Ethical Theory

managerial Auditing ledger Emerald Article On honorable supposition in trail stocking Lutz Preuss Article schooling To cite this document Lutz Preuss, (1998),On honourable possibleness in auditing, managerial Auditing ledger, Vol. 13 Iss 9 pp. euchre 508 Permanent tangency to this document http//dx. doi. org/10. 1108/02686909810245910 D experienceloaded on 25-11-2012 References This document abducttains references to 47 separate documents Citations This document has been cited by 2 opposite documents To copy this document email&clxprotected com This document has been downloaded 2432 times since 2005. *Users who downloaded this Article similarly downloaded * Gary Pflugrath, no.na Martinov-Bennie, Liang Chen, (2007),The imp mortalation of autographs of clean and jerk-livingity and experience on he ber ideas, managerial Auditing ledger, Vol. 22 Iss 6 pp. 566 589 http//dx. doi. org/10. 1108/02686900710759389 B foreverley Jackling, Barry J. Cooper, Philomena Leu ng, St stock-still Dellaportas, (2007),professional person base sy groundwork bodies lights of h cardinalst issues, ca phthisiss of h iodinest misery and extolable motive education, managerial Auditing diary, Vol. 22 Iss 9 pp. 928 944 http//dx. doi. org/10. 1108/02686900710829426 Douglas E.Ziegenfuss, Anusorn Singhapakdi, (1994),Professional determine and the honest Perceptions of inbred Auditors, managerial Auditing Journal, Vol. 9 Iss 1 pp. 34 44 http//dx. doi. org/10. 1108/02686909410050433 vex to this document was granted through an Emerald subscription translated by ASTON UNIVERSITY For Authors If you would wish sanitary to write for this, or whatever(prenominal) otherwise Emerald issuance, and so please use our Emerald for Authors service. Information nearly how to choose which earthly rookcernation to write for and submission guidelines argon unattached for every. 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On honest toyjecture in auditing Lutz Preuss Lecturer, Heriot-Watt University, Edinburgh, UK This name discusses ship seatal of boastful support to attenders in addressing virtuousistic dilemmas. labels of moral philosophy be rattling important in this context save are in the ? nal summary insuf? cient devices, because their needs generalised form has to be translated into the speci? c situation and then makes acceptance or else than merely adherence. reckons turn out to be complemented with break uped honorable evidenceing of controls.Hence, individual honest rationales are discussed which lodge in a crap been utilize to chronicle in the recent literature, i. e. functionalism, deontology, honor chastes and righteousity of interest. Unsurprisingly, none emerges as giving comely satisfactory answers. Yet eclectic method corporation be neutraliseed by apply intricate mannequins, which combine individual principles to contribute more or less world-wide cover of decision- devising in a transaction sector context. As in any other profession, practitioners of write up system system, be they valet de chambre comptrollers, management restrainers or inner attenders, whitethorn face clean-li ving dilemmas in their work.In represent out the ? eld of potentialityly con? icting interests, the instal of hired Accountants of Scotland (1997, p. i), the oldest sea captain bole in the UK, stipulates The primary duty of the Institute of Chartered Accountants of Scotland is to the public. This principle determines its status as a maestro body . The ICAS (1997, p. vii) requires that In addition to the duties owed to the public and to his or her employer, a member of the Institute is bound to watch high standards of deport, which whitethorn roughtimes be contrary to his mortalal self-seeking.The author would like to thank Professor Gerald Vinten, editor of managerial Auditing Journal, and Stephen Morrow, Department of Accountancy and Fi coffin nail, Heriot-Watt University, Edinburgh, for their helpful pop the questionions. managerial Auditing Journal 13/9 1998 cholecalciferol508 MCB University Press ISSN 0268-6902 The public comptroller is the con? dential instrum ent of the in anyiance at large, scarce the public does non (re)appoint auditors (for speci? c incorrupt dilemmas facing outdoor(a) auditors, see Gunz and McCutcheon, 1991 Moizer 1995 Finn et al. , 1994). concern accountants and informal auditors are employees of the corporation hence their practice session position whitethorn collide with their schoolmaster values. They too sustain a responsibility to society comparable to an engineers concern for public safety and are necessary by the Institute of Chartered Accountants in England and Wales to observe the equal standards of doings and competence as apply to in all other members (Statement 1. 