Business ethics and the accounting profession

Business ethics emerged as a major public concern following a spate of corporate collapses during the 1980s and early 2000s, Corporate collapses such as HIH and Harris Scarfe in Australia; Enron, Worldcom and Global Crossing in the US; and Parmalat in Europe, have precipitated questions about the business and accounting practices of these firms and the role played by their accountants and auditors, According to Armstrong et al. (2003, p, 1), one can hardly pick up a business publication today without noting some reference to an accounting scandal....The sheer number of accounting abuses serves as prima facie evidence that something more is needed in terms of accounting ethics.

Business ethics and accounting students : Australia, South Asia and East Asia

Recent corporate collapses around the world show that there are no national boundaries for these occurrences. Australian corporate collapses including HIH Insurance, One.Tel, Ansett Australia and Harris Scarfe have raised public expectations of investigation of the causes of collapses (Mirshekary, Yaftian & Cross, 2005). The main reason for the collapse of HIH was mismanagement, with an emphasis more on the directors’ personal qualities such as integrity, honesty and morality rather than tougher legislation and rules. Accounting students are our future business leaders. The teaching of ethics in the classroom to multicultural groups of students provides an opportunity to facilitate the sharing of knowledge, and to increase interaction and debate around different approaches to ethics among students from different countries.
This study uses previous literature to explain the attitudes of accounting students towards academic and business/accounting ethics at an Australian university which is a multi-campus institution undertaking programs and activities at regional, national, international levels and by distance education.
This study reports the results of cross-cultural investigations of students’ ethical perceptions on moral values, academic and accounting/business vignettes, given that all students share the same learning opportunities, knowledge of ethics and interaction with their peers and lecturers. The results indicate no significant differences in responses between the students from Australia, South Asia and East Asia.

Perceptions of quality in higher education : a comparative study of Turkish and Australian business academics

Finding a common definition of ‘quality’ in studies of quality and quality improvement in higher education institutions is very important. This study identifies the views of a key stakeholder group, academics, with reference to their beliefs (what is currently occurring) and their attitudes (what ought to be occurring) in relation to quality in their departments. The focus of this paper is on the collection of data from 64 business administration academics in Turkish universities. Face-to-face interviews were conducted using an instrument titled ‘Quality in Accounting Education Survey’. The questionnaire was developed by Watty and is based on the conceptions of quality framework, developed by Harvey and Green. The results are compared with the beliefs and attitudes of Australian accounting academics as reported in an earlier paper by Watty. The findings show that academics from Turkey adopt the perspective of quality as excellent or élitist, both in their beliefs (current situation perception) and in their attitudes (desired situation perception). This compares with the findings that Australian academics’ attitudes reflect a quality perspective as fitness for purpose in the current situation and beliefs that reflect a transformational quality perspective as the desired situation (what ought to be).

Professionalisation and accounting in China: a historical and comparative review

While applied broadly within the setting of accounting and some other occupations, “a profession” is a particularly Western concept with peculiarly British origins. Additionally, the significance of such status and the process of “professionalisation” by which it is acquired remain beset by lingering uncertainties. Examination of the sociology of the accounting occupation within non-Western locations can contribute to exposing and clarifying these problematic and contingent aspects of occupational stratification, as well as assist in redressing the bias towards English-speaking and European countries within the accounting history literature. Proceeding from these theoretical premises, a historical and comparative study of the accounting occupation within China is undertaken. This seeks to integrate the world’s most populous nation into the historical narrative of the professionalisation of accounting, and reinforces – often vividly – that accountants’ work status is not bound to any predetermined trajectory which is innate to the occupation. Instead, the variety of localised and time-specific variables which constitute the occupational context are shown to exert a dominating influence.

