EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS

Running head: EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20
YEARS
1 Emergence of ethics courses in accounting the past 10-20 years
Tevin Reeves
University of Maryland University College
April 16, 2017 EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 2 There have been countless stories in the news concerning unethical issues in
accounting. These stories range everywhere from fraud, bankruptcy, manipulation, inside trading
and embezzlement amongst many other scandals. Unethical behaviors can lead to many
outcomes such as company bankruptcy, loss of good reputation, increase in criminal behaviors
and even imprisonment. In an effort to avoid these negative incidents, there have been an
increase in ethics courses in accounting in the past 10 to 20 years. International Journal of
Education Research (2013) point out the main causes for the increase of these course and the
topics that given the most attention which include; corporate culture, integrity, independence,
objectivity, independence, personal ethics, global ethics, multi-cultural ethics, corporate
governance, financial statement manipulation, management stock options, and accounting firm
compensation of accounting professionals.
Worldcom, based in Jackson, Mississippi, used to be the second largest long distance
telecommunications company in the United States, ranking after AT&T. According to Forbes
(2013), in 1999, as Worldcom was negotiating a $129 billion dollar merger with Sprint, the
Department of Justice raised concerns about the company attempting to create a virtual
monopoly. The complaint decreased the company’s stock market price. There was a CEO by the
name of Bernard Ebbers that had hundreds of millions of dollars invested in Worldcom stock and
was demanded by the banks to pay over $400 million in margin calls, (Forbes, 2013.) Bernard
Ebbers eventually persuaded the company board to lend him the funds in an effort to prevent
having to sell his share of the stock. Forbes (2013) also mentioned that Ebbers tried to increase
stock prices by manipulating account entries, which was eventually recognized by internal audits
performed by the company. As a result, Ebbers was convicted of fraud, conspiracy, falsifying
documents and was sentenced to 25 years of imprisonment, and the company was forced into EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 3 bankruptcy with $3.8 billion worth of fraud. Worldcom is one of the many accounting scandals
to hit the news amongst others such as; Enron, Hollinger International, Tyco, and Yahoo just to
name a few. Accounting is important for businesses because it determines a company’s worth.
The rules and regulations that are in place are to ensure that financial statements and information
are accurate and if they are not being managed properly the value of the company automatically
decreases and that company is no longer reputable to the public or other investors.
Another contribution to the rise of ethics courses in accounting, according to Demand
Media (2015), is overbilling. Overbilling is defined as charging a consumer more than a service
or good actually costs. Overbilling most commonly occurs in medical professions, but can
negatively affect any business. “In 2002, several hospitals in the Tenet system were accused of
overbilling Medicare for cardiac surgery. This led to increased scrutiny of so-called outlier
payments, which are used to compensate hospitals when actual costs far exceed those anticipated
under prospective payment. Since then, the overall proportion of coronary artery bypass graft
(CABG) procedures associated with outlier payments has fallen from 13 percent in 2000-02 to 8
percent in 2003-06. Still, there is variation across U.S. hospitals, with some hospitals
experiencing much higher rates,” (Baser, 2009). Much later, in 2013, a southern New Jersey
doctor was billing Medicare patients for more time than she actually spent with patients.
Although overbilling is more common in medical professions, Demand Media (2015) also points
out a sports gear company that was caught charging school systems twice for the same services
unethically, resulting in jail time for some employees. Although one person or several people
within a company may be responsible for a specific act, the entire company will be publicized
negatively that will eventually result in its ultimate downfall. Conducting these audits prove that EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 4 there is room for improvement to being more cost efficient as well as increasing ethical
behaviors (Baser, 2009).
