Good Essay About Ethical Dilemmas And Ethical Theories

Type of paper: Essay

Topic: Ethics, Business, Accounting, Profession, Investment, Professionalism, Situation, Choice

Pages: 3

Words: 825

Published: 2020/11/06

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    Longman dictionary defines a dilemma as a situation in which someone faces a choice to make between different courses of action and any course taken will have some undesirable impact. In line with this definition, an ethical dilemma can be described as a situation when an individual faced with a choice, must take a decision about the best course of action, however, in all cases, the decision taken will have a certain negative effect as long as ethics is concerned.
Ethical dilemmas are often faced by accounting professionals who have a considerable responsibility to the users of accounting statements, including investors, shareholders, government and public at large. This is because accountants communicate information about business on the basis of which investors make their investment decisions, taxes are paid to the government etc. Therefore, all these stakeholders must have a considerable confidence in the ethical behavior of accountants. Examples of ethical dilemmas for accountants include conflicts of interest, receiving gifts, confidentiality and whistle-blowing.

Theoretical foundations of modern business ethics

  Addressing the views on the modern business ethics Elliott and Elliott (2009) distinguish two major approaches. One is promoted by Milton Friedman who said that the main purpose of the business is the “maximization of the profit for the benefits of shareholders” (p. 889).
Under this view the managers should be guided only by the market forces within the constraints of the legal framework. The proponent of the alternative view is Jeurissen who, while recognizing the significance of the market forces and the law, argues for the importance to take into account the moral views and values of the community within which the business operates. Put differently, a business has wider social responsibility to a number of its stakeholders, as opposed to the solely profit maximization objective offered by Milton. It is the latter approach which makes management responsible for operating toward wider benefit of society has become a foundation on which a modern business ethics is based (p. 889).
Another way of looking at ethical dilemmas could be taking normative or positivist approaches. Under normative approach business addresses ethical dilemmas in the light of certain theories, such as utilitarianism, postmodernism, marxism (p. 887-888). However, more practical way, observed in many organizations, is the positivist approach, when the emphasis is on the putting in place a formal, written code of ethics guiding employees or members.

Usefulness of ethical codes for resolution of ethical dilemmas

Many professional accounting organizations such as CIMA, UK, have put in place the formal code of ethics which should help their members confront ethical dilemmas that may arise in their business experiences. Ethical codes set forth broad ethical principles and values on which the professional behavior of accountants should be based and, in addition, they demonstrate their application in real-life situations, which may commonly arise in practice. Also the codes of ethics provide practical advice for safeguards and possible courses of action to take in these situations. One example of such ethical dilemmas is the request to produce misleading figures for investors (p. 895). The accountants in business always face the problem of dual loyalty structure. On one hand they are accounting professionals and should abide by the codes of professional ethics for accountants. However, on the other hand, they are employees of their organizations and have a duty of loyalty towards their employers. Some of the most prominent cases where there was a conflict of interest between the two loyalties have been Enron and WorldCom collapses. In both cases the accountants have been made to report misleading information to the investors. As discussed above, the prevalent choice for a professional accountant in such a situation should be the benefit of the public at large and not the short term interest of its employer. It is important that accountants should reflect on the situation in light of the professional values such as integrity, objectivity and professional competence. A possible course of actions for accountants facing the situation could be informing superiors or if this is not feasible whistle-blowing to an outside agency. The latter choice was taken by the internal auditor in WorldCom who informed the authorities of the falsified accounting information, as the superiors were the guilty party in that case. The trade-off in this situation is between the principles of integrity and confidentiality. Certainly, whistle-blowing is a clear breach of confidentiality, however, one always needs to make a difficult choice when facing ethical dilemmas. Another possible course of action would be to resign and leave the organization thus having his/her professional ethics intact, but with a negative impact on the career.

Conclusion

This paper outlined the principles and approaches of business ethics with focus on accounting professionals. It has been observed that ethical codes have become the mechanism for guiding ethical behavior of accountants and employees in many organizations world over. Practically speaking, ethical codes and theories provide framework for dealing with ethical choices, but it depends on individual to make the choice itself, especially in the pressing circumstances of ethical dilemmas.

Reference

Elliott, B. & Elliott, J. (2009) Financial accounting and reporting. 13th ed. UK: Pearson Education Limited.

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Good Essay About Ethical Dilemmas And Ethical Theories. Free Essay Examples - WePapers.com. https://www.wepapers.com/samples/good-essay-about-ethical-dilemmas-and-ethical-theories/. Published Nov 06, 2020. Accessed December 01, 2021.
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