Lesson 2 1

Lesson 2 : Analyzing Ethical Issues

Lesson 2 2

The Meaning Of An Ethical Issue

Choosing among several ethical or unethical alternatives

Other names : Ethical problem, situation, dilemma or decision

Factors : Conflicts in moral principles, desire for personal gain, dubious personal character, working environment …

A rule of thumb to judge an ethical issue

Lesson 2 3

Examples Of Ethical IssuesFor Professional Accountants

General

For auditors

For financial accountants

For management accountants

For tax consultants

Lesson 2 4

A Simple Framework For Analyzing Ethical Issues

Identifying the ethical issue Identifying the decision-maker Identifying the stakeholders Diagnosing the situation Analyzing your alternatives Picking your choice

Lesson 2 5

Five Major Factors Influencing Individuals’ Ethical Judgement

Moral development of the decision-maker Stakeholders and their influences Decision criteria or approaches used in

assessing various alternatives Standards of behaviour as benchmarks Temptations to rationalize unethical

alternatives

Lesson 2 6

Moral Development Of The Decision-Maker

Kohlberg’s Theory : Six sequential stages Different motivation to follow societal norms

e.g. Stage 1 : Fear of punishment

Stage 6 : Intrinsic satisfaction for being ethical

Individuals of different stages of moral development responding differently to the same ethical dilemma

Lesson 2 7

Five Major Factors Influencing Individuals’ Ethical Judgement

Moral development of the decision-maker Stakeholders and their influences Decision criteria or approaches used in

assessing various alternatives Standards of behaviour as benchmarks Temptations to rationalize unethical

alternatives

Lesson 2 8

Stakeholders And Their Influences

Owning a vested interest or a stake in the ethical decision

Maintaining a two-way relationship with the decision-maker

Stakeholders : Primary versus secondary

Important to “foresee” the influences of stakeholders

Lesson 2 9

Five Major Factors Influencing Individuals’ Ethical Judgement

Moral development of the decision-maker Stakeholders and their influences Decision criteria or approaches used in

assessing various alternatives Standards of behaviour as benchmarks Temptations to rationalize unethical

alternatives

Lesson 2 10

Decision Criteria Used In Assessing Alternatives

Providing a set of useful guidelines Three common criteria or approaches

Utilitarian : Benefits outweighing costs Rights : Respecting stakeholders’ rights Justice : Fair distribution of costs and

benefits among stakeholders Need to prioritize different concerns

Lesson 2 11

Five Major Factors Influencing Individuals’ Ethical Judgement

Moral development of the decision-maker Stakeholders and their influences Decision criteria or approaches used in

assessing various alternatives Standards of behaviour as benchmarks Temptations to rationalize unethical

alternatives

Lesson 2 12

Standards Of Behaviour as Benchmarks

Society’s moral principles and values

Government laws and regulations

Trade / profession-related codes

Corporate culture / code of conduct

Decision-maker’s own values and beliefs

Lesson 2 13

Five Major Factors Influencing Individuals’ Ethical Judgement

Moral development of the decision-maker Stakeholders and their influences Decision criteria or approaches used in

assessing various alternatives Standards of behaviour as benchmarks Temptations to rationalize unethical

alternatives

Lesson 2 14

Temptations To RationalizeUnethical Alternatives

The essence of rationalization : Acceptance of making unethical decisions

Typical rationalizations e.g. within reasonable ethical and legal

limits In the best interests of primary

stakeholders The alternative is “safe”

Lesson 2 15

Individuals’ Ethical JudgementBe Influenced By

Moral development of the decision-maker Stakeholders and their influences Decision criteria or approaches used in

assessing various alternatives Standards of behaviour as benchmarks Temptations to rationalize unethical

alternatives