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Ethics and Professionalism in Accounting

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Title: Ethics and Professionalism in Accounting


1
Ethics and Professionalism in Accounting
  • Lecture Notes
  • Chapter 4 Sociological Theories
  • Chapter 5 The Functionalist Model

2
Characteristics of a Profession
  1. Involves a skill based on theoretical knowledge
  2. Skill requires extensive and intensive training
    and education
  3. Must demonstrate competence by passing a test
  4. Organized and represented by associations of
    distinctive character

3
Characteristics of a Profession
  1. Integrity is maintained by adherence to a code of
    conduct
  2. Professional service is altruistic (unselfish
    concern for the welfare of others)
  3. Assumes responsibility for the affairs of others
  4. Professional service is indispensable for the
    public good

4
Characteristics of a Profession
  • Licensed, so their work is sanctioned by the
    community
  • Independent practitioners, serving individual
    clients
  • Have a fiduciary relationship toward their
    clients
  • Best serve their clients impartially without
    regard to any special relationship

5
Characteristics of a Profession
  1. Compensated by fee or fixed charge
  2. Regularly contribute to professional development
  3. Highly loyal to their colleagues
  4. Prestige is based on guaranteed service
  5. Use individual judgment in applying principles to
    concrete problems
  6. Work is not manual
  7. Profits do not depend on capital
  8. Status is widely recognized

6
Competing models of professionalism
  • Functionalist Views professions as a positive
    force in social development, standing against the
    excesses of both laissez faire individualism and
    state collectivism...
  • Conflict Views professions ...as harmful
    monopolistic oligarchies whose rational control
    of technology would lead to some form of
    meritocracy

7
Functionalist model
  • Professions cultivate order, discipline, and duty
  • Professions are an ideal counterforce to the
    self-interested individualism flourishing in
    other parts of society, spreading from
    professions to business
  • A force for stability in society and a
    counterforce to the concentration of power in the
    state

8
Conflict model
  • Professional associations increasingly use the
    mechanisms of bureaucracy to promote harmful
    monopolistic practices
  • Attitudes are not independent experts with an
    enlightened vision of democratic society and
    resistance to power in the state and the
    corporation

9
Your Opinion
  • Which view best describes your view regarding
    professions in general?
  • Which view best describes your view regarding the
    accounting profession?

10
Functionalist Model
  • Functionalist framework provides internal
    coherence for the idea of profession
  • The work of professions is seen to have the
    character it does because it enables them to
    perform their functions
  • The professions are thought to be structured and
    to attract and develop particular kinds of
    persons as the optimal way to get the work done
  • Members of an occupation see in professionalism a
    coherent pattern for implementing the aspirations
    to serve . society in an effective,
    efficient way

11
Goal of Service
  • Importance turns on the relevance of their work
    to
  • basic biological needs (food, shelter, health,
    disposal of the dead)
  • basic instrumental needs (education,
    transportation, sanity, order, legal counsel,
    energy, disposal of wastes)
  • Importance of the need distinguishes professional
    work from other highly skilled activities
  • welfare is vitally affected by the competence and
    quality of the service performed

12
Goal of Service
  • The professional relationship is determined by
    the problem the client brings to the professional
    not by who the client is
  • The clients needs concern the professional, not
    class, race, sex, age, nationality, social role,
    position
  • The work of the professions is critical for
    human welfare

13
Goal of Service
  • The professions collectivity orientation is
    service to humanity rather than profit
  • This implies that the profession serves humanity
    by serving others and that all members of society
    have access to the services
  • More strongly, this goal implies that
    practitioners and the leaders who control the
    structure of the profession aim at such service

14
Goal of Service
  • Success in the professions is defined in terms of
    service to clients
  • Success in business is defined in terms of profit
    for the firm and personal advancement
  • The successful doctor is one who cures his
    patients s/he is not judged by the fees her/his
    efforts bring

15
Alliance with Science
  • The true professional bases decisions on
    rationally grounded principles
  • Rationality as opposed to traditionalism is an
    institutional pattern of professions due to their
    affiliation with science
  • Just because something has held true in the past
    is not a basis for continuing to believe it will
    hold true in the future

16
Primacy of Practice
  • Professions are nourished by the sciences, but
    their concern is the solution of practical
    problems
  • The scientific grounding and practical
    orientation of the professions entail a number of
    distinctive features for professional expertise
  • Professionals may need theoretical knowledge to
    understand complicated instruments used in their
    work