Along with increasing ethics courses in accounting, Mirshekary (2015) investigates an
additional method that ties into influencing accounting which is exposing unethical accounting
practices. The purpose of this is to show the devastating effects of being unethical in accounting
and what it could eventually lead to. According to Mirshekary (2015), “this is an important topic
for business because accountants in small accounting firms are in a position to influence the
behaviors of the large number of businesses they serve.” They are hoping to obtain the domino
effect, if one business is practicing model ethical behavior, then the next will, and so on and so
forth. Increasing ethics courses in accounting is half the battle, the other half is actually obtaining
the results. “Findings confirm a negative relationship between the amount of exposure and
personal attitude towards questionable practices: increased exposure to questionable ethical
behavior is related to an increase of acceptance of unethical behavior,” Mirshekary (2015). In
other words if there is no direct form of consequences shown, there will be no positive influence
to correct the negative behaviors.
Accountants are very important throughout companies and different businesses.
“Accountants, and especially auditors, play an essential role in financial reporting of public and
private firms,” (Crittenden, 2014). Owners of companies rely heavily on those placed in
accounting role to ensure their financial information is current and correct. There are many
reasons for this, as Crittenden (2014) also mentions, if firms, financial institutions and
individuals are to invest and commit resources, they must have confidence in the accuracy of the
financial information that is given. If financial documents are not accurate, it will diminish the
legitimacy of the business, stamping them as untrustworthy and unreliable especially when EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 5 dealing with different cliental. In 1991, the Cadbury Committee was created as a result of the
lack of investor confidence in the honesty and accountability of corporations, (Crittenden, 2014).
The role of the Cadbury Committee was to raise the standards throughout businesses as well as
the level of confidence in financial reporting and auditing. They then created, The Cadbury
Report which brought attention to the contributing factors to public financial scandals that have
led to financial losses for private and public corporations. These Cadbury Reports served as
evidence to the role that accountants play in the controls and functions to corporate governance
that ensures the rules, processes and regulations that guide the strategies and operations of an
organization are applied responsibly, (Crittenden, 2014).
Subsequently of deceptive bookkeeping practices, there have been a huge increment in
morals courses in bookkeeping in the previous ten to a quarter century. There are a few courses
that have been added to bookkeeping educational programs throughout the years that has been
consolidated to be an authorized bookkeeping operator, not to state that these measures have
reduced unscrupulous practices, however the numbers have unquestionably diminished. EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS
References
Baser, O., Fan, Z., Dimick, J., Staiger, D., & Birkmeyer, J. (2009). Outlier payments for cardiac
surgery and hospital quality. Health Affairs, 28(4), 1154-1160 7p. doi:10.1377/hlthaff.28.4.1154
Crittenden II, C. A., & Crittenden, W. F. (2014). THE ACCOUNTING PROFESSION’S ROLE
IN CORPORATE GOVERNANCE IN FRONTIER MARKETS: A RESEARCH AGENDA.
Organizations & Markets in Emerging Economies, 5(2), 7-22.
Mei-Lung, C., Chen, R. D., & Chenoweth, T. (2013). STAND-ALONE COLLEGE
ACCOUNTING ETHICS COURSE AND INSIGHT FOR ACCOUNTING ETHICS
MODULES. International Journal of Education Research, 8(1), 1-16.
Mirshekary, S., & Carr, R. (2015). Effects of exposure to unethical practices on the personal
attitudes of accountants in small accounting firms. Journal Of Management & Organization,
21(1), 98-106.
Forbes.com,. (2015). Forbes Welcome. Retrieved 19 November 2015, from
http://www.forbes.com/sites/investopedia/2013/02/05/5-most-publicized-ethics-violations-byceos/
Rowe, R. (2015). Examples of Unethical Decisions That Have Ruined Businesses. Business &
Entrepreneurship – azcentral.com. Retrieved 20 November 2015, from
http://yourbusiness.azcentral.com/examples-unethical-decisions-ruined-businesses-21339.html
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Mei-Lung Chen; Chen, Ring D. and Chenoweth, Thomas. "STAND-ALONE COLLEGE
ACCOUNTING ETHICS COURSE AND INSIGHT FOR ACCOUNTING ETHICS MODULES",
International Journal of Education Research, 2013.
