieve a
common good, similar to the tenets of stakeholder theory (Freeman 1984). It requires the ability to
think dialogically, taking into account others’ interests, and dialectically, focusing on long-term effects
and not just short-term outcomes. The paper concludes by describing a creativity-focused approach to
an accounting ethics course that is designed to stimulate the development of students’ wisdom.
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Synthesizing Wisdom, Intelligence and Creativity in Accounting Ethics
The purpose of this paper is to describe an approach to ethical decision making in accounting
that is rooted in Sternberg’s (2003b) WICS (Wisdom, Intelligence, and Creativity Synthesized) model.
Many in the popular press have expressed amazement that intelligent, creative people in business and
in accounting firms have made decisions that have destroyed value for shareholders and short circuited
promising careers. People whose creativity often allowed their companies to reach new heights fell
prey to a type of hubris that doomed them and those who trusted their leadership. The question arises
as to why successful people repeatedly fall into these types of traps in their thinking.
This paper argues that accountants and business leaders have demonstrated a lack of wisdom
that is reflected in consistent decision-making patterns that are often characterized as unethical. At
some point, these decisions are attributed to personal selfishness and character flaws, but the decision
patterns may characterize these leaders long before they are considered to be unethical. In fact,
leaders’ success may make them more vulnerable to these thinking patterns.
Success tends to validate a leader’s thinking, and it may serve to make that leader less willing to
accept others’ counsel, which seems increasingly inferior to their own plans. This leads to failures in
dialogical thinking, or taking into consideration the concerns of others. Also, success creates the
expectation of success, and the attendant performance pressures to continually prove that one is
making good decisions. This tends to shift decision-makers into a short-term focus, short-circuiting
dialectical thinking. Dialectical thinking focuses on long-term outcomes, but the daily pressures in the
business world tend to focus a CEO on quarterly earnings and an audit senior manager on keeping
clients and making partner.
Failures in dialogical and dialectical thinking indicate a lack of wisdom guiding leaders’ decisions,
and they make leaders subject to what Jordan and Sternberg identify as the five fallacies of thinking:
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egocentrism, omnipotence, omniscience, invulnerability, and unrealistic optimism (Jordan and Sternberg
2006). As a result, intelligent, creative individuals who have a history of success find themselves faced
with unprecedented personal and professional failures, and often with no real strategy for overcoming
those failures.
The purpose of this paper is to explain how the synthesis of wisdom, intelligence, and creativity
has the potential to result in higher quality ethical decisions by business leaders and accountants. In
order to accomplish this purpose, the paper is organized as follows. The next section describes research
on intelligence, followed by a section describing some of the important creativity research and the role
of intelligence in creativity. The next section reviews the wisdom literature and the challenges in
measuring and evaluating this elusive construct. This is followed by a discussion of the five fallacies of
thinking, including examples of these fallacies that have occurred in the business world and accounting
profession. Next, the paper seeks to integrate these concepts more fully in the context of Sternberg’s
WICS model by providing a discussion of WICS and ethical reasoning, and offers suggestions as to how
accounting educators and professionals can influence the development of wisdom in young accountants
through creativity in the accounting ethics classroom. The paper concludes with a detailed description
of how creativity was built into an accounting ethics course, including discussing how this creativity has
the potential to enhance the development of students’ wisdom.
Intelligence
Intelligence is fundamental to success in the accounting profession. Besides the obvious
technical knowledge required in order to function in accordance with professional accounting and
auditing standards, access to the profession typically hinges on certain minimum levels of intelligence.
Most entrants to the accounting profession come from undergraduate and graduate accounting
programs that have competitive entrance and continuance requirements. But the intelligence research
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describes a more nuanced understanding of intelligence that goes beyond the measures that tend to
place young people in accounting programs and in entry level positions in the profession.
Sternberg (2003a) differentiates academic intelligence from practical intelligence. Academic
intelligence involves conventional measures of intelligence involving recall and analysis, such as IQ,
while practical intelligence includes environmental adaptability and tacit knowledge gained from
experience. Sternberg goes further to define “successful intelligence” as “. . . the ability to succeed in
life, given one’s conception of success, within one’s sociocultural environment (2003a, 387).”
Sternberg and his colleagues have developed a series of measures designed to measure tacit
knowledge across a variety of environments. While general cognitive ability (often called g) tends to
predict job performance (Ree, Earles and Teachout 1994), Colonia-Willner (1998) found that tacit
knowledge provides incremental explanatory power. In addition, Wagner and Sternberg (1990) found
evidence that tacit knowledge explains significant incremental variance in performance beyond
personality measures.
Creativity and the Role of Intelligence
Sternberg defines creativity as the ability to generate high quality, novel, task-appropriate ideas
(Sternberg 2003a, 391). In Sternberg’s view, creativity is not inherent to the individual, but a choice.
Among other important characteristics, creative people take sensible risks and are able to tolerate
ambiguity. At some level, they defy the crowd, doing what Sternberg calls “buying low and selling high,”
or value investing, in the idea marketplace (Sternberg and Lubart 1995).
