PDT 2020 — Session W114: Doing the Right Thing Especially When it is Not Easy

By Mary Margaret Yodzis 

Accountability professionals will face ethical dilemmas during their careers. How they react when faced with a difficult and ethically challenging situation makes all the difference. In session W114 at AGA’s PDT 2020, David Cotton, CGFM, CPA, CFE, vice chair of AGA’s Professional Ethics Board, examined various ethical decision-making models and explored obstacles to sound ethical choices.

Cotton began by outlining the five major hurdles in an ethical dilemma:

  1. You don’t recognize that you’re facing an ethical dilemma.
  2. Not everyone will agree on the right, proper course of action in response to a dilemma.
  3. Humans tend to rationalize behavior.
  4. Following all ethical rules is impossible in every situation.
  5. Ethical behavior often conflicts with personal best interests.
When an ethical dilemma is suspected, the “generic” first course of action, said Cotton, is to “check the organization’s ethics policy. If that doesn’t provide the answer you need, work your way up the chain of command. If that doesn’t resolve the issue, take more steps that might be necessary. Ultimately, all professionals have to face the prospect of remaining with the organization when it conflicts with their ethical values. They might need to seek other employment.”

Cotton presented several models of ethical decision-making. The first, is created by the American Accounting Association in conjunction with the Virginia Society of CPAs, recommends professionals:
  1. Determine the facts.
  2. Define ethical issues.
  3. Identify major principles, rules and values.
  4. Specify the alternatives.
  5. Compare values and alternatives.
  6. Assess the consequences.
  7. Make a decision.
The second, slightly different model presented is Rest’s Model of Ethical Action:
  1. Identify the ethical dilemma.
  2. Test the outcomes based on your ethical judgment.
  3. Commit to acting ethically.
  4. Carry out the ethical action.

“But I will point out here,” Cotton said, “that if you don’t identify the ethical dilemma, you don’t get to steps 2, 3 and 4. “

Cotton said he favors a different model, Kohlberg’s Theory of Cognitive Development, in which the most basic level of development is choosing right from wrong based on consequences. “As a society now, we study rules and laws and try to follow them. We have situational ethics. We should strive for [a higher cognitive level] in the principles-based model: in any given such situation, we simply do the right thing.”

Within the accountability profession, codes of professional conduct and various government-produced guidelines align fairly well, noted Cotton, in delineating ethical threats. “So, if you identify a threat, you first ask yourself if it is significant. If you conclude that it isn’t significant or that somebody on the outside looking in wouldn’t consider the threat significant, then you proceed with the professional service. But if you have doubts or if you think someone looking at the situation might believe it is a significant threat to remaining ethical, then you apply safeguards,” such as mandatory reviews by peers, clients or business partners or internal procedures checklists.

The next step, said Cotton, is to determine whether the safeguards eliminate or reduce the threat to an acceptable level. “If you conclude they do, then you can proceed to the professional service. If you still have doubts, consult other experts. I believe this is a particularly important step in the process. It’s always good to have someone you can count on — an objective outside party — take a look at the situation and give you untainted, objective advice.”

If the situation is one with which you do not want to become associated, said Cotton, it is time for an ethics decision. “But remember, it all starts with becoming aware that you are facing an ethical dilemma.”

If you face a question about a potential ethical dilemma in your work, review AGA’s Code of Ethics or reach out to AGA’s Professional Ethics Board for advice.