7
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Submitted to Florida Institute of Technology
Running head: 4 EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 1 4 Emergence of ethics courses in accounting the past 10-20 years Tevin Reeves University of Maryland University College April 16, 2017 There have been countless
stories in the news concerning unethical issues in accounting. These stories range everywhere from
fraud, bankruptcy, manipulation, inside trading and embezzlement amongst many other scandals.
Unethical behaviors can lead to many outcomes such as company bankruptcy, loss of good reputation,
increase in criminal behaviors and even imprisonment. In an effort to avoid these negative incidents, EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 8 there have been an increase in ethics courses in accounting in the past 10 to 20 years. 6 International Journal of Education Research (2013) point out the main causes for the increase of these course and the topics that given the most attention which include; 6 corporate culture, integrity, independence, objectivity, independence, personal ethics, global ethics, multi-cultural ethics, corporate governance, financial statement manipulation, management stock options, and accounting firm compensation of accounting professionals. Worldcom, based in Jackson, Mississippi, used to be 8 the second largest long distance telecommunications company in the United States, ranking after AT&T. According
to Forbes (2013), in 1999, as Worldcom was negotiating a $129 billion dollar merger with Sprint, the
Department of Justice raised concerns about the company attempting to create a virtual monopoly. The
complaint decreased the company’s stock market price. There was a CEO by the name of Bernard
Ebbers that had hundreds of millions of dollars invested in Worldcom stock and was demanded by the
banks to pay over $400 million in margin calls, (Forbes, 2013.) Bernard Ebbers eventually persuaded
the company board to lend him the funds in an effort to prevent having to sell his share of the stock.
Forbes (2013) also mentioned that Ebbers tried to increase stock prices by manipulating account
entries, which was eventually recognized by internal audits performed by the company. As a result, 9 Ebbers was convicted of fraud, conspiracy, falsifying documents and was EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 9 sentenced to 25 years of imprisonment, and the company was forced into bankruptcy with $3.8
billion worth of fraud. Worldcom is one of the many accounting scandals to hit the news amongst
others such as; Enron, Hollinger International, Tyco, and Yahoo just to name a few. Accounting is
important for businesses because it determines a company’s worth. The rules and regulations that are
in place are to ensure that financial statements and information are accurate and if they are not being
managed properly the value of the company automatically decreases and that company is no longer
reputable to the public or other investors. Another contribution to the rise of ethics courses in
accounting, according to Demand Media (2015), is overbilling. Overbilling is defined as charging a
consumer more than a service or good actually costs. Overbilling most commonly occurs in medical professions, but can negatively affect any business. 1 “In 2002, several hospitals in the Tenet system were accused of overbilling Medicare for cardiac surgery. This led to increased scrutiny of so-called outlier payments, which are used to compensate hospitals when actual costs far exceed those anticipated under prospective payment. Since then, the overall proportion of coronary artery bypass graft (CABG) procedures associated with outlier payments has fallen from 13 percent in 2000-02 to 8 percent in 2003-06. Still, there is variation across U.S. hospitals, with some hospitals experiencing much higher rates,” (Baser, 2009). Much later, in 2013, a southern New Jersey doctor was billing Medicare EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 10 patients for more time than she actually spent with patients. Although overbilling is more common in
medical professions, Demand Media (2015) also points out a sports gear company that was caught
charging school systems twice for the same services unethically, resulting in jail time for some
employees. Although one person or several people within a company may be responsible for a specific
act, the entire company will be publicized negatively that will eventually result in its ultimate downfall.