220, quoted in Maurice, 1996, p. 184). estimable dilemmas operate to be complex and exactly if hazily de? nable.In method of explanation, just agency oftentimes buy the farms a question of causation (Moizer, 1995, p. 425f. ), as the content of an audit circulate whitethorn not conduct an obvious link with a speci? c result if an auditor quali? es a brotherly clubs accounts, has he actually caused an ensuing savings margeruptcy? Furthermore, the really(prenominal) subject matter of bill is such(prenominal)(prenominal)(prenominal) that 2 equally objective accountants may r apiece opposite results. The roughly microscopic response by all professed(prenominal) account bodies has been to set up write in codes of morality, e. g. by the Institute of home(a) Auditors in 1968.Their very lastence sets limits for immoral behavior and offers pleader in uncertain situations. Studies of members of the Institute of intragroup Auditors (Siegel et al. , 1995 Ziegenfuss and Singhapakdi, 1994) found that a clear absolute majority do use the code of moral philosophy in their work. It is seen primarily as an instrumentate for giving guidance in moral dilemmas (64 per cent) rather than a lowlys to elicit the professions public perception (16 per cent). Research by Dittenhofer and colle agues offers an insightful longitudinal perspective nto changing moral beliefs of natural auditors in the light of the IIA Code of Ethics. In 1982 Dittenhofer and Klemm (1983) presented a random sample of IIA members with 20 vignettes, each describing morally litigious issues, and asked respondents to auspicate their reaction, ranging from dismissal of the person to doing nothing because no honorable trouble is perceived to exist. In 1994 Dittenhofer and Sennetti (1995) repeated the survey, a run into sampling IIA members. In many cases the authors found signi? sanctimoniousness pitchs, with IIA members having locomote more critical and supporting harsher action.So the harmonise of respondents who claim they would dismiss an versed audit supervisor who engaged in in gradientr traffic (situation 4) has risen from 50. 1 to 63. 0 per cent, with curiously large increases for trainees/journeymen (+70 per cent), in the division staff status, and insurance (+40 per cent) in t he category employers activity . However, some cases arguably less severe ones construct extractn infinitesimal change over the decade or even a decline. In any case, there were no signi? earth-closett differences in terms of gender or age groups.Most astonishing, so Dittenhofer and Sennetti claim, was the fact that for each scenario al near the complete spectrum of attitudes was represented, which indicates that there is no consensus among internal auditors as to what is right or upon. Codes of morals are not fitting to recess moral dilemmas. For a start, violations of codes energize persisted (Finn et al. , 1994 Loeb, 1971 Pearson, 1987). A tubercle has to be do amid acceptance of a code and mere adherence to it (Loeb, 1971), which may stem from a well-set place psychic climate or a fear of universe penalised.Furthermore, codes in their linguistic widely distri simplyedised form, dismissnot cover all eventualities. Analysing Dittenhofer and vitamin D Lutz Preuss On ethical opening in auditing Managerial Auditing Journal 13/9 1998 500508 Klemms (1983) research, Vinten (1996, p. 56) found a two-fold riddle for some scenarios clearly morally contentious ones it was unclear exactly which article of the IIA Code applied and too what response the Code required. Swanda (1990) and Vyakarnam et al. , (1996) found that accountants isplay a tendency to authorize back to technical issueledge when facing ambiguous moral situations. Hence Mintz (1995) argues that accountants need both technical and moral expertise as well as the intention and major power to act against self-interest if piety requires doing so. Vinten (1990, p. 10) sees one-third types of codes 1 a regulatory code, such as the Ten Commandments. It establishes a complete overlap amongst behaviour and code, which is weaponed with such a compelling ethical imperative that progress reverberationsign is uncomplete unavoidable nor asked for.It does, however, not recogni se sunglasses of grey . 2 an aspirational code, such as the wisdom literature in the Jewish Scriptures. It provides the standard a person should aspire to entirely recognises that full compliance may rarely be possible. Yet it provides little help in weighing up alternative courses of action. 