Creativity in accounting is not a subject often discussed. When it is discussed, creativity is often
viewed in a negative light, with “creative accounting” referring to varied attempts to manipulate
accounting numbers and disclosures to mislead users or regulators. For example, Andy Fastow’s
development of variable interest entities that allowed Enron to hide debt would be an example of
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counterproductive creativity. But creativity has a potentially important impact in the accounting
profession, particularly among auditors.
Auditing requires the ability to see regular patterns in information, but it also demands the
ability to “think outside the box.” Often auditors are seen as performing the same repetitive,
predictable steps. In fact, Statement on Auditing Standards No. 99 (AICPA 2001) requires that auditors
include unpredictable auditing steps in the search for fraud (AICPA 2001, AU 316.50).
One area of the accounting profession that has rewarded creativity is the tax shelter industry.
Accounting firms have developed a number of creative methods over the years to effectively shelter
income by designing vehicles that avoid the statutory requirements. Of course, there has been a
downside to this creativity when these vehicles have failed to meet the standards of having a legitimate
business purpose, most notably in KPMG’s $456 million settlement to avoid criminal prosecution for
advising clients into four specific tax shelters (Sloan 2005).
But creativity can be used in doing the right thing as well. For example, accountants can be
trained to thwart fraud and unethical behavior, to get in the way and make it awkward for others to do
wrong. An argument can be made that creative leadership has been lacking in CPA firms, that despite
the rollout of web sites and programs each year, the work-life issues of public accounting are
fundamentally no different than they have been for the last four decades.
Creativity is critical to the success of a public accounting firm. If Sternberg’s definition of
creativity is adopted, auditors, tax accountants, and consultants must seek to develop high quality,
novel, and task appropriate ideas to serve their clients. If these CPAs are successfully intelligent, these
solutions will satisfy clients within the constraints of the law. If they are wise, the CPAs will consider the
long-term impacts of their decisions on a variety of stakeholders, and they will take into account the
common good.
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Auditors, then, will seek to perform their audits in such a way that they will reach the correct
conclusion about financial statement presentation as efficiently as possible. Tax accountants will seek to
minimize clients’ tax liabilities over the long haul, giving consideration to the company’s short-term cash
flow needs, while complying with the letter and the spirit of the statutes. Consultants will seek to add
the greatest value possible to clients’ operations either by infusing efficiencies in systems or detecting
and fixing correctable weaknesses.
Consultants and tax accountants have been more successful in coming up with novel ideas than
auditors, but not all of the novel ideas have been task appropriate (e. g., the KPMG tax shelters). While
auditors have leveraged technology to become more efficient, novel approaches to auditing have been
rare in recent decades.
Wisdom
The attempt to understand wisdom has been approached philosophically and psychologically
(Sternberg 2003a). Examples of philosophical approaches include those of Aristotle and Plato, with the
latter’s dialogues providing a three-fold concept of wisdom (Robinson 1990):
. . . as (a) sophia, which is found in a contemplative life in search of truth; (b) phronesis, which is
the kind of practical wisdom shown by statesmen and legislators; and (c) episteme, which is
found in those who understand things from a scientific point of view (Sternberg 2003a, 394).
The accounting profession can address all three of these, with sophia a likely approach to an accounting
ethics course, phronesis demonstrated in accounting practice, and episteme potentially contributed
through accounting ethics research.
Sternberg argues that creativity is rooted in intelligence, that a certain level of intelligence is
required in order to be creative. However, intelligence is a necessary, but not sufficient, condition for
creativity. In addition, many people who are intelligent are not wise, largely because they do not think
dialogically nor dialectically, and thus they fall prey to the five fallacies of thinking: egocentrism,
omnipotence, omniscience, invulnerability, and unrealistic optimism (Jordan and Sternberg 2006).
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Wisdom involves balancing intrapersonal, interpersonal, and extrapersonal interests to achieve a
common good, similar to the tenets of stakeholder theory (Freeman 1984). It requires the ability to
think dialogically, taking into account others’ interests and viewpoints, and dialectically, focusing on
long-term effects and not just short-term outcomes.
The Five Fallacies of Thinking
Jordan and Sternberg (2006) identify the five fallacies of thinking as egocentrism, omnipotence,
omniscience, invulnerability, and unrealistic optimism. These fallacies seem to arise out of a focus on
self-interested behavior, behavior which is considered normative under the dominant moral theory
taught in business schools, agency theory (Jensen and Meckling 1976, 1994). On the other hand,
Sternberg (2002) claims that purely self-interested behavior lacks wisdom.
This is an interesting contradiction, and one that is not often explicitly discussed in accounting
research. Jensen and Meckling (1994) argue that people should engage in self-interested behavior, and
that it is irrational to do otherwise. While Adam Smith saw self-interested behavior as descriptive, it
cannot readily be said that he endorsed it as normative. In fact, in The Theory of Moral Sentiments
Smith explicitly stated, “The wise and virtuous man is at all times willing that his own private interest
should be sacrificed to the public interest of his own particular order or society (1966, 346).” This is
consistent with Sternberg’s (2003b) definition of wisdom as involving dialogical thinking, taking into
account others’ interests rather than being purely self-interested.
