Editorial Note: It’s time to go “back to school” as we begin the traditional academic year! In the spirit of the season, we’re pleased to feature the following piece by Contributing Columnist Steve Mintz on accounting education.
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It’s time now for accounting educators to rethink the scope of decision-making models used to teach accounting ethics. If ethical issues that arise in the context of organizational culture are not dealt with properly then it is less likely ethical conflicts can be resolved. Consideration of the internal systems within organizations is what’s missing from traditional decision-making models and should be given a more prominent role.
Ethical Decision Making
Accounting educators typically use an ethical decision-making model to teach ethics to accounting students. Ethical decision models provide a systematic way to think through ethical issues, identify alternative courses of action, evaluate the ethics of each alternative and decide what to do.
Traditionally, the decision-making models used to teach ethics to accounting students have focused on applying philosophical reasoning methods to the analysis of what should be done. These models tend to downplay or ignore the importance of organizational culture in the decision-making process including internal policies and practices, the code of ethics and individuals in the organization who might serve as supporters to help resolve conflicts.
Given the added focus on organizational ethics since passage of the Sarbanes-Oxley Act and the profession’s recognition of the importance of the control environment, accounting educators should look for new ways to incorporate organizational factors to make the ethics curriculum more relevant. Moreover, the AICPA Code of Professional Conduct now addresses ethical conflicts and describes the process to resolve them including internal steps.
The PLUS Ethical Decision Making Model
The PLUS Ethical Decision Making Model was developed through The Ethics Resource Center, the research arm of the Ethics & Compliance Initiative (ECI). The ECI is a community of organizations that are committed to creating and sustaining high quality ethics and compliance programs to assist organizations in building strong cultures. The mission of ECI is to assist its members across the globe to operate their businesses at the highest levels of integrity.
The PLUS Model is based on a seven-step process described below. The word PLUS refers to ethics filters that facilitate the analysis of ethics considerations and implications of the decision at hand. The filters ensure that ethical issues rise to the forefront in ethical decision making. The mnemonic PLUS refers to four considerations that apply to the analysis in steps 1, 4 and 7 of the decision-making model as follows.
P = Policies
L = Legal
U = Universal
S = Self
A description of each filter and its role in decision-making follows (Ethics Resource Center of the Ethics & Compliance Initiative, The PLUS Decision Making Model, https://www.ethics.org/resources/free-toolkit/decision-making-model/).
Policies. Is it consistent with organizational policies, procedures and guidelines?
Legal. Is it acceptable under applicable laws and regulations?
Universal. Does it conform to universal principles and the values of the organization?
Self. Does it satisfy my personal definition of right, good and fair?
The advantage of the PLUS model is it relies heavily on organizational ethics. This is important because no matter how good one’s ethical judgment may be, ethical decision-making is not likely to occur unless support for the position exists in the organization. A summary of the seven-step model follows.
Step 1: Define the problem. Determine why a decision is necessary and identify the desired outcome(s). This helps to clearly state the problem and where to look for alternatives to resolve it. Consider the PLUS factors to ensure the existing situation does not violate any of them.
Step 2: Seek out relevant assistance, guidance and support. Identify the available resources within the organization to help resolve the problem. This helps to define the guidelines and individuals within the organization that may help to resolve the problem.
Step 3: Identify available alternative solutions to the problem. Consider all relevant solutions to avoid the dichotomy of one choice versus another (i.e., either this or that).
Step 4: Evaluate the identified alternatives. This step in the model uses a decidedly consequence-based criteria. Positive and negative consequences are evaluated with fact-based consequences weighed more heavily because the expected outcome is more likely to occur. The PLUS factors are an integral part of the evaluation to supplement outcomes-oriented considerations, which are teleologically based, with universal principles (deontology) and virtue ethics as represented by organizational values.
Step 5. Make the decision. After evaluating all the alternatives, it’s time to decide on a course of action. The reasons for choosing one alternative over the others should be explained especially if the decision is by a work team that recommends a solution to higher-ups.
Step 6. Implement the decision. Putting the decision into effect is essential to change the situation and resolve the problem identified.
Step 7. Evaluate the decision. A determination has to be made whether the decision fixes the problem identified. Questions to ask are: Did it go away? Did it change appreciably? Is it better now, or worse, or the same? What new problems did the solution create? In making these determinations it’s important to incorporate the PLUS factors to ensure the solution conforms to organizational policies, laws and regulations, universal principles and values adopted by the organization.
Advantages of the PLUS Model
The “S” component of the PLUS factor is a feature of the decision-making process that requires explanation because it’s not recognized explicitly in traditional decision-making models although virtue considerations come close. To implement the “self” factor, the decision maker should consider whether the solution satisfies one’s personal definition of right, good and fair. It means that individuals should understand how their values influence decision making to ensure the decision reflects those values. For ethical decision-making to occur in an accounting situation those values should include independence, integrity, objectivity and due care, which are the principles of professional behavior.
Ethical decision making is a complicated process that relies on organizational variables to ensure the ultimate decision is supported by those who have to carry it out. The PLUS model incorporates those factors and should be used in accounting ethics education to make it more relevant given the increased focus on organizational ethics in the post Sarbanes-Oxley era.
The advantage of using the PLUS model to teach ethics to accounting students is it increases student awareness of organizational factors that influence ethical decision making. In reality, regardless of the ethical justification for one’s position it’s unlikely to be implemented unless individuals within the organization support resolution of the ethical problem. Knowing how the internal systems work can help to make that determination early on and influence ethical decision making in a positive way.