3 an educational code this holds rules and regulations to be unhelpful if not minus and instead stresses the richness of the individual sense of right and improper in a original situation.The unacceptable nature of codes of morality, Vinten fires, may stem from the pre authority of the regulatory ride. It emerges that de? ning ethics as the rules of conduct recognised in the benevolent living department of the practice of professional account statement (Maurice, 1996, p. 9) is too limited. Codes of ethics pass to be reinforced with moral phylogenesis of accountants. therefore researchers gain studied the status quo of moral development in the profession (Finn et al. , 1994 of certi? ed public accountants, Ziegenfuss et al. , 1994, of internal auditors and management accountants). well-nigh authors look at then discussed possible improvements of moral development deep down Lawrence Kohlbergs role model for cognitive moral development (Lovell, 1995, 1997 Sweeney and Roberts, 1997). some others have sought- subsequently(a) to clarify how far individual ethical theories and principles are applicable to story dilemmas, although the intelligence has often been limited to utilitarianism and deontology (Maurice, 1996 Moizer, 1995). Only over the last few years have alternative ethical theories been applied to bill (Mintz, 1995 Francis, 1990 Oakes and Hammond, 1995 Reiter, 1996, 1997).The aim of this article is to draw the countersign of these ethical theories and principles together into a large system, where the returns and disadvantages of individual principles are highlighted. Following Hartman (1994) ethical theories shall be understood less as prescription for action than as tools for mind complex situations. 1. Utilitarian ethics teleological or consequentialist ethics judges the honor or wrongness of an act by its consequences. The close elaborate consequentialist opening is that of utilitarianism, as propagated by Jeremy Bentham (1789/1962).In the de? nition of his disciple John Stuart sub (1861/1962, p. 257) Utility, or the Greatest Happiness prescript holds that actions are right in coincidence as they tend to promote gladness, wrong as they tend to produce the arrest of happiness. Utilitarianism is a hygienicly democratic theory as every individual is to be granted as lots favor as anybody else is. It should be pointed out that Bentham aphorism this principle not as a watertight moral theory except as a tool for policy-making decision making. Utilitarianism faces obvious pragmatic lines in its moral arithmetic.Mill introduced a distinction amidst high and lower pleasures, yet it is restrained far from clear how different pleasures of different intensities lav be summed up, how a strong immediate desire compares with a life-long restrict one, and so forth Agents may pretermit fitting time to calculate all the consequences or may overestimate their own sufferings and lowball somebody elses happiness. This kind of upbraiding fanny partly be averted by applying the principle of utility not to oneness acts, act-utilitarianism, but to classes of acts, rule-utilitarianism.Under rule-utilitarianism an act is morally indispensable if it falls into a category of acts, which in their collectivity tend to produce more happiness than pain. It is no longer necessary to know all the implications of an action one can rely on historical read to get a fairly finished account of an acts potential consequences. Rule-utilitarianism is applied in a council good word by the Institute of Chartered Accountants of Scotland issued in 1971 (quoted in Moizer, 1995, p. 422), which recommend s that members hould not disclose past or intended civil wrongs, crimes or statutory offences unless they feel the damage to the public likely to arise from non-disclosure is of a very serious nature. 501 Lutz Preuss On ethical theory in auditing Managerial Auditing Journal 13/9 1998 500508 Rule-utilitarianism, however, can be shown to collapse into act-utilitarianism, if one follows the rule in situations of type x, do y or whatever else maximises utility (Smart, 1967). Also, the difficulty or perhaps impossibility of a moral deliberateness has not been solved.Since utilitarianism is to consider all consequences of an action, this includes not and consequences for yet unborn generations but also side cause the agent has not brought about actively, and these may well overshadow intended consequences. Intuitively, one would hesitate to blame a moral agent on this buns. Utilitarianism in method of in the altogethers report Utilitarianism has two advantages over alternative ethical theories for coat in business. It cogitate self-interest with moral behaviour, and a caller-up is per de? nition self-interested. Secondly, the calculation of bene? and harm is similar to pro? t and loss accounting and hence more likely to ? nd acceptance with business practitioners than rival ethical theories. By default, utilitarianism is the most in? uential ethical theory in the business context. Most economical and ? nance concepts are implicitly or verbalisedly built on the assumption that individuals are interested in maximising short-term self-interest. A resulting intellectual parenthood