Falling prey to the five fallacies of thinking leads to foolish choices (Sternberg 2006), what Shaub
and Fisher (2008) refer to as “stupid” behavior. Not recognizing one’s limitations is fundamental to
succumbing to these fallacies.
Egocentrism means that a person thinks only of himself, ignoring the rights and interests of
others. Though normative under agency theory (Jensen and Meckling 1976), an exclusive focus on selfinterest exposes the self-interested person to consequences that might not be anticipated. This is in
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part because the focus on self-interest as rational (and, by implication, on considering others’ interests
as irrational) has reclassified agency theory as a normative approach to ethical decision-making rather
than a positive or descriptive approach. Ghoshal (2005, 81-82) claims that the reason that agency
theory continues to dominate the business school landscape is because it can be “elegantly modeled,”
even though the evidence from a long series of studies does not support its implications for the effects
of independent directors, CEO/chair role separation, and stock options on corporate governance.
Omnipotence is the sense that one can control all circumstances, including random events. This
fallacy evidences itself in many financial risks taken that seem, in retrospect, inexplicable. Andy Fastow
exuded this characteristic in the movie Smartest Guys in the Room when he was making a presentation
to Merrill Lynch regarding Enron’s special purpose entities. His response to one Merrill Lynch
representative’s comment that they were having difficulty picking holes in his presentation was simply,
“Good,” accompanied by a knowing smile.
Omniscience is the belief that one understands everything there is to know about a matter, or
that one understands more than others and need not take into account their perspectives. For example
in the KPMG tax shelter case, partners were deliberating whether to adopt the aggressive tax shelters
and market them to clients because of their uncertain status under IRS regulations. One partner’s email was explicit about the consequentialist calculation driving the decision:
First the financial exposure to the Firm is minimal. Based upon our analysis of the applicable
penalty sections, we conclude that the penalties would be no greater than $14,000 per
$100,000 in KPMG fees. Furthermore, as the size of the deal increases, our exposure to the
penalties decreases as a percentage of our fees. For example, our average deal would result in
KPMG fees of $360,000 with a maximum penalty exposure of only $31,000.
This further assumes that KPMG would bear 100 percent of the penalty. In fact, as explained in
the attached memo, the penalty is joint and several with respect to anyone involved in the
product who was required to register (pbs.org 2004).
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These types of memos, which are increasingly common with the prevalence of e-mail and text
messaging, underestimate the visceral response readers have in retrospect to ethical calculations. This
response is one of the omitted variables in some people’s ethical calculations.
This omniscience also seems to reflect itself in the rise of the influence of “quants” in the
financial markets, those few with the higher knowledge to understand certain complex transactions. As
a recent Economist article indicated, the occurrence of “black swans” (extreme events) in financial
markets is much more frequent that would be predicted by standard probability models. But the
“hubris of spurious precision” demonstrated by these quants led to inappropriate risk-taking and its
attendant problems (Valencia 2010).
Invulnerability is a sense that one will never get caught or be harmed from behavior choices. It
can arise from the overconfidence that accompanies a string of successes, or it can simply result from
poor estimates brought on by the natural delay between an event’s commission and its detection,
especially when that event is unique or new. Invulnerability may also be tied to a sense of omniscience,
as it apparently was in the KPMG case.
So why would savvy professionals (five of the indicted former KPMGers are lawyers), knowing
they were skating close to the line, write such damaging stuff? New York Law School professor
Tanina Rostain, who has studied KPMG's shelter business, chalks it up to a sense of
"invincibility" that was part of the culture. "They just thought they were smarter than the IRS
and would never get caught," she says. (Novack 2005)
Unrealistic optimism evidences a less sinister type of folly than the other four fallacies, but it
arises from the same type of thinking. Certainly creativity can readily lead to unrealistic optimism, since
creativity requires a willingness to buck the system in order to put forth a novel idea. Successful
intelligence is important for the creative person to determine whether the novel idea is task
appropriate, whether it will accomplish the idea generator’s goals within societal constraints. But
unrealistic optimism is much harder to criticize than are the other four fallacies.
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Wisdom, Intelligence, and Creativity Synthesized in Ethical Reasoning
Members of the accounting profession do not seem, in general, to lack the intelligence
necessary for creativity. However, accounting education and early career development courses in the
accounting profession are not aimed at developing young accountants’ creativity. One opportunity that
accounting educators have to develop students’ creativity is through an accounting ethics course. This
course, unlike many accounting courses, relies less on expert knowledge and more on creativity and
wisdom to solve problems and make decisions.
Ethics training and preparation provides the opportunity to add the creativity and wisdom that
potentially lead to better professional decisions. Figure 1 provides a picture of how this might take
place. The model in Figure 1 is based on Rest’s (1986) Four-Component Framework for ethical decisionmaking, but recognizes that for professional ethical decisions the accounting profession provides an
explicit opportunity through accounting ethics education to prepare its members for this decision
process.