From websites to portals: success factors For business community portals

Many Governments are using funding initiatives to encourage businesses, particularly small businesses to adopt e-commerce technology. One currently popular approach in Australia, has been to fund internet portal developments with a specific community or business focus. The success of such portals however, as with many Web developments has been mixed. This paper reports on the establishment of a B2B portal in Australia. The paper explores issues and expectations from the perspective of the business people involved. A survey was conducted amongst the participants of the portal shortly after it was launched. Then follow-up interviews were conducted with business owners 2 years later just before the portal closed. The researchers sought to understand what the business community expected from the portal and to identify what factors contribute to success. The research found that in addition to the factors identified through the literature that, technological readiness of business owners, understanding the business community, realizing business value and managing participant’s expectations are also factors impacting on success. A model is proposed to describe the success factors.

Web site information design: what small business needs to know

Designing and maintaining websites can be costly for small business, therefore the decision to embark on a Web strategy should not be taken lightly. Critical to the success of a web site is its design. Most small business web sites focus on information provision yet for many it would appear there is a lack of understanding of how to design a web site that delivers information effectively to users. This paper presents research that examined the effectiveness of small business web sites from the perspective of users. Findings indicate that: users found many sites contained too much irrelevant information; users were critical of sites where not enough information was provided; how the text is organised is important; and, the quality and quantity of information provided on the websites and the display and size of the text influenced the ability of users to complete the task and not be frustrated. The paper concludes with recommendations on more effective information design.

Accounting services and SMEs : an Australian study

Background: The observance of regulation has become a fundamental part of life for the conduct of business around the world. Governments and their duly appointed designates, acting in the interest of the collective public, have relied on regulation to moderate economic and social behaviour through the imposition and enforcement of rules. While it can be commonly accepted that such a prescriptive framework may be necessary for the achievement of desired economic and social outcomes, regulation does impose costs on society and on individual firms. These costs, which can include the costs for government departments to administer, the cost for firms to comply, and the multitude of indirect costs such as lost innovation and productivity or their interrelated opportunity costs, have received ample attention.

Accountants are key advisers to all businesses on all aspects of doing business, including regulation. As such, it is appropriate that ACCA has sponsored this study, which explores the regulatory issues facing SMEs and the critical role that accountants and other organisations play in helping SMEs be aware of, comply with and generally manage effectively the regulations that apply to their business.

ACCA has consistently argued for a balanced view to be taken on regulation, recognising that certain rules are necessary for the fair development of business and for employees’ rights. Yet at the same time, ACCA recognises that SMEs are likely to be disproportionately burdened by regulatory requirements and, as a consequence, it actively campaigns for fairness in regulation, recognising the issue as a significant factor in the success, productivity and growth of small businesses.

Overview: This study complements similar research commissioned by ACCA in the United Kingdom and Canada (Blackburn et al. 2006), with the aim of helping to provide a more international picture of the effects of regulation on adviceseeking by SMEs and how accountants can help SMEs meet their regulatory obligations.

The research commenced in November 2006 and was conducted over the Australian summer period 2006/7, among SMEs and accounting practices, as follows:

* telephone survey among 250 SMEs
* postal survey among 130 accounting practitioner firms.

Key findings: The SME section of this study revealed the following points.

* Most SMEs (between 70% and 80%), agreed that the regulations under review were reasonable, however there were significantly high levels of concern regarding:
* the number of regulations affecting their business (80%)
* staying up to date with changing regulations (80%)
* complexity of regulation or the ease of understanding regulations (77%)
* inequity, or the cost of regulation in proportion to the business (66%)
* duplication, or being required to provide the same information to more than one government department (55%).
* External accountants were the most common source of advice, being used by 72% of SMEs; this was followed by federal government agencies,    62%; trade or industry bodies, 61%; and a lawyer or solicitor, 53%.
* Highest levels of satisfaction with the advice provided were recorded for lawyers/solicitors (94%), banks (91%) and external accountants (90%).
* Overall, 80% of SMEs who had used accountants rated their service as excellent or good. Thirty per cent gave accountants an excellent rating.
* Accountants rated particularly well on the following attributes:
* the potential for a long-term relationship with the business (81% excellent/good)
* technical understanding of the regulatory requirements that apply to the business (79%)
* ability to meet the needs of the business (77%)
* understanding of the business of the SME and its operations (73%).

