Ethical Exemplification and the AICPA Code of Professional Conduct: An Empirical Investigation of Auditor and Public Perceptions

Abstract

This research applies the impression management theory of exemplification in an accounting study by identifying and measuring differences in both auditor and public perceptions of exemplary behaviors. The auditors were divided into two groups, one of which reported self-perceptions (A-S) while the other group reported their perceptions of a typical auditor (A-O). There were two separate public groups, which gave their perceptions of a typical auditor and were divided based on their levels of accounting sophistication. The more sophisticated public group was comprised of bank loan officers (LO) while the less sophisticated public group consisted of investment club members (IC). Comparisons were made on 30 behaviors contained in the AICPA Code of Professional Conduct, which served as the basis for the research instrument. Profile analysis, a special form of MANOVA technique, was used to analyze the results. A-S perceptions were the highest of the four treatment levels and were significantly higher (i.e., more exemplary) than the perceptions of both the A-O and LO groups. The more sophisticated user group (LO) provided the lowest perceptions of the four treatment levels. For at least four of the six measures, the LO treatment group perceived the typical auditor to be less exemplary than both the IC and A-O treatments. There were no differences in perceptions between the A-O group and IC. Additional analysis revealed that auditors overrated the degree to which the public relied on financial statements. However, both public groups reported a reasonably high level of reliance on financial statements when making decisions. Copyright Springer Science+Business Media, Inc. 2007accounting code of ethics, professional conduct, impression management, exemplification,

Does Job Function Influence Ethical Reasoning? An Adapted Wason Task Application

“…Research conducted by Brown et al (2007) used impression management theory to compare perceptions of auditors on themselves (self-perceptions) and of a typical auditor and the perceptions of a sophisticated public group, bank loan officers, and a less sophisticated public group, investment club members. Using comparisons on 30 behaviors contained in the AICPA Code of Professional Conduct, the authors found the auditor's self-reported perceptions to be the highest (most exemplary) when it came to ethical judgments and the bank loan officers provided the lowest perceptions.…”

“…A review of extant business ethics research by the authors of this project uncovered well over 200 published articles that investigated the role of accounting, finance, marketing, human resources management, or other functions within a business organization as an explanatory factor of ethical or unethical behavior. Yet, nearly all of these reported investigations focus on a single job function and the professional managers within these disciplines, such as accounting (Arnold et al, 2005;Brown et al, 2007;Cohen et al, 2001), finance and insurance (Cupach and Carson, 2002), marketing (Armstrong and Sweeney, 1994;Bone and Corey, 2000), information technology (Fimbel and Burstein, 1990;Oz, 2001), supply chain/purchasing (Landeros and Plank, 1996) and human resource management (Foote and Robinson, 1999). While this represents an important body of work, ethical breaches are often found to cut across job functions or work roles within an organization and involve multiple disciplines embedded in a business organization.…”

“…Unfortunately, further investigations of the business ethics literature uncovered only a smattering of any significant number of investigations that explore cross-functionality of managers' ethical awareness, reasoning, or resolution (Brown et al, 2007;Fisher, 1999;O'Higgins and Kelleher, 2005;Sonnenfeld and Agle, 1998;Weber and Wasieleski, 2001). Despite the lack of empirical exploration of crossfunctional comparisons of ethical reasoning or decision making, the presence of such ethical dilemmas in the workplace provide the foundation for a new exploration that investigates if there are differences among managers by job function.…”

Dimensions of Auditor Independence: A Pilot Study

“…Integrity means maintaining an honest character, client confidentiality, due care and upholding the public trust above personal gains. According to Brown, Stocks and Wilder (2007), acting with integrity entails acting with all honesty and fair dealing, observing ethical and technical standards, client confidentiality and resisting subordination of judgment or circumvention of standards. The American Institute of Certified Public Accountants (AICPA) also charges auditors to maintain objectivity by continuously assessing client relationships with public responsibility.…”

Different Pathways that Suggest Whether Auditors’ Going Concern Opinions are Ethically Based

“…Therefore, the accounting profession may consider that a major problem lies with an unconscious lack of independence (Bazerman et al, 1997(Bazerman et al, , 2002. Brown et al (2007) have recently provided evidence supporting auditors' unintentional bias since they found that auditors perceive themselves as ethically exemplars.…”