Conducting these audits prove that there is room for improvement to being more cost efficient as well
as increasing ethical behaviors (Baser, 2009). Along with increasing ethics courses in accounting,
Mirshekary (2015) investigates an additional method that ties into influencing accounting which is
exposing unethical accounting practices. The purpose of this is to show the devastating effects of
being unethical in accounting and what it could eventually lead to. According to Mirshekary (2015), 2 “this is an important topic for business because accountants in small accounting firms are in a position to influence the behaviors of the large number of businesses they serve.” They are hoping to obtain the domino effect, if one business is
practicing model ethical behavior, then the next will, and so on and so forth. Increasing ethics courses in accounting is half the battle, the other half is actually obtaining the results. 2 “Findings confirm a negative relationship between the amount of exposure and personal attitude towards questionable practices: increased exposure to questionable ethical behavior is related to an increase of acceptance of unethical behavior,” Mirshekary (2015). In other
words if there is no direct form of consequences shown, there will be no positive influence to correct EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 11 the negative behaviors. Accountants are very important throughout companies and different businesses. 5 “Accountants, and especially auditors, play an essential role in financial reporting of public and private firms,” (Crittenden, 2014). Owners of companies rely heavily on those placed in accounting role to ensure their financial information is current and correct. There are many reasons for this, as Crittenden (2014) also mentions, 5 institutions and individuals are to invest and commit resources, if firms, financial they must have confidence in the accuracy of the financial information that is given. If financial documents are not accurate, it will
diminish the legitimacy of the business, stamping them as untrustworthy and unreliable especially
when dealing with different cliental. In 1991, the Cadbury Committee was created as a result of the
lack of investor confidence in the honesty and accountability of corporations, (Crittenden, 2014). The
role of the Cadbury Committee was to raise the standards throughout businesses as well as the level of
confidence in financial reporting and auditing. They then created, The Cadbury Report which brought
attention to the contributing factors to public financial scandals that have led to financial losses for private and public corporations. These Cadbury Reports served as evidence to 7 the role that accountants play in the controls and functions to corporate governance that ensures the rules, processes and regulations that guide the strategies and operations of an EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 12 organization are applied responsibly, (Crittenden,2014). Subsequently of deceptive bookkeeping
practices, there have been a huge increment in morals courses in bookkeeping in the previous ten to a
quarter century. There are a few courses that have been added to bookkeeping educational programs
throughout the years that has been consolidated to be an authorized bookkeeping operator, not to
state that these measures have reduced unscrupulous practices, however the numbers have
unquestionably diminished. References Baser, O., Fan, Z., Dimick, J., Staiger, D., & Birkmeyer, J. (2009).
Outlier payments for cardiac surgery and hospital quality. Health Affairs, 28(4), 1154-1160 7p.
doi:10.1377/hlthaff.28.4.1154 Crittenden II, C. A., & Crittenden, W. F. (2014). THE ACCOUNTING
PROFESSION’S ROLE IN CORPORATE GOVERNANCE IN FRONTIER MARKETS: A RESEARCH AGENDA.
Organizations & Markets in Emerging Economies, 5(2), 7-22. Mei-Lung, C., Chen, R. D., & Chenoweth, T.
(2013). STAND-ALONE COLLEGE ACCOUNTING ETHICS COURSE AND INSIGHT FOR ACCOUNTING ETHICS
MODULES. International Journal of Education Research, 8(1), 1-16. Mirshekary, S., & Carr, R. (2015).
Effects of exposure to unethical practices on the personal attitudes of accountants in small accounting
firms. Journal Of Management & Organization, 21(1), 98-106. Forbes.com,. (2015). Forbes Welcome.
Retrieved 19 November 2015, from http://www.forbes.com/sites/investopedia/2013/02/05/5-mostpublicized-ethics-violations-by- ceos/ Rowe, R. (2015). Examples of Unethical Decisions That Have
Ruined Businesses. Business & Entrepreneurship – azcentral.com. Retrieved 20 November 2015, from
http://yourbusiness.azcentral.com/examples-unethical-decisions-ruined-businesses- 21339.html 3 EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS 2 EMERGENCE OF ETHICS YEARS 3 3 3 COURSES IN ACCOUNTING THE PAST 10-20 EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 EMERGENCE OF ETHICS COURSES IN ACCOUNTING THE PAST 10-20 YEARS YEARS 4 EMERGENCE OF ETHICS EMERGENCE OF ETHICS 3 COURSES IN ACCOUNTING THE PAST 10-20 YEARS 5 4 COURSES IN ACCOUNTING THE PAST 10-20 YEARS 6 13

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