DECISION MAKING IN ACCOUNTING

AND ETHICS

MUHAMMAD AZRI PRASETIO : 0421113333250

DIPO ADHI NUGROHO : 042111333251

 A DECISION MODEL FOR ACCOUNTING ETHICS

The intention of a decision model is twofold. First, it
offers a structured approach to ethical decision-
making for accountants to use as a framework for
addressing ethical issues. As the accountant gains
experience in identifying, judging, and managing
ethical issues, he or she will likely develop their
approach to ethical decision making and the need
for such a structured decision model will diminish.
Second, the model serves a pedagogical purpose as
it summarizes and draws together key stages of
ethical decision-making. The model identifies key
resources that may support decision-making, and it
points out relevant environmental characteristics
that may influence the decision process. These
features of the model allow us to communicate “the
parts and the whole” of accounting ethics in an
accessible and useful structure that can be used
both for analyzing situations and making practical
action choices in accounting discourse.
THE FIRST STAGE IS DEFINING THE PROBLEM.

Problem definition means identifying what the problem actually entails. in terms of the moral
agent’s pursuit of suitable tools or frameworks that may be helpful for understanding the
situation and identifying the problem – especially for understanding how the situation at hand
differs from how we might want things to be.

we distinguish between two types of problems that are related, yet distinct. For the first part, we are
concerned with identifying (or defining) the accounting problem. This means figuring out what is wrong
with a given decision or what is not yet resolved in a particular situation from an accounting point of view.
This means that “the ideal state” must be considered from an accounting point of view; that is, with
reference to accounting purposes and accounting standards. For the second aspect of the problem
situation, we are concerned with identifying (or defining) the ethical problem. This means determining what
is wrong with the decision or what is left unresolved in a situation from an ethical point of view
SECOND STAGE DISCUSSES THE IDENTIFICATION OF
RELEVANT PROBLEM-SOLVING RESOURCES THAT ARE
AVAILABLE TO THE DECISION MAKER
We see the identification of problem-solving resources in terms of the moral agent’s pursuit of
suitable tools or frameworks that may be helpful for understanding the situation and identifying
the problem – especially for understanding how the situation at hand differs from how we
might want things to be
there are three broad categories of such problem-solving resources available to the moral
agent (i.e., the accountant). First, the accountant may consult the guidelines for the
preparation of financial statements which is the relevant framework for determining the
acceptable form and content of financial accounting according to the relevant regulatory
bodies

Second, the accountant may assess the situation and make a decision in light of perspectives
from moral philosophy, such as duty ethics, virtue ethics, or utilitarianism.

Third, the accountant may consult professional codes of ethics The code of ethics will provide
information about the standards of conduct that are required for professional accountants
THIRD STAGE IDENTIFY IMPORTANT
CHARACTERISTICS OF THE DECISION ENVIRONMENT
the accountant should attempt to understand the decision environment. This means gaining
insight into relevant situational, institutional, and environmental features that influence the
decision making of the accountant
the identifies three broad categories of factors in the decision environment that are
particularly salient for the accountant’s purposes: stakeholders’ power, and legitimacy,
potential conflicts of interest, and pressures on decision making.

First, the accountant should identify which stakeholders are influenced by the decision

Second, the accountant can scrutinize the decision environment to identify potential conflicts
of interest

Third, the accountant may “scan” the environment for relevant pressures that can influence
decision making. Pressure comes in many forms
FORTH STAGE GENERATE AND ASSESS DECISION
ALTERNATIVES
The accountant can generate and assess decision alternatives. At first, this is an open-ended
process that expands the “action space” of the accountant; that is, it is desirable to conceive
as many action alternatives as possible before weighing their costs and benefits, seeking to
arrive at the best solution given the constraints of the situation