Insert Figure 1 about here
This creates five components: professional ethical education, professional ethical sensitivity,
professional ethical judgment, professional ethical intention, and professional ethical behavior. In the
interest of simplicity, the components of the model will be discussed largely in the context of auditors’
decision-making, but the model is equally applicable to professional ethical decision-making in other
roles within the accounting profession.
Professional Ethical Education. An ethics course can help students to add the creativity and
wisdom to their professional knowledge and intelligence that allows them to avoid the five fallacies of
thinking, and to develop the moral courage to engage in ethical behavior. CPAs in the United States are
required to develop the technical training and proficiency to carry out their professional roles. Technical
competence is as important to acting ethically as is integrity; an honest, incompetent accountant still
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acts unethically by misrepresenting the quality of service performed. This technical competence is
developed throughout the accounting curriculum, and generally an auditing course is helpful in
understanding ethical requirements under a code of professional conduct like that of the American
Institute of Certified Public Accountants (AICPA 2010).
However, the ethics course allows the opportunity to develop accounting students’ dialogical
and dialectical thinking. Dialogical thinking can be encouraged by bringing to light the public interest
effects of ethical decisions in cases. Dialectical thinking is perhaps best communicated through studying
historic frauds and ethics failures to demonstrate the impact of these events on others over time. For
example, studying the Enron fraud allows accounting students to understand the impact on
shareholders, long-time employees who lost pensions and jobs, and other companies in the trading
markets where Enron was a major player. The course can also provide students with exposure to the
five fallacies of thinking.
Professional Ethical Sensitivity. More broadly, accounting students can develop their ethical
sensitivity by studying the types of indicators that signal broader ethical problems. Volker (1984) and
Bebeau et al. (1985) provide evidence that professionals’ preoccupation with technical issues can make
them insensitive to the ethical nature of situations. Shaub, Finn and Munter (1993) found significant
variance in auditors’ ability to recognize ethical situations embedded in a technical, professional context.
In order to increase ethical sensitivity, accounting educators and accounting firms must continue
to develop methods to stimulate young accountants’ intelligence and creativity. Yetmar and Eastman
(2000) imply that better in-house training increases the ethical sensitivity of (then) Big Six tax
practitioners compared to those in smaller firms.
Professional Ethical Judgment. Ethical reasoning has been studied extensively with accounting
students and accountants, with the focus of much of the work centered around Kohlberg’s (1976) Moral
Judgment Interview and Rest’s (1979) Defining Issues Test. Early work in accounting included studies by
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Armstrong (1987), Ponemon (1990, 1992), and Shaub (1994), and progressed through Thorne’s (2000)
development of the Accounting Ethical Dilemma Instrument to parallel Rest’s measure. The cognitive
moral development theory at the heart of most of this work is consistent with the concept that a certain
level of intelligence is necessary in order to develop the creativity necessary to make wise ethical
decisions. In contrast, some cultural views of what constitutes wisdom focus on life experience, rather
than inherent intelligence or education. As stated earlier, even if intelligence is a necessary condition
for wisdom, it is not sufficient.
Professional Ethical Intention. Auditors who reach a judgment about proposing an adjustment or
confronting a client still must have the moral courage to do what is right. Shaub and Lawrence (2002)
found that auditors who were less idealistic, believing that doing the right thing would not lead to the
best outcomes, were less likely to do further testing or confront a client when they were skeptical. They
suggest the importance of “training, reinforcement, mentoring, and peer oversight (2002, 167)” to
encourage auditors to act on their professional skepticism.
Professional Ethical Behavior. The ultimate measure, of course, is the accountant’s actual
behavior. The goal of implementing the WICS model in the ethics classroom and in the professional
accounting environment is to empower accountants to make wise choices that reflect both dialogical
and dialectical thinking, taking into account the effects over time on specific others, and on the common
good.
Developing Wisdom in Young Accountants
Rachels (1986) views morality as requiring reason and impartiality at a minimum. Specifically,
he states that
. . . morality is, at the very least, the effort to guide one’s conduct by reason—that is, to do what
there are the best reasons for doing—while giving equal weight to the interests of each
individual who will be affected by one’s conduct (Rachels 1986, 11).
In other words, morality requires reasoning ability and takes into account others’ interests.
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Sternberg would agree. Since academic intelligence is inherent to the individual, it seems best
to focus our efforts on developing practical intelligence. Perhaps the accounting classroom, particularly
the ethics classroom, can focus on the environmental adaptability that is part of practical intelligence,
while student internship experiences can be used to begin the process of gaining tacit knowledge.
Professors can only pass on experiences in a limited way; practical intelligence requires that students be
embedded in experiential environments. The ethics classroom may also provide practical opportunities
as to how academic intelligence and practical intelligence can become the successful intelligence that
will pay dividends in the professional environment. But it will require the practical experiences of a
career to solidify this quality in students.