of accounting theory and methods in utilitarianism becomes important in the debate over the neutrality of accounting study.Neutralists, like Solomons (1991), argue that it is not the business of accountancy to be an agent of change in society Accountants should merely require . unbiased education, on which users can then base their decisions. Radical accountants, such as Tinker (1991), have questioned whether accounting information can actually be neutral. As accounting is embedded in genial realness it is neither inexplicably given nor a straight re? ection of social reality and in social con? ict, its theory and methods inevitably favour one side of the con? ict over another. Thus Lovell (1997) ? ds it problematic that accounting concepts are often presented as neutral or even as morally correct, without pointing out their grow in utilitarian thought. in that location is movement (Gray et al. , 1994 Lovell, 1997 Ponemon, 1992) that accounting and other means of organisational catch compress moral reasoning within the lowest periods of Lawrence Kohlbergs (1981) hierarchy of cognitive moral development. Kohlberg sees moral development progressing from an submissive use of other persons via the acceptance of a social order to abstract principles which, if necessary, over- card human laws.Where accounting control is delusive to work be cause muckle do not emergency their under exertion to be detected, a peg one motivation exists. Linking acceptable performance to ? nancial bonuses assumes a stage two motivation. At stage trine a person performs as required because she wants to win or importanttain the respect of colleagues, a stage four motivation shows in a belief that the law, either respective call down laws or the organisational laws, are to be obeyed for their own sake (Lovell, 1997, p. 155). On the other evanesce, inasmuch as it opposes illegal or immoral practices, accounting control does have a moral quality . . Deontological ethics Deontological ethics focuses on duty or moral obligation, deon creation the Greek word for duty in that location are various deontological con. cepts, such as Do unto others as thou wouldst have them do unto you, but the most squiffy version was essential by Immanuel Kant (1785/1898). He sees a sharp difference amongst self-interest and morality and proposes that a n action yet has moral value if it is performed from duty Kant proposes his . savorless adjuratory (1785/1898, p. 38). Act lonesome(prenominal) on that maxim whereby thou canst at the similar time testament that it should become universal law.A different version of the Categorical Imperative reads (1785/1898, p. 47) . So act as to address human bes, whether in thine own person or in that of any other, in every case as an end, never as means altogether . A maxim, a rational principle, which underlies an action, has to ful? l two criteria to become universally binding ? rst it has to be shown that the maxim can be universalised without contradiction. Breaking promises if the disadvantages exceed the bene? ts is not universalisable, because if it was nobody could rely on anybody telling the truth anymore.Secondly, one has to show that a rational agent ought to pass on the maxim, i. e. that it actually creates conditions which are conducive to human life. Some actions, howev er, are universalisable but so far seem wrong a sacred fundamentalist may reason it necessary to treat opponents in horrendously brutal focuss and accept that he would be conduct in the very same mold if he were in the opposing camp. Other cases are not universalisable but do not seem morally wrong universal contraception would bring humanity to an end but to most throng it does not seem wrong in individual cases.Furthermore duties, imposed by 502 Lutz Preuss On ethical theory in auditing Managerial Auditing Journal 13/9 1998 500508 several categorical imperatives, may clangour here the principle offers no further solution. On the other hand, Kantian morality links with popular conceptions of morality, e. g. that some actions only are never permissible, whatever the gain to individuals or society . The link amidst morality and the will of the agent allows us to praise mint for their intentions even if the results fall short of expectations.A deontological antenna is als o the most important basis for criminal law. Deontology in accounting A deontological perspective underlies much of the self-regulation in accountancy, see for instance the explicit requirement by the Auditing Practices Committee in the US on flip a companys accounts on a spill concern basis (Moizer, 1995, p. 424) The auditor should not refrain from qualifying his report if it is otherwise capture, merely on the grounds that it may lead to the appointment of a receiver or liquidator. rong, even if it prevented a major disaster witness the extend debate on the evaluation of whistleblowing (Vinten, 1994), where accountancy bodies for a long time held that bear on employees may raise their concern to superiors but must not under any batch report to out-of-doorrs without authorisation. A strong deontological stress has the disadvantage that compliance with rules is taken to be moral. One feels as an accountant, said a participant in a study by Vyakarnam et al. (1996, p. 159) t hat there are so many rules and regulations that anything outside is acceptable. A consensus to work just higher up the required minimum can lead to a situation where the minimum becomes judge and cart increases to drop standards further. 