To be ethical or not to be ethical? – That is the question…

Before understanding the meaning of ethics, we must first consider the underlying principle of morality. Morality is the norms and values that define right and wrong in society or to individuals, whereas ethics is the study of morality, with the aim to produce rules and principles to determine right or wrong in specific situations – giving rise to ‘ethical theories’.

Ethical Theories


This ethical approach implies that there is only one set of moral rules that will always be true. It suggests that the truth in one culture may be imposed as truth in another culture. It is now believed that each culture can have its own truths, but these truths will hold true in all situations.


This approach is the direct opposite to absolutism in that it states that there are many sets of moral rules. These rules change over time, and there are different rules in different societies. Similarly, within the same society, different individuals will hold different beliefs. This approach is much more subjective than absolutism, and provides that what is correct in a given situation depends on the prevailing conditions.

Dogmatic v Pragmatic

The dogmatic approach says there is one truth to be used in all situations (imposing).

The pragmatic approach finds the best answer to a particular moral problem based on the beliefs of the individual (practical).

Kohlberg’s ‘Cognitive Moral Development Theory’

Kohlberg's Cognitive Development Theory

This theory proposed the idea that individuals move from level 1 to 3 as they get older, and that this movement is decided by how the decision is made, not what the decision is about. Research shows that most people tend to be on level 2.

Ethical Decision-making Models

These well established models are used to help make particular decisions based around ethical issues.

American Accounting Association Model: starts with an ethical dilemma and tries to find a conclusion by asking several questions.

  1. What are the facts of the case?
  2. What are the ethical issues in the case?
  3. What are the norms, principles and values related to the case?
  4. What are the alternative courses of action?
  5. What is the best course of action that is consistent with the findings from Q3?
  6. What are the consequences of each possible course of action?
  7. What is the decision?

Tucker’s 5 Question Model: tests ethical decisions and is used after the AAA model. It states the decision should be;

  1. Profitable
  2. Legal
  3. Fair
  4. Right
  5. Sustainable or environmentally sound

Corporate Ethics

This is the application of ethical values to business decisions, and is discretionary as it goes beyond the legal requirements. Details of the company’s ethical policies may be given by a company in their Corporate Social Responsibility Report (if they have one). Corporate ethics may relate to;

  • Employees
  • Customers
  • Shareholders
  • Suppliers
  • Community

Corporate ethical codes are designed to ensure members observe proper standards of professional conduct, and any misconduct or departure from the code will result in disciplinary action.

Generally, a code of ethics will contain the following;

  • Introduction: background, who it applies to, enforcement etc.
  • Fundamental principles: key principles to be followed.
  • Conceptual framework: how the principles are to be applied.
  • Detailed application: examples of specific situations.

An example of a widely used code of ethics is the ACCA Code, which was reissued in January 2015 and has 5 main principles;

  1. Integrity
  2. Objectivity
  3. Professional competence
  4. Confidentiality
  5. Professional behavior

Examples of ethical issues and dilemmas within different departments may include;


  • creative accounting to boost/suppress reported profits
  • directors pay arrangements
  • bribes to facilitate contracts
  • insider trading


  • production of certain products
  • environmental impact
  • animal testing

Sales and Marketing;

  • price fixing and anti-competitive behaviour
  • targeting adverts at children
  • junk or spam emails


  • favouring or discrimination by; race, gender, religion, age, or disability
  • contract of employment
  • safe and healthy working environment

Ethics and Professions

A profession can be defined as ‘a body of theory and knowledge which is used to support the public interest (standards, exam system, guidance notes, experience)’. Professionalism, on the other hand, is the taking of action to support the public interest (expected to contribute to public interest, more of a state of mind). There is no real definition of ‘public interest’, but it refers to the ‘common well being’ of the public.

A profession, as opposed to an occupation, is characterised by the following factors;

  • mastering specialised skills during a period of training
  • governance by a professional association
  • compliance with an ethical code
  • a process of certification before being allowed to practice
  • duty to act in the public interest as well as employer and shareholders interest

Professionals owe an obligation to society above their duty to the client – the International Federation of Accounts (IFAC) Code of Ethics states;

  • a distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.
  • a professional accountants responsibility is not exclusively to satisfy the needs of an individual client or employer.
  • other professions like lawyers may refuse to take a case if it is against the public interest.

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