In many ways, developing creativity in young accountants may be one of the biggest challenges
in helping them develop wisdom. The self-selection process that attracts students to accounting may
tend to exclude some of the more creative students. Success in tasks like rote memory is rewarded in
most accounting programs, and even the CPA exam in the United States requires a significant level of
academic intelligence and the ability to remember facts. This is true even subsequent to the
restructuring of the exam to insure that it tests a broader set of skills.
Creativity in the Accounting Classroom
The accounting ethics classroom is a unique opportunity to develop students’ creativity, because
this class has few of the constraints tied to CPA exam preparation that are inherent to most accounting
courses. Creativity involves the development of high quality, novel, and task-appropriate ideas.
Through the use of cases, a professor can readily demonstrate the quality of an idea that has been used
in the past, allowing students to see repeated examples of cause and effect. Teaching students to think
in novel ways is more difficult, but the accounting ethics classroom is a reasonable place to encourage
this habit. For example, when students are encountering the aftermath of a disastrous ethical decision,
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almost any idea or approach would have been better than the one chosen, which provides permission
for students to consider atypical solutions.
Bonk and Smith (1998) provide helpful ideas and resources promoting the use of creative and
critical thinking in the accounting classroom. This section will describe their suggestions and illustrate
how I have adopted some of them into the accounting ethics course in an attempt to stimulate the type
of creativity that can lead to wisdom.
Bonk and Smith (1998) seek to stimulate creative and critical thinking in accounting education.
Creative thinking, as described before, is the ability to generate high-quality, novel, and task-appropriate
ideas (Sternberg 2003a, 391). According to Bonk and Smith (1998, 264), “Critical thinking is the ability
to make sound judgments in complex, real-world situations, based on available evidence and a clearly
worked out value system (Kurfiss 1988).”
Bonk and Smith provide a suggested list of creative thinking techniques (1998, 270) and critical
thinking techniques (1998, 276) that can be used in the accounting classroom. These are summarized in
Table 1. The consultative instructor has the opportunity to stimulate creative thinking, and then to help
students employ that creativity by more effectively implementing the critical thinking skills that they
learn across the accounting curriculum. Accounting curricula are designed to more naturally prepare
students to develop critical thinking skills through various forms of analysis and the habit of evaluating
alternatives. However, examples of accounting courses developing students’ creative thinking are
harder to come by.
Insert Table 1 about here
Bonk and Smith argue for accounting faculty to seek opportunities to incorporate a more
consultative style encouraging students’ active involvement in the learning process rather than a
traditional style. They see this as more than simply a change in teaching methods; “. . . it is driven by a
philosophical belief that students actively construct knowledge while teachers facilitate this process
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(1998, 286).” They lament that accounting education reforms have been restrained by a continuing
focus on assessment and certification.
The accounting ethics course is strategic in bringing together the issues of technical preparation
and professional responsibility. It also provides a unique opportunity for adapting a consultative style.
The course material is less constrained by the accreditation and certification issues that influence other
courses, even when course syllabi have to be approved by a state board of public accountancy.
A Strategy for Enhancing Creativity in the Accounting Ethics Classroom
The professor’s intervention seems important in stimulating creative and critical thinking in the
classroom. Designing cooperative learning activities may arise out of a professor’s creativity or out of
necessity. For me, it was the latter. Living with the constraints of trying to teach accounting ethics to
182 students in a six-week condensed course, small groups were a necessity. What I discovered is that
these groups became a golden opportunity for teaching ethical accountability, something that
historically has been very hard to communicate or attempt to inculcate.
The accounting ethics course in our professional program was historically taught to an even
larger section, and its focus was on covering fundamental professional ethics material, mixed with a
variety of guest speakers and experts. Interaction, for the most part, was limited to feedback to
speakers’ questions using electronic responders.
The course was moved into the internship semester and condensed into a six-week period,
providing a series of challenges and opportunities. Two sections were created, one for those students
who were gone early in the spring semester on audit internships, and one for those tax interns who
were employed later in the semester. My responsibility was to teach the audit interns, along with
perhaps 20-30 other students who chose to take the course either as undergraduate accounting majors
or as an elective.
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While a complete course description is beyond the scope of this paper, it seems instructive to
describe the results of incorporating several efforts at stimulating creative and critical thinking in the
course. Bonk and Smith describe creative thinking as “original and appropriate to the problem’s context
(Bonk and Smith, 1998, 264),” consistent with Sternberg’s creativity definition. Torrance (1972)
indicates that creativity is reflected in fluency (number of ideas), flexibility (categories of ideas),
originality, and elaboration (extent of detail provided) (Bonk and Smith 1998, 264). Creative thinking
results in many potential solutions, while critical thinking develops a best solution. Below are some
suggestions for stimulating creative and critical thinking in the accounting ethics classroom, divided into
what I did in the classroom, what I am currently attempting to implement, and ideas that could readily
be implemented.
What I Did (Spring 2009)
Freedom to choose source materials. Those creative ideas that arise out of necessity tend to be
aimed at problem-solving. One of the difficult decisions any professor has in an ethics course is
determining what readings should be required. In the spring of 2009, I made a conscious decision to
create an atmosphere of freedom, giving my students almost complete discretion about what their
outside reading would be for the course. Students were required to report the time they spent reading
each week, but the only constraint on the source was that it had to have ethical content. As one might
imagine, this led to a great diversity of reading material. Students were also permitted to change their
ethics readings during the course of the semester, as long as they reported that change to me. Often
students changed their readings from hearing what other class members were learning from their
readings.
