By its very nature, professional accounting and auditing requires that individuals and firms deal with the social and economic welfare of various constituencies, such as clients, business organizations and society at large. At times, conflicting demands among constituent groups will result in actual or perceived conflicts of interest, causing practitioners to behave in ways that can and will compromise the quality and integrity of services rendered. As a result, self-regulatory bodies, the courts and governments are becoming increasingly concerned about real and perceived conflicts of interest that can diminish the credibility of the accounting and auditing professions in the eyes of the general public.
In the light of increasing litigation risks and the potential for reputation losses resulting from a rash of negative stories in the popular press, public accounting firms, business organizations and government entities are striving to apply more stringent controls over the unethical and/or dysfunctional behaviors of accounting and auditing practitioners. A necessary requisite to mitigating the unethical acts of accountants and auditors, however, is an understanding of the ways in which ethical conflicts and dilemmas manifest themselves in extant practice. This is precisely the reason why behavioral accounting research can be so important and potentially useful.
Clearly, ethical behavior in accounting and auditing has been most frequently studied on the level of individuals or small groups, wherein the issue is defined as the individual's ability to frame, process and resolve an ethical problem or dilemma. In addition, ethical behavior in accounting and auditing has been studied from the perspective of business organizations and CPA firms, represented by the collective interest, beliefs and values of the organization's senior management or managing partners. Similarly, ethics research has been studied from the perspective of the profession, represented by the interest of self-regulatory bodies and associations such as the AICPA, IMA, IIA and so forth. Finally, ethics in accounting and auditing has been examined from the perspective of the public who relies on the quality and credibility of the professional's work product and service. This area of examination includes all key exchange partners of the professional firm, business organization and the profession as a whole.
Professional responsibility and economic need are at the heart of many ethical problems. Along similar lines, nontraditional service areas coupled with increasingly competitive work environments can lead to accounting or auditing problems. For instance, by virtue of work-related stress and business pressures, auditors may be too lenient when dealing with a client's unorthodox accounting and disclosure practices, or management accountants may undertake financial shenanigans to stretch actual to budget comparisons, or financial accountants may not exercise diligence and healthy skepticism when booking unusual accounting entries.
Economic motivation is not the only factor that influences ethics and ethics-related behaviors in accounting and auditing. For instance, ethical values and integrity of the individual, firm reputation, risk of litigation and threat of increased governmental interventions reduce occurrences of fraudulent activity as well as the opportunity for shirking behavior in the professional domain. Drawing upon behavioral and organizational research paradigms, I believe that the study of accounting and auditing ethics plays an important role in defining and shaping the professional's role in practice as well as for society. I also believe that this area of research has the potential for helping professional firms and business organizations to understand and cope with the plethora of ethical conflict that abounds in everyday practice.