ACC 2213- ACCOUNTING ETHICS

WHISTLE BLOWING AND ETHICAL THEORIES

1.0 WHISTLE BLOWING CONCEPT:

Whistle blowing simply means giving information (usually to the authorities) about illegal or
under hand practice (Chambers Dictionary) exposing to the press a wrong doing or cover up in
a business or government office.

Whistle blowing can also be seen as calling attention to wrong doing that is occurring within an
organization. Experts and analyst believe that whistle blowing; the act of exposing fraud, waste,
abuse or misbehavior in a company organization is on the rise globally.
2.0 Four ways to blow the whistle
The government accountability project list four ways to blow the whistle.
1. Report wrong doing or a violation of the law to the proper authorities such as supervisors, a
hotline, or an inspector general.
2. Leaking evidence of wrong doings to the media.
3. Testifying in legal proceedings.
4. Refusing to participate in wrong doing in work place.
Of course, whistle blowing goes on in the private sector involving some of the most famous
figures including ERNON vice president Sharon Watkins and Tobacco executive Jeffrey
Wigan. Because government by its very nature is supposed to open and transparent, full
disclosure of unethical or illegal behavior in the public sphere is particularly important, whistle
blowing today becomes the position of the government globally.

3.0 But is it wise to speak out? Consider the following examples:

On the 22nd July 2005, Charles de Menezes, having just entered a train, was shot seven times
by the London Police. The police claimed he was wearing a bulky coat and had jumped over the
ticket barrier and had run to the train. But Lana Vandenberg knew the police were lying. She
work for the independent police complaint commission and had access to evidence presented at
the commission’s enquiry into the shooting. She leaked the information to television journalists
and then was subject to reprisals by the police. In a dawn raid by 21st September 2005, ten
police officers broke down her door and arrested her, she was kept in a cell without access to
lawyer for 8 hours and threatened by a police that she could go to prison. She said “It never
crossed my mind that I would be treated as if I was a criminal for telling the truth. Unlike the
police, I hadn’t killed an innocent person”.
Whistle blowing definitely is a risky business. There examples are just sample of thousands of
similar cases, although each one is far more complicated than can be conveyed by a short
summary.

4.0 Who is a Whistle Blower?

A Whistle Blower is an employee, former employee, or member pf an organization, especially a
business or government agent who reports misconduct to people or entities that have power and
permitted to presumed willingness to take corrective measures. Generally, the misconduct is a
violation of law, rule, regulations and corruption. One of the publicized whistle blowing cases

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involved Jeffrey Wigand, who exposed the Big Tobacco scandal, revealing that executive of the
companies knew the cigarette were addictive while approving the addition known as
Carcinogenic ingredients to the cigarettes. Wigand’s story was the basis for the 1999 movie
“The Insider”. Another famous whistle blower was Dr. Frederic Whiteburst, who exposed
irregularities at the federal bureau of investigations (FBI) crime lab

5.0 Types of Whistle Blowing

1. Internal Whistle Blowing: A person who reports misconduct to another employee or

supervisor within their company or agency. A disclosure made in good faith essentially
honestly to the employer (be it a manager or director) will be protected if the whistle blower
has a reasonable suspicion that the wrong doing has occurred, is occurring or likely to occur.
2. External Whistle Blowing: Reports misconduct to outside persons or entities. In these
cases, depending on its severity an nature, whistle blowers may report the misconduct to
lawyers, the media, law enforcement, state or federal agencies.
Wider disclosures (e.g. to the police, the media etc) are protected if in addition to the tests for
regulatory disclosure, they are reasonably in all circumstances and they are not made for
personal gain. A wider disclosure must however, meet one of four pre-conditions to trigger
protection. These are:
a) The whistle blower reasonably believed he would be victimized if he raised the matter
internally or with a prescribed regulation.
b) There was no prescribed regular and he reasonably believed the evidence was likely to be
concealed or destroyed.
c) The concern had already been raised with the employer or a prescribed regulation.

6.0 Whistle Blowing and Ethics

Whistle blowing has to do with ethics because it represents a person’s understanding at a deep
level that an action his/her organization is taken is harmful- that it interferes with peoples right
or unfair or detracts from the common good. Whistle blowing also calls upon the virtues,
especially of course, as standing up for principles can be a punishing experience.
Even though laws are supposed to protect whistle blowers from retaliation, people who feel
threatened by the revelations can ostracize the whistle blower, marginalize or even forcing him
or her out of public office.
On the hand, there have been occasions when the role of whistle blower has actually catapulted
people into a higher office and has carried the respect of constitutions. For example former
Director General of NAFDAC Prof. (Mrs) Dorah Akunyili.

