Ethics

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Ethical Decisions 
in Accounting 

Alfonso Oddo 
Niagara University

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ISBN 978-0-470-87810-1

Ethical Decisions 
in Accounting 
Learning Objectives 
After studying this module you should be able to: 

Understand the importance of ethics 
Know the history of ethics in accounting 
Incorporate ethics into your decision process 
Know ethical standards for accounting professionals 
Understand ethical implications of the U.S. transition to IFRS  Appreciate lessons learned from recent business scandals 

SECTION 1 — THE IMPORTANCE OF ETHICS 
Ethics is an important part of your accounting education and it will play an increasingly important role in all aspects of your professional life. This module is intended to give you an overview of the study of ethics. It is a

starting point for the discussion of ethics that
will continue throughout all of your accounting studies. We will begin with a definition of ethics and then review some ethical theories that provide a framework for developing ethical standards for accounting students and

professionals. Finally, we will discuss why ethics is important to you as you prepare for a career in accounting.

DEFINITION OF ETHICS 
What exactly is ethics? According to Webster’s Dictionary ethics is “a discipline dealing with good and evil and moral duty, and with moral principles and practice.” Accounting ethics basically involves applying moral principles to accounting and business decisions. Business ethics is a more general form of applied ethics that relates moral principles to business situations. Business ethics examines behavior toward the outside world considering ethical principles and business codes of ethics.

Ethical Decisions in Accounting  |  1 

Simply put, ethics is doing the right thing. It is not easy to define ethics because ethics can be different for different people. You have your own personal values and these values are very important in the decisions you make. When you are in business you will be required to follow codes of conduct that are established by your company and by any professional associations that you belong to. Following the ethical standards of these organizations is important, but you should always bring your own personal values into your business model.

ETHICAL THEORIES 
Philosophers have developed many theories to provide a framework for making ethical business decisions. These theories provide a point of reference for developing codes of conduct for companies and professional associations. Most ethical codes in business are based on the following moral theories: Rights theory. The moral choice is the choice that best protects and respects the moral rights of those involved with a decision. This theory suggests that humans have a dignity that is based on their human nature and their ability to freely choose what they do with their lives. Therefore they have a right to be treated as ends and not merely as means to other...
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