MODULE 1: ACCOUNTING AND SOCIETY
PART A – ACCOUNTANTS AS MEMBERS OF A PROFESSION
1. Public interest or self-interest?
Accountants serve the public interest by:
creating and distributing information that conveys a clear and accurate picture of an entity’s financial performance, financial position and other relevant issues
providing objective, accurate and appropriate financial and accounting-related advice that is free from bias and based on expertise.
“Altruism” – chu nghia vi tha: action that brings no benefit to an individual and may even be at their own expense. However, altruism may not be the driving motivation.
Like West (2003), Larson (1977): monopolistic professionals are not motivated by a service ideal or the public interest.
Larson: considers that professions and professionals are about maintaining monopolies and extracting unwarranted wealth and influence from that position =>
described as self-interest or enlightened self-interest, rather than altruism.
2. Model of responsible decision-making
Governance:
firstly within the governance framework of the profession => codes of behavior
within the relevant corporate governance framework of the entity (i.e. instruments and articles of association, policies and strategies approved by the board of
directors.)
Accountability:
requirements of regulatory authorities;
appropriate disclosure to shareholders and other stakeholders.
Ethics:
within a framework of ethical conduct
based on a commitment to integrity and honesty in the pursuit of professional purposes and client interests.
3. Enlightened self-interest (by Lee 1995)
The term ‘enlightened self-interest’ suggests both purposes may be served together, committed to the public interest and yet possess a degree of self-interest ~ “doing
well by doing good”
There is a careful balance to be maintained between serving the public interest and pursuing self-interest, and the public interest is outweigh.
4. Ideals of accounting—entrepreneurialism and professionalism
Carnegie and Napier (2010): ideals of accounting professionalism comprising “the four Es” - education, ethics, expertise and entrepreneurship
Too emphasize on “entrepreneurship”:
may result in a ‘de-professionalisation’ of accounting - pursuit of commercial opportunities moves an accountant away from integrity, objectivity and professional
behaviour in order to achieve commercial success
can lead professional accountants to place more importance on increasing their personal wealth and influence than on notions of public service
Examples of accountants pursuing self-interested outcomes at the expense of their ethical or professional standards:
the corporate collapses of the early 2000s
failures of organisations, such as Lehman Brothers in the GFC of 2008–2009;
1
, MODULE 1: ACCOUNTING AND SOCIETY
PART A – ACCOUNTANTS AS MEMBERS OF A PROFESSION
5. What is a profession ?
A profession is based on a high level of competence and skills in a given area, which are learnt through specialised training and maintained by continuing professional
development.
Members of professions are expected to behave ethically and in the best interests of society.
Features of a profession:
established professional associations, which carry many obligations and attributes (8 attributes)
focus on intellectual or administrative skills rather than mechanical or physical actions
critical nature of their work and the esoteric knowledge required to perform it to a high standard;
often leads to greater status and wealth for its members (result of the members’ specialised skills and the level of monopoly control ~ where members of the
profession control who is allowed to work in the industry by establishing licensing rules and regulations)
professions should both serve society and act in the public interest ~ “service ideal”
high levels of expertise: extensive educational programs focused on the development of intellectual skills, knowledge and experience, with an emphasis on lifelong
updates.
Self- regulation Co-regulatory process
independence or autonomy: greater level of negative outcome from this autonomy: if the profession fails to
authority to set their own rules and regulations, and demonstrate self-control and self-regulation => trust will be
have less detailed government regulation. eroded and the value and the status will be destroyed.
commonly extends to membership and membership Thus, the profession has moved from a situation of self-
rules of a profession i.e. education requirements, regulation to co-regulation, with regulation shared between
professional ethical standards and disciplinary the profession and external sources (e.g. AFRC, Corporation
processes Act)
members of a profession to be judged by their
informed peers, rather than by regulators
internal penalties, or sanctions,
“professionalization”: ( e.g. financial advisers, project managers, physiotherapists, and among service occupations and manual trades––such as builders and electricians ):
established professional bodies and codes of conduct
efforts of these occupations to raise their standards, and to invest in training, education and quality standards
6. What is a professional ?
A professional :
is a person who has a significant level of training and a high level of competence and skills in an area;
behave in an ethical and appropriate manner and apply their skill and judgment in areas of importance
2
PART A – ACCOUNTANTS AS MEMBERS OF A PROFESSION
1. Public interest or self-interest?
Accountants serve the public interest by:
creating and distributing information that conveys a clear and accurate picture of an entity’s financial performance, financial position and other relevant issues
providing objective, accurate and appropriate financial and accounting-related advice that is free from bias and based on expertise.