The survey of accounting practitioners produced the following information.
* The results indicate that SME firms with fewer than 10 employees are the main source of revenue for the respondent accounting practitioners.
* Virtually all accountants provide regulatory advice, primarily in the areas of taxation (particularly Goods and Services Tax, GST), and Do-It-      Yourself (DIY) superannuation requirements. These services provided the accountants with their largest business growth in the two years before the time of the survey.

Seventy-nine per cent of accountants referred their SME clients to external professional advisers. Their comments indicate (see Appendix 4) that some accountants consider their role to be as convenors or advisers for their SME clients. Importantly, according to the accountants, SME firms with fewer than 10 employees did not update their knowledge of regulatory requirements; they relied on their accountant for the right advice. The main types of external adviser to whom accountants referred their SME clients were lawyers and financial planners.

* Accountants expressed their concern regarding the complexity and amount of regulations affecting their SME clients.
* The accountants also stated that they would like to provide additional advice to their SME clients.
 
Confidence intervals – SME survey:  The survey sample size was 250 SMEs from the total of 1.2 million Australian SMEs. Any estimate of proportions agreeing or disagreeing with particular statements must be considered with respect to the margin of possible statistical error. Owing to the small sample size, generalising the results from this study to a wider population of SMEs may be constrained.

A 95% confidence interval of the sample mean for the following estimates based on a percentage agreement of 75% to a proposition with a sample size of 250 would be from 69.5% to 80.5%. The 95% confidence interval for estimates of any other value will diverge slightly in magnitude from the numbers given.

In general then we can be highly confident that the actual sample mean will be within approximately ± 5% of the figure given, with a survey of this size. Confidence intervals – acounting practitioner survey IBISWorld estimates reveal a figure of 9,222 accounting practices in Australia as at June 2006 (IBISWorld 2007). The sample size of 133 accounting practitioners gives a 95% confidence limit that the results reported from the mail-out survey are within the ± 5% confidence interval of the reported values.

Conclusions:  This report describes the results of two parallel surveys undertaken on the impact of business regulation on small and medium-sized enterprises in Australia and on the perceptions of accounting firms about the ways in which the regulatory impact on the SME sector drove their business.

The survey of SMEs provides empirical support for many of the concerns raised with the Regulation Taskforce, which reported to the Australian government in 2006. Many businesses are concerned about the volume and complexity of government legislation as it applies to their business. They are concerned that they are unable to keep up with new legislation and that there is apparent duplication of reporting requirements across the various tiers of government.

The survey of accountants revealed that accounting firms derive a significant proportion of their revenue from SMEs. While the SMEs are concerned with regulatory changes, the accountants surveyed reported that the major growth areas in their businesses were in what could be seen as traditional accounting areas of tax and superannuation. Some SMEs sought advice on areas such as employment law, environmental regulation and health and safety but it appears that many accountants refer their clients to specialists in these areas. Recent changes to the laws regarding financial planning in Australia may lead to changes in the market for financial advice in Australia, with many accountants apparently regarding this as a key driver of future business opportunities.

The surveys were conducted using a similar instrument to similar surveys conducted in the UK and Canada and reported in Blackburn et al. (2006). Comparisons of the Australian survey results with those from the UK and Canada seem to support the perception that Australian business is not over-regulated, but the SME sector is concerned with the volume and complexity of regulation. This suggests that the SME sector wants to see improvements to Australia’s regulatory regime as a result of the work of the Regulation Taskforce undertaken in 2005/6. In its response to the work of the Taskforce the government agreed with 158 of the 178 specific recommendations of the Taskforce. This now needs to be followed through at all levels of government.

Accountants in all three countries understand their SME clients’ concerns with the burden of regulation and they are prepared to advise their clients where appropriate or refer them to specialist advisers. Most business growth for accountants has come from the taxation area. Very few accountants in the UK or Australia specialise in providing advice in the areas of environmental regulation or health and safety regulation.

