In the earlier parts of this course, I explained how accounting can help businesses perform for the betterment of society. Society may also demand businesses to be operated by conforming to his expectations by using accounting. To make this happen, there are institutional and regulatory frameworks put in place for accountants and companies to follow. Yet, the most crucial factor for success in the above is the quality of all parties concerned in regard to understanding the roles and also performing them faithfully. This quality is primarily founded on the notions of ethics which applies to individuals in the society or the society as a whole, businesses and limited liability companies in particular, and also professionals like accountants and auditors. In this module, I shall introduce you to the notions of ethics. How it serves as the foundation for proper conduct of individuals, businesses and also professionals like accountants. You will get to understand how all these lead to increased attention to corporate governance and corporate social responsibility where accountants do have significant roles to play. There are many definitions of ethics that you can find in textbooks, articles and even on the internet. Here are a few to share with you. As defined, ethics can be the set of principles followed by individuals or group, or it can be broader as the discipline of study about those ethical principles. Please look carefully at the four definitions and tell me what you find most in common in them. Is the word moral. So basically, ethics is about judgment of right or wrong action from a moral perspective. This may simply and only natural to you but very often, the real challenge is how this can be put into practice. Let us try to examine the notions and devise and approach for practice. For all ethical issues, there must be a subject which is being judged and having a predicate attached to it after the judgment. Subjects are usually human actions and predicates are judged values such as good or bad, fair or unfair and so on. For any subject or action to be worthy of judgment, it must be a deliberate and free choice and having an ethical impact. Let us look at what is meant by deliberate and free choice of action. Consider the case where a lion kills an antelope. The subject is the action of killing. Is that an ethical issue and therefore a judgment needed? I don't think so. Because animals killing animals is an instinct for survival not a deliberate choice. There should be no ethical issue. But in the case of a human killing another human with a motive, there is clearly unethical issue because the action is a deliberate and free choice driven by the motive. In fact, there is also an ethical impact being the deprival of others right of living which will lead to a judgement that the killing is bad. Human actions are usually the subject of ethical judgments and people are held responsible for these actions. Where actions like murders are clearly unethical and unacceptable to everyone, they are simply forbidden and pronounced as illegal and punishable by laws. As such, the law often maps the minimum standard of what may be ethical behaviors acceptable in society. If the laws mark the minimum standard of what may be ethical behaviors acceptable in a society, are we therefore ethical if we obey the laws? Well, you need to do better than that. While the laws mark the minimum standard of what may be ethical behaviors, is only a "maybe". There are other actions in life that are not illegal but they can still be unethical. That is why apart from obeying the laws, human action still require judgment of their ethical values before they can be taken as ethical actions. Does it therefore mean that all human actions have to be judged as ethical or unethical? Not necessarily. Remember we said earlier that for any action to be worthy of judgment, a second condition is that the action must have an ethical impact. Therefore, a judgment is needed only when a human action has an ethical impact. Consider this. Is there an ethical impact and adjustment required, if a student wears a T-shirt to lecture or a red tie to a funeral? It is the presence of ethical impact and ethical issue that calls for judgment of an action. When dress normal and there was no dress code specified for attending lectures, a student can have a free choice of wearing T-Shirt or shirts, jeans or trousers, jacket or suit as they prefer, because what the student chooses to wear to attend lectures does not have an ethical impact. There's no ethical issue and no judgement is required. But if the same person wears a red tie to a funeral, this is clearly inappropriate. At least this action is an appropriate as a violation of ethical rules. But if the person did this intentionally to agitate the grieved family, then this action will be both a deliberate choice and having an ethical impact and therefore subject to ethical judgment. The above considerations apply similarly to actions taken by a group of human subjects. For example, a company can be unethical in hiring child labor or dumping toxic waste into rivers. A society can be unethical in condoning or even allowing racial discriminations. By now, you should be able to determine when ethical judgement needs to be made based on different actions. Let us now turn to a more realistic situation. That is, very often we hear people saying that they have done something unethical because they had no choice and therefore excusing themselves. Should they be excused? Well, they may be but only very rarely. The fact is oftentimes, what really left people with no choice is what they have or have not done before the dire situation arose. For example, a student claimed that he had to copy his classmate homework because there were so many assignments to be submitted at the same time and he simply could not finish them all. But taking one step back, it was really that the assignments have been handed out well before the deadlines and the student just did not manage his time well, and did not start doing the homework until the deadline came very near. At this point, an ethical judgment may seem rather complicated. So, how can we deal with it? A quick search of literature may give you a vast list of theories, models and guidelines. In general, they vary due to their different emphasis on factors like motivations, consequences of actions, duties or key values of the subject et cetera. A more systematic approach has to be adopted for dealing with the judgment which I shall provide in a separate video.