Ethical leadership. Prior to the course, I contacted the students who were on their audit
internships and asked for volunteers to serve as ethics accountability group (EAG) leaders. Because I
planned to use groups of four, I needed 46 volunteers to serve in this role. I was encouraged to find that
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I actually had more volunteers than I needed, even though I was deliberately vague about what the
expectations would be. I offered very little reward for serving in the role other than the experience that
it would provide. I selected several of the capable leaders to serve as course facilitators, who were
particularly helpful in accumulating ideas from the small groups to contribute to the large class
discussions.
Ethical accountability. As mentioned above, I have historically found it difficult to effectively
communicate the importance of ethical accountability to my students. Most ethics decisions in
accounting are made at an individual or small group level. For example, young auditors typically have to
make ethical choices in consultation with a senior, manager, trusted friend on the audit staff, or mentor
within the firm. Encouraging students to trust others enough to discuss ethical issues with them before
they make important decisions has been a challenge.
So students were assigned to ethics accountability groups (EAGs) at the beginning of the course.
Because the course was taught in a large auditorium style classroom, the students within a group were
encouraged to sit close to one another to facilitate in-class discussions. From the outset of the course,
students reported attendance daily and outside reading hours weekly to the ethics accountability group
leader. This served to reduce the anonymity that is typical of a large class; every absent student was
missed because that person’s absence reduced the richness of small group discussions.
Weekly Ethics Reading Summary. On Mondays, students brought a hard copy 300-word
summary of what they had learned from their outside ethics reading the prior week. Meeting in their
EAGs, the students read each other’s summaries and annotated them with written comments in the
margins. These annotated reading summaries were then handed in. I was impressed by the significance
of the interaction that these comments reflected, with many of the groups representing a wide diversity
of viewpoints. It was also very interesting to see group members learning from one another and, as
mentioned above, often shifting their ethics readings based on insights gleaned from reading group
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members’ summaries. This is an example of the summing up (critical thinking technique number 4)
recommended by Bonk and Smith (1998) in Table 1. In fact, according to Bonk and Smith (1998, 278):
As recent progress in learning theory indicates (Bruer, 1993) a few additional minutes allocated
to sharing one’s summary and receiving peer or class feedback can further enhance these
knowledge gains.
Ethics Coffees. Once or twice a week I would meet any students who were interested at a coffee
shop for informal ethics discussions. Having never done anything like this before, I was uncertain who
would show up and where discussions might go. Typically, five to twenty students would show up, and
the discussions were wide ranging, covering everything from moral philosophy to practical career
matters. It did provide an additional opportunity to personalize the large classroom setting without a
large investment by the instructor.
Ethics B-Movie. In retrospect, this appears even to me to be a little crazy. But I tuned into a
1950’s sci-fi movie one night in which the characters continually used ethics terms. So I bought the
movie and scheduled an ethics B-Movie night. (B-Movies were basically the second feature at the
theatres during the 50’s and 60’s, noticeably lower in quality than the primary feature film.) Students
arranged the refreshments, and thirty people showed up.
Ethics Speaker Evaluation Forms. The accounting ethics course has a history of including a
number of outside speakers which, especially in a large classroom, may lead to a relatively passive
learning style. As an alternative to that approach, students evaluated guest speakers using a form
designed around concepts they learned in the early part of the course (see Table 2). Much as auditors
are required to do with clients, students were required to evaluate the types of assertions that the
speaker made and categorize them according to the type of ethical theory and the stage of ethical
decision-making (Rest 1986). They were also required to assess the persuasive quality of the assertions
made and to identify when the assertions were largely unsupported. These forms are an example of the
19
reviews (item 4) and guided questioning (item 5) suggested by Bonk and Smith (1998) as critical thinking
techniques in Table 1.
Insert Table 2 about here
Ethics Kudos. Ethics kudos forms were made available to students. They were asked to indicate
on the forms when they noticed something positive happening in the class, allowing me to receive
better input from students on the quality of EAG discussions and the influence that students had on
each other. This was also an opportunity to provide students with positive reinforcement when they
noticed something good happening ethically, rather than simply focusing the course on criticizing ethical
failings.
Group Presentation. Every EAG was required to develop some sort of presentation, role playing
scenario, video or other similar project. The only instructions given were as follows: “This presentation
must be relevant to this course, but it may be as creative as you would like it to be.” As the reader
might imagine, they were, indeed, very creative. Bonk and Smith (1998) and Davis (1992) suggest that
“creative dramatics” can be useful as a creative thinking technique.
Capstone Project. The individual capstone project involved developing and justifying ten or
fewer principles to guide the student’s professional life. This is consistent with Kurfiss’s (1988) idea that
critical thinking requires a “clearly worked out value system.” Most of these students had an internship
experience prior to the course, so they had some framework within which to develop these principles. It
was rewarding to see how many of the students actually adopted principles that arose out of the
readings of others in the EAGs, but were impactful enough that they adopted them.