International comparisons show that in all three countries accountants are generally highly regarded by SMEs for their professionalism and competence. The major area of client concern is the value for money offered by the accountant’s service. In an era of rapidly shifting professional and technical boundaries, accountants need to be more strongly attuned to levels of client satisfaction. Lawyers, financial planners and a plethora of specialist advisers operate in the business services market and if they have an opportunity to take business from accountants by competing on price they may well do so. This suggests a stronger role for professional accounting bodies in monitoring the broader business services market for opportunities and threats on behalf of their membership.

Making a difference with a discrete course on accounting ethics

Calls for the expansion of ethics education in the business and accounting curricula have resulted in a variety of interventions including additional material on ethical cases, the code of conduct, and the development of new courses devoted to ethical development [Lampe, J.: 1996]. The issue of whether ethics should be taught has been addressed by many authors [see for example: Hanson, K. O.: 1987; Huss, H. F. and D. M. Patterson: 1993; Jones, T. M.: 1988–1989; Kerr, D. S. and L. M. Smith: 1995; Loeb, S. E.: 1988; McDonald, G. M. and G. D. Donleavy: 1995]. The question addressed in this paper is not whether ethics should be taught but whether accounting students can reason more ethically after an intervention based on a discrete and dedicated course on accounting ethics. The findings in this paper indicate that a discrete intervention emphasising dilemma discussion has a positive and significant effect on students’ moral reasoning and development. The data collected from interviews suggest that the salient influences on moral judgement development include: learning theories of ethics particularly Kohlberg’s theory of cognitive moral reasoning and development; peer learning; and moral discourse. The implications from the findings in this study suggest that moral reasoning is responsive to particular types of ethics intervention and educators should carefully plan their attempts to foster moral judgement development.

Course websites, computer proficiency and need for achievement : implications for MBA student performance

Course websites have become a basic requirement for course promotion and delivery in many universities. This study explores the relationship between perceived usefulness of course websites and student performance in an accounting course within a Masters of Business Administration (MBA) programme. Data from 48 students were found to support several hypotheses. Specifically, the findings of the study indicate that there is a significant correlation between the perceived usefulness of course website features such as lecture notes, tutorial questions and solutions and the frequency of use or access by students of such course website features. Further, we found that the perceived usefulness of course websites was positively related to students’ computer proficiency, but not with the frequency with which students missed classes. The findings also indicate that students with high need for achievement achieved better performance scores, but there was no significant relationship between perceived usefulness of course website and performance. These findings have several implications for the design and development of course websites at post-graduate level, and for future research examining the link between information technology and accounting education.

Students' perceptions of academic and business dishonesty : Australian evidence

Publicly available information indicates that the collapse of the high-profile corporations during the recent past were due to the unethical actions of a number of major players, including high level managers in those corporations. These examples of the ethical misdeeds of corporate actors have influenced accounting professional bodies and academic institutions around the globe to revisit the issue of ethical training of business and accounting students—the corporate managers of tomorrow. However, little is known about the ethical perceptions of business and accounting students, and business academics are finding it challenging to develop and promote ethics-based accounting and business curricula. This study addresses the research gap. It explores the ethical perceptions of accounting and business students in two Australian universities using three paradigms, that is, whether there are differences between regional and metropolitan, male and female, older and younger accounting students with respect to their ethical perceptions. Empirical evidence provided in this study
suggests that while there are no differences in ethical perceptions of the regional and metropolitan accounting and business students, female and older students are found to be more ethical compared to male and younger students.

Integrating sociological concepts into the study of accounting : yielding the benefits of team teaching

In response to recent criticisms of business and accounting education, a team of educators introduced a new course in social and critical perspectives on accounting. The course sought to integrate sociological concepts into the study of accounting, with key themes of social construction and social power forming a core of the course. The express intention was to raise student awareness of the nature and functions of accounting in contemporary society. The core teaching strategy involved team teaching, which was used to enhance learning and develop higher order generic skills. Feedback from two diverse cohorts of students vindicated the approach undertaken and reinforced the importance of linking teaching and research in accounting programs. Change in accounting education can be directed towards regaining and rebuilding social relevance for a discipline too often associated with a narrow economic imperative rather than the broader public interest.