Ethical reasoning and competing values

Recognising the ethical question

Ethics examines how people ought to act and how they justify their choices. An accounting problem can therefore have both a technical question and an ethical question. The technical question may concern the calculation of an estimate; the ethical question concerns whether the assumptions have been selected honestly, whose interests are affected and whether relevant uncertainty is concealed.

Legality, personal comfort and popular approval are useful information, but none is a complete ethical test. A permitted action may still exploit an information imbalance. A familiar practice may have become normal without being defensible. Conversely, feeling uncomfortable about reporting an error does not make reporting it wrong. Religious and cultural traditions can inform a person's values, but professional reasoning must also be explainable to people who do not share those traditions.

Professional ethics concerns the obligations attached to professional work and its public consequences. Business ethics considers conduct within and by organisations. The two overlap when an employed accountant helps prepare a product claim, assesses an investment or designs an incentive. The employer's commercial objective does not replace the accountant's professional obligations.

A dilemma is not simply an opportunity to cheat

Sometimes the apparent choice is between an ethical action and an attractive but clearly improper one. A request to invent an invoice does not become a balanced ethical dilemma merely because refusing it is uncomfortable. Other situations involve genuinely competing values: being truthful while respecting confidentiality, applying a consistent rule while considering exceptional hardship, meeting immediate needs while protecting future users, or balancing an individual's interests against a group's interests.

The guide introduces these recurring tensions through Kidder's framework. Use them to describe what is difficult, not to assume that every side is equally permissible. First establish the facts and applicable duties. Then consider whether a better alternative could protect more than one legitimate interest.

Describing behaviour and evaluating it are different tasks

Descriptive ethics investigates what people believe or do. A survey showing that staff commonly accept a particular benefit describes behaviour; it does not prove the benefit should be accepted. Normative ethics offers reasons for judging conduct. The guide's principal normative approaches examine consequences, duties and character.

This distinction prevents a common reasoning error: moving directly from an observation to an obligation. A finding that a manager acts in self-interest does not establish that self-interest should be the only basis for decisions. Likewise, observing different customs across countries does not itself establish that every customary practice is ethically acceptable.

Egoism and the reach of consequences

Ethical egoism treats the decision maker's interests as the basis for judging action. It is a normative position. Psychological egoism is a descriptive claim about why people act. Do not use these terms interchangeably.

Self-interest can also be viewed over different time horizons. A professional might reject a dubious engagement because preserving a reputation is worth more than an immediate fee. That is different from rejecting it because users deserve honest work regardless of the fee or reputational outcome. Both decisions may look identical, but the reasoning differs.

The guide discusses constrained forms of self-interest in which rules and fair dealing limit pursuit of personal gain. Even so, public-interest professional obligations cannot be reduced to the accountant's private advantage. A case answer should identify whose interests are being counted and which responsibilities remain when doing the right thing is costly.

Utilitarian reasoning looks beyond the accountant

Utilitarian reasoning compares effects on overall wellbeing, considering everyone affected. It requires a broader assessment than company profit or a count of people who prefer an option. The severity, duration and likelihood of harm matter, including harms to a small group that may be easy to overlook.

For Willow Learning, a cheaper assessment system might expand access but wrongly exclude applicants who need accessible formats. A useful analysis considers both the additional places and the harm caused by unreliable decisions. It should look for alternatives, such as an accessible assessment process, before presenting the issue as an unavoidable choice between access and fairness.

Consequences are uncertain and not all values can be measured in money. Assigning a convenient dollar amount to every effect can hide the judgement involved. Explain the assumptions, include longer-term effects on trust and consider whether rights or professional duties rule out an apparently beneficial option.

Concept sources: John Stuart Mill, Utilitarianism, Chapter II — the original work provides a foundation for the consequence-based approach; the cooperative example and analysis here are original.

Duties, rights and justice

Duty-based ethics asks whether an action respects an obligation, rather than treating a favourable result as sufficient justification. Kant's approach also emphasises respect for people as persons with their own purposes. A professional should not manipulate a user's understanding merely to secure the employer's desired outcome.

Rights may arise from law, agreement or moral claims. Identifying a right also raises questions about the responsibilities of others. A contractual right to confidentiality does not mean that all other duties disappear; equally, concern for the public does not automatically authorise unrestricted disclosure. Establish the relevant rights, duties and exceptions before recommending action.

Justice concerns fair treatment. Procedural justice examines how a decision is reached, such as consistent criteria and an opportunity to be heard. Distributive justice examines how benefits and burdens are allocated. Equality, need and contribution can point to different distributions. State the basis used instead of treating fairness as a self-explanatory conclusion.

The guide also introduces Rawls in its discussion of justice. A useful learning question is whether the rules would be defensible without knowing which position you would occupy. That shifts attention from protecting the decision maker's present advantage to the fairness of the arrangement, including the position of people who are least advantaged. It is not a claim that every unequal outcome is automatically unjust or that an identical allocation always meets different needs fairly.

Concept sources: Immanuel Kant, Fundamental Principles of the Metaphysic of Morals, Second Section — a primary text on duty and respect for persons, in T. K. Abbott's translation.

Character, courage and moral agency

Virtue ethics shifts attention to the qualities a person develops and exercises. In professional work, honesty without diligence can still produce unreliable information, while technical ability without integrity can make deception more effective. Courage is needed to act on a sound conclusion, and practical judgement helps determine how to act responsibly in the particular circumstances.

Good character develops through repeated choices, reflection, feedback and the example of others. It is not a claim that a well-intentioned person can ignore procedures. Nor does describing someone as courageous resolve whether their action was justified. A forceful accusation without adequate evidence may be rash rather than virtuous.

Moral agency involves the capacity to make ethical judgements and accept responsibility for choices. Instructions from a superior, a software recommendation or a widespread custom do not remove that responsibility. They form part of the circumstances the accountant must assess.

Apply several lenses without inventing certainty

Suppose Willow Learning can improve its reported completion rate by excluding students who withdrew after receiving poor support. A consequence-based analysis considers future students, funders, staff and the organisation. A duty-based analysis asks whether the report represents the agreed measure honestly. A justice analysis examines who bears the cost of the exclusion. A character-based analysis asks whether staff are exercising candour and care.

Reasoned response: Establish the reporting definition and the reasons for withdrawal. Report the measure consistently and explain any limitations or supplementary analysis. Do not alter the population solely to improve appearances. Ethical theories deepen the explanation; the professional Code provides the framework for addressing the resulting threats.

Self-check: Why is “most staff support the exclusion” insufficient? It describes support, not ethical justification. Why is “the funding will help many students” insufficient? A beneficial aim does not establish that misleading the funder is permissible.

Sources and further reading

Study-guide reading: CPA Australia, Ethics and Governance, fourth edition, November 2023, Module 2, printed pages 48–66. The guide covers the nature of ethics, recurring value conflicts, normative theories and moral agency. These notes do not reproduce its cases or questions.

• Mill, Utilitarianism, Chapter II.
• Kant, Fundamental Principles of the Metaphysic of Morals, Second Section.