“Altruism” – chu nghia vi tha: action that brings no benefit to an individual and may even be at their own expense. However, altruism may not be the driving motivation.
Like West (2003), Larson (1977): monopolistic professionals are not motivated by a service ideal or the public interest.
Larson: considers that professions and professionals are about maintaining monopolies and extracting unwarranted wealth and influence from that position =>
described as self-interest or enlightened self-interest, rather than altruism.
2. Model of responsible decision-making
Governance:
firstly within the governance framework of the profession => codes of behavior
within the relevant corporate governance framework of the entity (i.e. instruments and articles of association, policies and strategies approved by the board of
directors.)
Accountability:
requirements of regulatory authorities;
appropriate disclosure to shareholders and other stakeholders.
Ethics:
within a framework of ethical conduct
based on a commitment to integrity and honesty in the pursuit of professional purposes and client interests.
3. Enlightened self-interest (by Lee 1995)
The term ‘enlightened self-interest’ suggests both purposes may be served together, committed to the public interest and yet possess a degree of self-interest ~ “doing
well by doing good”
There is a careful balance to be maintained between serving the public interest and pursuing self-interest, and the public interest is outweigh.
4. Ideals of accounting—entrepreneurialism and professionalism
Carnegie and Napier (2010): ideals of accounting professionalism comprising “the four Es” - education, ethics, expertise and entrepreneurship
Too emphasize on “entrepreneurship”:
may result in a ‘de-professionalisation’ of accounting - pursuit of commercial opportunities moves an accountant away from integrity, objectivity and professional
behaviour in order to achieve commercial success
can lead professional accountants to place more importance on increasing their personal wealth and influence than on notions of public service
Examples of accountants pursuing self-interested outcomes at the expense of their ethical or professional standards:
the corporate collapses of the early 2000s
failures of organisations, such as Lehman Brothers in the GFC of 2008–2009;
1
, MODULE 1: ACCOUNTING AND SOCIETY
PART A – ACCOUNTANTS AS MEMBERS OF A PROFESSION
5. What is a profession ?
A profession is based on a high level of competence and skills in a given area, which are learnt through specialised training and maintained by continuing professional
development.
Members of professions are expected to behave ethically and in the best interests of society.
Features of a profession:
established professional associations, which carry many obligations and attributes (8 attributes)
focus on intellectual or administrative skills rather than mechanical or physical actions
critical nature of their work and the esoteric knowledge required to perform it to a high standard;
often leads to greater status and wealth for its members (result of the members’ specialised skills and the level of monopoly control ~ where members of the
profession control who is allowed to work in the industry by establishing licensing rules and regulations)
professions should both serve society and act in the public interest ~ “service ideal”
high levels of expertise: extensive educational programs focused on the development of intellectual skills, knowledge and experience, with an emphasis on lifelong
updates.
Self- regulation Co-regulatory process
independence or autonomy: greater level of negative outcome from this autonomy: if the profession fails to
authority to set their own rules and regulations, and demonstrate self-control and self-regulation => trust will be
have less detailed government regulation. eroded and the value and the status will be destroyed.
commonly extends to membership and membership Thus, the profession has moved from a situation of self-
rules of a profession i.e. education requirements, regulation to co-regulation, with regulation shared between
professional ethical standards and disciplinary the profession and external sources (e.g. AFRC, Corporation
processes Act)
members of a profession to be judged by their
informed peers, rather than by regulators
internal penalties, or sanctions,
“professionalization”: ( e.g. financial advisers, project managers, physiotherapists, and among service occupations and manual trades––such as builders and electricians ):
established professional bodies and codes of conduct
efforts of these occupations to raise their standards, and to invest in training, education and quality standards
6. What is a professional ?
A professional :
is a person who has a significant level of training and a high level of competence and skills in an area;
behave in an ethical and appropriate manner and apply their skill and judgment in areas of importance
2