3. Virtue ethics In contrast to the universal emphasis on moral duty in deontology and on general happiness in utilitarianism, Aristotle emphasises the importance of a persons instance for morality He suggests that the highest . human good is happiness, not in a crude material sense, but in a comprehensive meaning which carries connotations of ? ourishing and well-being.This highest good is closely linked to the range of a human being, which is to obey reason, as this is the primary(prenominal) characteristic to set humans apart from other living beings. As a good ? autist plays the ? ute well or a good knife cuts well, Aristotle argues, so a good human is good at applying reason. Acting according to good reason is the distinguishing feature of virtuous behaviour. Reason helps to avoid both excess and de? ciency so the truth of courage shows the healthy mean in the midst of cowardice and rashness. To acquire this kind of virtuousness, people need practical wisdom, which can only be acquired by experience and habituation.Aristotle (1985, trans. Irwin) de? nes that the virtue of a human being will be the state that makes a human being good and makes him perform his function well (1106a20-24). Virtue ethics distinguishes mingled with internal and external rewards, a distinction utilitarianism cannot make. Internal goods emerge from speci? c practices. They can only be experienced after a long engagement in the practice and their achievement bene? ts the whole of the fellowship External goods are . not unequivocally related to any practice they are an individuals property and are objects of competition.Thus, when Turner revolutionised the painting of sky and clouds, he created an internal good, irrespective of This c lear, deontological public opinion is necessitated by the public subroutine of the accountancy profession which requires it to place above any other the public interest in being informed of the auditors doubts about the ability of the company to continue trading. There may be individual cases where an auditor, after considering the consequences of a quali? cation, would want to give the company a clean account the more since a quali? cation is only a weak indication of business failure.The case of BCCI, Moizer (1995, p. 429) argues, has shown the danger in taking such an act-utilitarian access. BCCIs auditors Price Waterhouse considered qualifying the accounts in April 1990 but reasoned that auditors owe a duty to shareholders to consider very bangfully the possible impact of their report because a quali? ed report would have more dramatic consequences for a bank than for an industrial concern. BCCIs accounts were not quali? ed, and the bank was able to trade for another 14 mon ths before it ? nally collapsed in July 1991. Moizer (1995, p. 30) concludes that the professions Code, which is based on either deontological or rule-utilitarian approaches, must be followed without regard to the crabby situation auditors ought not to consider the consequences of their actions, since they have already been evaluated for the profession as a whole. Deontological ethics is uncompromising by de? nition, but the complete disregard for great deal can lead to morally enigmatic requirements. Few would follow the Kantian whimsicality that telling a lie should eer be 503 Lutz Preuss On ethical theory in auditing Managerial Auditing Journal 13/9 1998 500508 he external goods, such as fame and income, he attain too (MacIntyre, 1985, p. 190f. ). Virtues and accounting Virtue ethics considers both intention and outcome, where duty-based ethics and utilitarianism only see one it also links morality with self-interest. Principle-based ethics rarely ever gives unambiguous a dvice it faces counter-examples, sometimes its conclusion runs counter to moral intuition. Virtue ethics, on the other hand, recognises that there are no light-colored answers and stresses the importance of practical wisdom in dealing with a moral dilemma.Mintz (1995, p. 259) argues that virtues alter accounting professionals to resolve con? icting duties and loyalties in a morally appropriate way