The accountant wants to make a decision that (1) solves the problem, i.e. brings him closer to
“the ideal state,” while at the same time (2) being feasible, given the constraints of the
situation (e.g., pressures, the degree of power held by the accountant, and suchlike). Following
the logic of the model (and recalling the discussion in previous chapters), this assessment will
combine the accountant’s professional knowledge (technical proficiency) with his competence
in assessing the problem from a moral point of view (ethical sensibility).
LAST STAGE PRACTICAL JUDGMENT AND ACTION
when all alternatives have been assessed, the accountant as the moral agent will judge the
problem and select a course of action that (1) he considers to be rationally and ethically
justifiable; for example, an action that emerges from combining his professional and ethical
judgments, and (2) he commits himself to act on this judgment. It should be noted that these
two elements, judgment, and action, do not necessarily go hand in hand. That is, the
accountant may act in a way that is not in accordance with his judgment

Judgment and action, as we can see, comprise two difficult tasks for the accountant. First, the
accountant must arrive at a justifiable assessment of the course of action he should follow.
Second, the accountant must be able to realize this in practical action and to implement the
decision despite the obstacle
 THE DESIRABLE AND THE POSSIBLE
This relationship between desirable action alternatives
and possible action alternatives is illustrated in the
Venn diagram in Figure 2.2. The circle on the left
represents all possible decision and action alternatives
that are consistent with the technical and ethical
requirements the accountant should take into account.
The circle on the right represents the possible decision
and action alternatives, those that are available to the
accountant given the constraints of the situation (e.g.,
pressure, lack of power, knowledge or authority, and
suchlike). The intersection of the two circles represents
the alternatives that are both possible and desirable,
alternatives that are consistent with standards, codes
and requirements and the accountant finds it possible to
realize them
PROBLEM-DEFINITION: FINDING AND FORMULATING
THE PROBLEM
“the gap between the current state and the desired state
to accounting”
For example, look back at earlier accounting decisions: there may be something in the way that accounting
decisions were made that deviates from the relevant accounting standards and principles. there is a gap
between the current and desired states in relation to accounting. For example, look back at earlier
accounting decisions: there may be something in the way that accounting decisions were made that deviates
from the relevant accounting standards and principles. Or in another circumstance, looking ahead to an
accounting decision yet to be made: the financial situation may be complicated and confusing to the
accountant, or he will experience pressures within the circumstance that will make it difficult to follow the
rules of the profession or act with integrity in the situation.
PROBLEM-DEFINITION: FINDING AND FORMULATING
THE PROBLEM
“The gap between the current and desired states in relation to ethics

On the other hand, there may also be a gap between the current and desired states in relation to ethics. In
such a circumstance, something is being done that violates shared principles, standards or judgments of what
is considered right, good or wise – principles likely shared by the accountant and those whom he or she
serves. In another instance, the accountant decision maker faces a situation in which important values are at
stake for the various stakeholders and these particular values may be in conflict or the interests of the
different stakeholders may collide
FINDING THE PROBLEM IN ACCOUNTING ETHICS

We have argued that finding and formulating the accounting problem is about discerning the accounting-
relevant features of the current situation as well as of the desired state; that is, what one is trying to achieve
as an ideal solution. Formulating the ethical problem, in comparable fashion, is about discerning what is
ethically relevant in the situation at hand, the features of the situation and characteristics of the decision to
be made that are relevant from an ethical point of view.

Accounting ethics comprise an accounting dimension and an ethical dimension. These two perspectives of
the problem are partially overlapping; despite their differences, they express some similarities with one
another. The reason for this is that accounting principles and rules carry within them ethical judgments that
are seen as appropriate from an accounting point of view.
CASE STUDY
A. The accounting issue is that she shows a fake profit just to show
the company is making profit in the first year, 24 Kant recognize
revenue on the items shipped with the word

B. there is obviously an ethical issue this is because the public trust

between the company would be destroyed we can support this by
her saying "even if we have not shipped the goods"

C. the right to recognition of the equal worth and equal dignity of

each human being
THANK YOU