7.0 Ethics Theories

In the study of moral development as conducted by psychologist Lawrence Kohlberg, he
discovered two types of moral theories namely, Ethical Subjectivism and Cultural
Relativism.
a) Ethical Subjectivism: This theory claims that morality is relative to individual and that it
differs among people depending on what they feel. It is believed that morality is a matter of
opinion. In the view of Boss (2005), “If morality was simply a matter of opinion, then there

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was no point in trying to use rational arguments to convince the racist or the serial killer that
what he did was wrong”.
b) Cultural Relativism: This theory was developed from the studies of simple cultures. It
proposes that morality is a societal norm. It is believed that public opinion and not private
determines what is right and wrong. This theory holds that what is right in one society or
culture maybe regarded as wrong as wrong in another society or culture.
While the ethical subjectivism absolves people of ever hearing to deliberate before moving a
making a moral judgement. Culture relativism on the other hand, absolves people from
moral responsibility as long as they follow the good. In accountancy profession, whether the
member is working in the industry or in a professional practice, the member cannot just
follow the crowd without being in trouble.
This therefore, brings us to the universal moral principles such as the Utilitarian and
Deontology.
a) Utilitarian Theory: This theory was developed by Jeremy Bentham, proposes that the
morality of an action is determined solely by its consequences. Utilitarian’s maintain that
actions as rights, to the extent that they tend to promote overall happiness and vice versa.
According to this theory, when people or individual is faced with ethical dilemma, the
consequences of the action are usually first evaluated in terms of what produces the greatest
amount of good for the greatest number of people. Utilitarian Philosophers that individual
should evaluate behavior in terms of its social consequences.
b) Deontology: This theory regards duty as the basis for morality. According to Echekwube
(1991). The Greek word “Deon”(duty) emphasizes that it is not the result of an action that
make it right or wrong, rather it is the action itself in its original conception and intuition
which determines whether the action is right or wrong.

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ENFORCEMENT OF ACCOUNING ETHICS

1.0 ENFORECEMENT OF ETHICS
To a large extent, the accounting profession is self-regulated rather than being regulated by the
government. For instance, the ICAN and ANAN have their internal means to enforce the code
of ethics. The power of ICAN, ANAN to enforce ethical standards is conferred on the
accountant disciplinary tribunal.
Violations of ethical standards can lead to expulsion or suspension. This is because of the
extreme importance of a professional accountant’s regulation, expulsion is a strong disciplinary
measures. However, ethical violation can lead to even more adverse consequences for
Accountant’s because of state and federal laws as contained in the company and allied matters
act 1990 as amended to date in the Nigerian constitution.
2.0 RESOLVING ETHICAL DELIMMA
By definition, an ethical dilemma is a situation that will often involve an apparent conflicts
between moral imperatives and one or a number of other issues.
Ethical dilemmas faced by mangers are often more real to life and highly complex- with no
clear Guidelines when one are actually faced with a significant conflict; some options may
exist;
(a) Significant Values conflicting among different interest
(b) Real alternatives that are equally justifiable, and
(c) Significant consequences on “stake holders” in the situation.

3.0 Ethical Dilemma Document

In other for organization to resolve ethical dilemma they should develop a document a
procedure for dealing with dilemma as they arises. In an ideal situation, ethical dilemma ought
to be resolved by a group within the organization, of an ethics committee which may comprise
of top managers and/or members of the brand
Today’s workforce is composed of people who are more diverse than ever in nationality,
culture, religion, age, Education, and socioeconomic status. More people enter the workforce
with differing background, value, goals, and perceptions of acceptable behavior, many of them
have career expectations that will be difficult, if not impossible to realize in today’s society.
Ethical issues may project themselves as well.
The diverse, multicultural population of workers is being used to work together in a spirit of
corporation and aspect for the good of the organization band the public they serve. According to
Kirrane (1990) there’s move pressure on people in the organizations than there ever has been to
do more with less and adjust quickly to change. In response to pressure people may cut corners,
may engage in expedient but questionable behavior.

4.0 Involving stakeholders

The resolution of conflict cannot and should not rest in the hands of one or two persons. All
stakeholders in a situation must be involved. This is probably for legal and ethical reasons, this
knowledge, opinion, and expertise of all the stakeholders in a particular decision situation must
be considered. In line with this assertion, Sonvesyu (1990) opines, “potential clients should also
be recognized as stakeholders because their choice to do business with a firm may be based on
the firm’s reputation for ethical behavior”.

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5.0 Requirements for successful Resolution of Ethical Dilemma Resolving Ethical Dilemmas
requires ;
 Interpersonal and negotiation skills as well as the new application of Employability skills.
 Honesty
 Ability to move cooperatively
 Respect for others
 Pride in one’s work
 Willingness to lean
 Dependability
 Responsibility for one’s action
 Integrity
 Loyalty
Over the years, employers have sought workers with their skills, today, businesses are training
their employees in ethical and critical thinking and conflict resolution skills required for ethical
decision making.

6.0. Consulting Services

Accountants also render consultations service, ethical standards must guide such service as
well, such ethical standards must be observed by American Institution of certified public
Accountant (AICPA) has shed some light in this aspect.
The AICPAs management consulting services executive committee is authorized to issue
statement bon the standards for consulting services to provide practitioner with authoritative
guidance on providing consulting services to their client , consulting services are broadly
defined by their standard to include virtually all services Accounting and review services and
tax services. To the general standard the following requirements are added to types of
engagements;
a. Client interest: the practitioner should strive to meet the objective of the client while
maintaining integrity and objectivity.
b. Understanding Client: the practitioner should establish a written or oral undertaking with the
client about the nation, scope and limitation of the consulting engagement.
c. Communication with client : the practitioner should inform the client of
1. Any conflict of interest that may occur with respect to the engagement.
2. Any significant reservation about the scope or benefit of the engagement.
3. All significant finding or event.

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