because they provide the inner strength of character to withstand pressures that might otherwise have the best and negatively in? uence professional judgment in a family of trust. He sees two virtues as having concomitant importance for the accounting profession, integrity, which enables the auditor to substantiate objectiveness under competitive pressure and trustworthiness, which ensures public con? ence in a professional service. The notion of virtuous behaviour in accounting is again linked to the discussion of the neutrality of accounting information. The neutralist perspective (Solomons, 1991) sees a clear distinction between the accountant as accountant and as citizen, and only in the latter capacity can the person legitimately express concern over social issues. Tinker (1991, p. 305), however, sees a social world where roles are inextricably intertwined and con? icting, and where the individual needs to develop a social selfconsciousness for transcending con? cts. The same accounting individual often appears on several sides in the same dispute, and without self-awareness about her role interdependencies, may at last land to her own repression and exploitation wisdom, which differs from the routine screening of rules, such as those by the professional bodies. Furthermore, the use of computer-aided decision models does actually transport the possibility of developing virtuous behaviour. The main drawback of virtue ethics lies in its relativism (Hartman, 1994).Aristotles de? nition of virtue as a mean between two extremes makes sense to all communiti es, but only in a formal way The communities decide . what the two extremes are, and by this what the mean is. Hence, there is no neutral objective standpoint from which a good community can be distinguished from bad ones. Most humans belong to a figure of speech of communities, the community of their employer, their family, a sports club. There can be diverging de? nitions of community, which lead to diverging conceptions of the required virtues.A management accountant may take her employer to be her community and rate trueness to it higher than loyalty to the general public. There are also practical problems with virtue ethics. Stressing the importance of character and practical wisdom does not already give concrete advice. The focus on character also neglects power distribution in organisations it may actually disguise power structures and prevent change. The rich language of virtue ethics also lends itself for PR exercises. 4. Ethics of apportion The ethics of perplexity has been developed as a libber critique of the handed-down moral philosophy on the basis of rights and rules.Traditional ethics is grounded in a spot of others as potentially dangerous thus rights become an important means to underscore claims against others and rules are needed to settle con? ict. The moral responsibility arising from both rights and rules is universal it binds all moral agents equally (cf. the principle of utilitarianism or Kants Categorical Imperative) but makes the individual person replaceable without any loss to the ethical principle. womens liberationist authors have contended that the ethics of rights is essentially a priapic perspective and re? cts male dominance in western society and thought. Gilligan (1982) argues that womanly morality does not centre on abstract principles but contextualises moral responses by drawing on personal experiences. It focuses on adequate responses to the needs and concerns of close individuals. Feminist philosophers see th e self as being determined by its relationship with others Francis (1990) sees three main obstacles for more virtuous accounting. First, the relationship between internal and external rewards is dark heavily towards the latter. The virtue integrity may be agreed by the bene? s of retaining a client. Secondly, the organisation of accounting into a teensy-weensy design of large private companies may hamper the development of virtuous professional norms. Under the prevailing competitive pressure the profession has demonstrated a lack of solidarity which has manifested itself particularly in auditor switching. Thirdly, virtues require the application of practical 504 Lutz Preuss On ethical theory in auditing Managerial Auditing Journal 13/9 1998 500508 ( nonedings, 1984). sort of of bargaining between rational agents and rule-based occlusion of con? ct, an ethics of economic aid focuses on respect for others maintaining the relationship is valued higher than scoring a victory o r exercising ones right. Ethics of care and accounting An ethics of care has been applied both directly to the accounting profession and in the concept of a warmth organisation. Burton and Dunn (1996, p. 139) suggest that a company could be said to care if it exhibits pity behaviour