The very significant result of these modest attempts at creativity was the pleasure of watching
the development of ethical leaders in the classroom setting, as well as the assumption of individual
responsibility and personal accountability by a number of students. I observed substantial evidence of
critical thinking taking place at levels that were not as evident in teaching the auditing course to many of
20
the same students in the prior semester. Attendance was never an issue during the course; instead, I
sensed a different expectation from students, that they might well encounter something new that day in
the classroom. Of course, these are subjective evaluations, and there is no assurance of permanent
effects. But the questions asked, and addressed, were different in nature from those that I have seen
among accounting students during the bulk of my career.
What I Will Do (Spring 2010)
The next iteration of the accounting ethics course will likely include several new attempts at
creativity and at stimulating students’ critical thinking. While the focus of the second time through the
course will be to solidify and streamline the creative processes described above, I hope to incorporate
additional features aimed at the ultimate goal of synthesizing wisdom, intelligence, and creativity in
these accounting students.
Ethics Blog. In February of 2010 I began an ethics blog, and students this spring will be expected
to comment on topics discussed in the blog as part of ongoing discussion in the course. These will be
similar to the “minute papers” (item 5) or critiques/rebuttals/replies/rejoinders (item 6) suggested by
Bonk and Smith as critical thinking techniques in Table 1. The issues covered in the blog will be wideranging and not simply limited to business and accounting, allowing students to think through how
different approaches to ethical decision-making impact all areas of life. This exercise could be combined
with a creative thinking approach such as assigning thinking roles and having students comment from a
particular point of view (item 6 in creative thinking techniques in Table 1).
Free Writing or Wet-inking. This approach is different from most writing assignments in
accounting courses. I am considering allowing time on certain days to write for three to five minutes on
a topic of the day without lifting pen from paper. The purpose is to get students to write down ideas
immediately as they arise rather than having them pause to reflect as they normally would. However,
this would be countercultural to the course, since one of the major course goals is a habit of reflective
21
thinking. This free writing is the approach suggested by item 4 under creative thinking techniques in
Table 1.
What Could Readily Be Done
There is so much more that could be done in the accounting ethics course to stimulate the
creative and critical thinking of students. Some of these suggestions are easily implemented, while
others may be more time consuming for the instructor.
Assigning Thinking Roles and Six Hats. Though I am likely to adopt this method (creative thinking
technique number 6) in a limited form in the class occasionally, it would be quite reasonable to identify
“six hats,” one of which each student could be assigned to wear when commenting on ethical issues.
These could then be rotated in the course of the semester. For example, an instructor might assign the
hats of ethical egoist, utilitarian, virtues-driven person, duty-driven person, regulator, and shareholder.
Janusian Thinking. This type of thinking (creative thinking technique number 8) holds opposites
in juxtaposition. This can be done in the classroom by having students take and justify opposing
positions on issues like insider trading or corporate social responsibility. I have used this general
approach in the past in discussing shareholder theory (Friedman 1970) vs. stakeholder theory (Freeman
1984).
“What-If” Scenarios. An ethics class is a logical place to include the use of “what-if” scenarios
(creative thinking technique number 9). For example, using ethics accountability groups, students could
be given a hypothetical situation where one of the members (or an additional unseen member) is found
to have engaged in unethical behavior. The group is then required to design the most effective
intervention into the situation and to consider the possible outcomes. This can be enriched by the
instructor introducing additional facts or outcomes depending on the solution chosen by each group,
allowing them to grapple in real time with perhaps unexpected implications of their decisions.
22
Plus, Minus, Interesting. This relatively straightforward approach (critical thinking technique
number 2) can be helpful for students in writing assignments (de Bono 1994). The instructor encourages
the students to actively think about the strengths, weaknesses, and unusual considerations involved in a
plan of action, such as implementing a forensic approach to auditing at least some accounts of all audit
clients. This may help students develop dialogical reasoning by thinking more broadly about how
situations are viewed by others and how others are impacted by decisions.
My conclusion is that virtually any accounting professor can model some level of creativity for
students, and this is likely important to seeing the synthesis proposed by the WICS model. Stimulating
creativity in an ethics course may help students permanently associate creativity with wisdom rather
than with the cleverness that allows them to avoid societal restraints to purely pursue self-interest.
Accounting firms need to provide continuing education situations that model novel thinking for
young accountants as well, building on creativity experiences at the university level. This is important
for auditors detecting misstatements and fraud, for tax accountants designing appropriate solutions for
clients, and for consultants seeking to anticipate and solve client problems.
How Will Stimulating Creativity Lead to Wisdom?
While developing creativity in young accountants may be a useful exercise, the more important
question is, “What about the creativity process in the accounting ethics course will stimulate the
development of wisdom?” There are at least three contributions the accounting ethics course can make
to developing wisdom: emphasizing dialogical thinking, developing dialectical thinking, and sensitizing
students to the five fallacies of thinking.