17
Primacy of Practice
  • Skillful performance involves judgment, both in
    the selection of relevant principles and in their
    application to unique and fluctuating conditions
  • Individual professionals must not only master and
    retain the knowledge and skills of their
    predecessors, they must continue to learn and
    grow. They must keep in touch with new
    developments in order to maintain competence.
  • They must run fast to stay even

18
Occupation, Career and Vocation
  • Professional work is exacting, requiring long
    intensive preparation to qualify for practice and
    full-time dedication through the remainder of
    life
  • An occupation seizes one and uses up ones time
  • Professionals not only spend more hours at work
    itself, but also leisure hours keeping up with
    developments

19
Occupation, Career and Vocation
  • Their occupation is not only their livelihoods
    but pretty much their lives or what they live for
  • A profession is a careera course with successive
    stages through which one is expected to advance
    throughout ones working life
  • A person not only makes a living in the
    professions, s/he earns it in the sense of
    deserving that pay through hard work in the
    service of others

20
Autonomy
  • Professional work involves the application of
    complex, theoretical, and specialized knowledge
    to problems of clients, employers, or customers
  • Gaps in knowledge between the lay person and
    professional is maintained by the professions
    effective monopoly over a stock of theory and
    skill

21
Autonomy
  • A profession enjoys collective autonomy by being
    exempt from control of society and free to
    regulate the behavior of its members
  • Professionals enjoy individual autonomy in that
    the professions reins of control are slack and
    they are left to their own sense of morality and
    prudence

22
Autonomy
  • Combat competition
  • lobby for a system of licensure administered
    according to their own standards
  • defend status as a monopoly as a means of
    assuring predictable high-quality service
  • profession monitors performance of members
  • standards of technical competence
  • standards for ethics

23
Mechanisms for Influence
  • Entry into profession is tightly controlled
  • technical training
  • faculty and administrators are drawn from the
    profession
  • control curricula, admission, and graduation and
    monitor progress of students
  • professional school is the primary socializing
    agency that initiates novices into the
    professions subculture (develop professional
    conscience)

24
Mechanisms for Influence
  • Entry into practice
  • Legal status for members by licensure
  • Formulate legislation to control
  • Career is shaped by the profession
  • Typically fraternize socially as well as
    vocationally with colleagues
  • Social contact reinforces shared conceptions of
    the work and its role in society, of the
    profession as a corporate body, and of economics,
    politics, and even religion and morality insofar
    as these bear on the profession

25
Mechanisms for Influence
  • Membership in professional associations
  • Continuing education
  • Accredit educational programs
  • Influence legislative and administrative
    processes
  • Judges and punish malfeasance

26
Meritocracy Collegiality
  • Meritocracy in leadership and collegiality among
    practitioners are necessary to sustain the trust
    of clients
  • Meritocracy (a social system that gives
    opportunities and advantages to people on the
    basis of their ability rather than wealth or
    seniority an elite group of people who achieved
    their positions on the basis of ability and
    accomplishment)

27
Meritocracy in Leadership
  • The mechanisms of self-regulation guarantee
    competent and conscientious service only if the
    levers are pulled by the best that the profession
    has to offerbest in professional skill and
    dedication to public service and sound ethical
    principles
  • Guaranteed by training-testing-certifying-monitori
    ng process
  • The true profession is ruled by the best. It is a
    meritocracy

28
Collegiality among Practitioners
  • A profession operates within a voluntary
    community of equals with rights of independent
    judgment and obligations of mutual assistance and
    criticism
  • Professions are communities with common values
    and elicit from their members a high level of
    conduct for the public welfare

29
The Persons
  • Service orientation is a holistic characteristic
    of professions but does not presuppose altruism
    on the part of professionals
  • Success is defined in terms of service to the
    client
  • Character of professional work and structures of
    professions attract a special sort of person
  • Personal qualities are specific to each
    profession (but some qualities are shared)

30
The Persons
  • Possess special intellectual abilities
  • Power of abstract thought to grasp the
    theoretical foundations
  • Intuitive perceptions to see the problems and
    possible solutions
  • Practical reason and skillful manipulation of
    materials characteristic of the artist (to apply
    knowledge and insight)
  • Great interest in work
  • Basic moral qualities
  • Bond between professional and client is fiduciary

31
The Persons
  • Professionals are compensated handsomely
  • not only in money and perquisites, but autonomy,
    influence over others, prestige, symbolic
    gratification and interesting work
  • Professionals are paid a lot and deserve what
    they are paid
  • They do not practice their profession for the
    pay they are fascinated with the work and desire
    fervently to help others

32
Concluding Thought
  • A functionalist perspective of professions is an
    idealistic perspective
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