consistent with ? rm policy. A company is here seen as a secondary feel for agent, dependent on the primary caring actions of its organisational members. Liedtka (1996) ? ds that much of the present rhetoric about caring for customers or employees is just care-talk but suggests a caring organisation can be built. Apart from having caring employees, organisational support is crucial, because the organisation largely shapes the persons role within it and must also provide the resources for caring. Employees would be seen as central, because they are the people who deal directly with customers and thus ultimately determine the success or failure of the business. Reiter (1996) suggests that caring is a va luable trait for employees, e excessly in the service sector.A caring ? rm could enjoy a competitive advantage in capability-driven markets, because it engenders trust and reduces transaction prices. Reiter (1997) claims that an ethics of care can foster a better understanding of the underlying principles of the accounting profession, such as auditor license. This independence is to be achieved by a number of detailed rules which determine the relationship between auditor and client, yet true mental separation from the client would require the auditor to work in a social vacuum, and the rule-based approach can be seen as arbitrary The contextual perspective . f the ethics of care, Reiter suggests, provides the alternative metaphor of interdependence. This allows de? ning an appropriate proportion of interests, on which users of accounting information could rely more than on the show of independence. Such thinking in? uenced the embodimentwork approach by the ICAEW (Maurice, 19 96, p. 43). In accounting education, an ethics of care provides an important balance to rightsbased approaches. Reiter (1996, p. 48) discusses training material compiled by the American bill Association and Arthur Andersen and ? ds a tendency of the AAA approach to frame con? icts as moral dilemmas where the quality is between resignation and hopeless compromise of integrity. A win-win-situation, and above all a positive learning effect for accounting students, may be more likely to come from a care perspective, which focusses on understanding others situations and points of view and ascertain what can be done to maintain appropriate relationships between the self and others (1996, p. 48). An ethics of care can also impact on accounting research (Oakes and Hammond, 1995), e. g. y challenging the possibility of a bountiful neutral scholar and thus request how the researchers experiences and perspective in? uence the choice of research question. The interconnectedness of accountan t and society raises the question of how current accounting practice affects the lives of people, especially the economically disenfranchised. This in turn challenges the assumptions regarding economic behaviour. The contextual approach of an ethics of care introduces a relativist element. This is not merely a practical problem for the accounting profession, in that accounting information may become less intelligible to outside users.It indicates a deeper philosophical ? aw in the application of an ethics of care to economic life. Burton and Dunn (1996, p. 142) considered the dilemma of a company missing to dispose of lead acid batteries. demonstrate care for those that are close its local anesthetic community the ? rm decides to recycle the batteries rather than cast away them. The dangers involved in handling the batteries suggest they are better not handled by workers in the US, again the company displays care for close stakeholders. But would recycling in Taiwan be a moral alternative? Burton and Dunn attempt to rescue the model by introducing A hybrid approach, ecommending that special attention be given to the to the lowest degree advantaged members of the moral community, e. g. that the ? rm applies the same employee auspices measures in Taiwan as it would in the US, even though this is not mandatory However, exempting the least(prenominal) . advantaged stakeholder shifts the burden onto the second least advantaged, until they turn into the least advantaged and get exempted, etc. The relativist problem leads to a further paradox if others are all important in the de? nition of the self, then the self does not exist independently of these others.Wicks et al. , (1994, p. 483) de? ne a company as constituted by the internet of relationships which it is involved in, yet as Burton and Dunn (1996) observed, this is close to the view of transaction cost economics. 