Dialogical thinking is emphasized in the course through the use of ethics accountability groups.
These groups send the message that what others say matters, that others’ perspectives are important.
This is reinforced through the Monday breakouts to annotate one another’s weekly ethics reading
summaries, reinforced by the larger class discussion of the issues raised in the smaller groups.
23
Students are also provided ample opportunity to develop their dialectical thinking through case
discussions, issues raised by guest speakers, and videos that tell the whole story of a scandal. Hindsight
can be an effective teacher in certain situations, and the outcomes of ethics scandals send strong signals
to people who are naturally short-sighted.
In addition, the course is able to alert students to the fallacies of thinking that prevent the
development of wisdom, reinforcing the dangers of succumbing to them. These fallacies arise primarily
from a focus on self and a lack of humility, an unwillingness to take into account others’ points of view.
The structure of the course is designed to develop listeners—people who are willing to have their
perspectives informed by others.
Thinking dialogically and dialectically, as well as becoming more others-centered and a better
listener, does more than develop young accountants’ wisdom. These characteristics are at the heart of
client service, strategic thinking, and leadership. This process has the potential to develop the types of
leaders for the accounting profession that will assure that it continues to have a significant role in a free
society’s financial markets.
We have seen ample evidence of accountants’ intelligence and creativity focused on unethical
purposes. We have had ICS. What we need is WICS. Implementing creativity in the accounting ethics
course is an opportunity to take a step forward toward achieving that goal.
24
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Figure 1
Five Components of Accountants’ Ethical Decision-Making
Professional
Ethical
Education
Technical training
and proficiency
Exposure to Code
of Conduct
Training in
recognizing the
public interest in
issues (dialogical
thinking)
Creativity and
wisdom added to
intelligence in the
WICS model
Exposure to the
five fallacies of
thinking

Professional
Ethical
Sensitivity
Intelligence and
creativity to
recognize
professional
ethical issues
Mentoring and
continuing
education in
recognition skills

Professional
Ethical
Judgment

Professional
Ethical
Intention

Professional
Ethical
Behavior
Wisdom to reach
the appropriate
professional
ethical judgment
Professional
skepticism as part
of due
professional care
Five fallacies of
thinking impede
the development
of this wisdom
Consider whether
to test more or
confront client
Book an
adjustment to
financial
statements or a
tax return
Qualify an opinion
or refuse to sign a
tax return
Consider whether
to consult with
others
Report finding to
the audit
committee
Consider whether
to report to
outsiders
Report finding to
the SEC
Whistleblow
28
Table 1
Potential Creative and Critical Thinking Techniques
Creative Thinking Techniques
1. Brainstorming
2. Reverse Brainstorming
3. Alternatives-Possibilities-Choices
4. Free Writing or Wet Inking
5. Simulations and Role Plays
6. Assigning Thinking Roles, Role Play, Six Hats
7. Semantic Webbing, Chaining, Mapping, Linking of Ideas, Free Association Exercises
8. Idea-Spurring Questions/Checklists/Cards, Attribute Listing, Janusian Thinking
9. Synectics, Analogies, Metaphors, Forced Associations, What-If/Just Suppose Exercises
10. Checkerboarding or Morphological Synthesis
Critical Thinking Techniques
1. Nominal Group Process (i.e., ranking brainstormed ideas)
2. Plus, Minus, Interesting (PMI), Pros and Cons, Considering All Factors (CAF)
3. K-W-L (What do you know? What do you want to know? What did you learn?)
4. Summing Up: Summaries, Reviews, Index Cards, Abstracts, Outline, Nutshelling
5. Minute Papers, Reflection Logs, Think Sheets, Guided Questioning
6. Critiques, Rebuttals, Replies, Rejoinders
7. Case-Based Reasoning and Problem-Based Learning
8. Pruning the Tree, Twenty Questions, Working Backwards
9. Mock Trials, Structured Controversy, Debates, Examining Both Sides of Argument
10. Graphic Organizers: Flowcharts, Concept Maps, Diagrams, Decision-Making Trees
Adapted from Bonk and Smith (1998: 270, 276)
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Table 2
Ethics Speaker Evaluation Form
Evaluating Ethical Assertions
1. How did the speaker appeal to duties or rules that need to be complied with? What duties or rules?
What was the reason given by the speaker for assuming the duty or complying with the rule?
2. How did the speaker appeal to a consequentialist calculation?
What was the calculation and was it a reasonable estimate? What was left out?
3. How did the speaker appeal to a virtuous character?
What was the reason given by the speaker that this virtue is more important than self-interest?
The speaker focused on (give specific examples):
Ethical Recognition or Sensitivity:
Ethical Judgments:
Ethical Intentions:
Ethical Behavior:
Evaluation
Strongly
Disagree
Strongly
Agree
I found the speaker’s arguments convincing.
1
2
3
4
5
The speaker made many unsupported assertions.
1
2
3
4
5
The speaker’s overwhelming appeal was to (circle one): Duty or Rule
Calculation
Character