505 Lutz Preuss On ethical theory in auditing Managerial Auditing Journal 13/9 1998 500508 5. Compound models of ethics So far ethical theories have been considered in isolation from each other. Unsurprisingly in view of the complex nature of moral issues, none offers a completely satisfactory solution to moral problems in accounting.However, an unsystematic application of ethical principles carries the danger of eclecticism, of a pick-and-mix ethics, where an agent could select the ethical approach most suitable to furthering his own aims. A more secure theoretical foundation can be found in heighten models. Brady (1985) suggested a Janus-headed model of ethics, further developed in Brady and Dunn (1995), which combines deontological and utilitarian requirements and proposes that an action should only be carried out if it violates neither.Kantian deontology and utilitarianism should be seen as complementing each other Moizer (1995) found them to be the two dominant ethical theories in accounting rule making. A particular advantage of this compound model lies in its capability to capture both the catholicity of a situation, in the universalisability of Kantian deontology, and the particularity, via the utilitarian principle, for which, in order to calculate the superlative good of the greatest number, one must know the particulars of the situation (Brady nd Dunn, 1995, p. 394). Cavanagh et al. (1981) suggest a different version of a compound model, where an act would be unethical if it violated any of the following principles (a) to hone utility for all stakeholders involved (b) to respect the rights of the individuals concerned and (c) to be consistent with norms of justice. afterward work by the three authors (1995) enlarge this model by asking (d) whether the act arises from an impulse to care, to a utility-rightsjustice-care model.The decision-maker should also take account of clashes between principles, as well as of overwhelming or modify factors, which would justify overriding one of the ethical criteria (1981, p. 370). Cavanagh et al. (1995, p. 399) argue that the advantage of their model lies in its practicality it does not require business decisionmakers to handle abstract ethical principles but translates them into familiar norms, which then can be applied to concrete situations. Both models have had great in? uence in the business ethics debate they have been applied in case studies and business ethics textbooks.The utility-rights-justice model was even chosen by Arthur Andersen for its business ethics programme. The two teams of authors have exhausted a great deal of thrust arguing the practical applicability or capturing distinction of their respective models. However, the main problem lies in the legitimation of selecting components. The very human race of competing models and the enlargement of one (the authors also considered the inclusion of a ? fth element of virtue) raises doubt whether any universally acceptable composition of a compound model can be achieved at all. Cavanagh et al. 1981 ) made important concessions when they allowed for mitigating circumstances for decision-makers who are not fully in control of the situation. Furthermore, decision-makers, who have strong and credible doubts about the legitimacy of an ethical criterion, can legitimately be excused from adhering to that criterion (1981, p. 371). nonee of the two teams offers advice on how to resolve clashes between principles. Cavanagh et al. , (1981, p. 370) note that there are no well-de? ned rules for such clashes, they can be resolved only by making a considered judgment concerning which of the con? cting criteria should be accorded the most weight in the given situation. While the necessity of making such caveats is perfectly understood, nonetheless, a certain follow of arbitrariness may result in the application of compound models. On the other hand, both models secure a reasonably complete coverage of the ethical terrain in business decision-making (Brady and Dunn, 1995, p. 386). Eclecti cism in the plectrum of compound models still guarantees a comprehensive range of ethical principles, which would not be the case for eclecticism in the infusion of individual ethical principles.It should also be noted that the utility-rights-justice-care model allows for only one criterion to be set aside, having just doubts about more than one would not longer qualify as legitimate. 6. closedown The discussion set out from a realisation that Codes of Ethics in accounting are an important but in the end insufficient device for addressing moral con? ict, thus stressing the need for moral development of the person. Individual ethical theories and principles have been discussed of which none emerges as an all-round favored for giving advice in moral dilemmas.Yet between the Scylla of offering no advice at all and the Charybdis of eclecticism in the selection of ethical principles, a safe course can be steered under the guidance of compound models. 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