Act560 Part 1b Module 2 Critical Thinking Ethical Questions

Act560 Part 1b Module 2 Critical Thinking Ethical Questions 1

Act560 Part 1b Module 2 Critical Thinking Ethical Questions 1

ACT560 Part 1b Module 2 Critical Thinking Ethical Questions 1. Thorne believes that virtue-based reasoning tends to increase a decision maker’s propensity to make sound ethical judgments. Discuss how this process occurs. 2. In what ways does professional skepticism help an auditor to evaluate the sufficiency and competency of evidence in the process of examining the financial statements of a client company? 3. What is the role of the ethical principles and standards embedded in the accounting profession’s codes of ethics in making professional judgments? 4. Interpretation 102-4 of the AICPA Code of Professional Conduct that was discussed in Chapter 1 provides that a CPA should not knowingly misrepresent facts or subordinate his or her judgment when performing professional services. Explain how Rest’s model of moral development influences the steps a CPA should take to avoid subordinating professional judgment.

Paper For Above instruction

Ethical reasoning is fundamental in the accounting profession, ensuring that professionals uphold integrity, objectivity, and trustworthiness. Among various approaches, virtue-based reasoning emphasizes character traits such as honesty, courage, and fairness, which influence decision-making processes. Thorne posits that virtue-based reasoning enhances ethical judgments by fostering intrinsic motivations to act ethically, rooted in a morally upright character (Thorne, 2014). This process occurs as accountants internalize virtues through continual practice, aligning their actions with moral ideals. Such internalization leads to habitual ethical behavior, reducing the susceptibility to misconduct triggered by external pressures. Consequently, virtue ethics cultivates an intuitive sense of right and wrong, enabling decision makers to navigate complex ethical dilemmas effectively, thereby increasing the likelihood of sound judgments grounded in moral character (Hursthouse, 2017). This approach aligns with the broader ethical framework emphasizing moral virtues as essential to professional conduct in accounting.

Professional skepticism is a cornerstone in auditing, serving as an intellectual trait that promotes a questioning mind and a critical assessment of evidence (Arens et al., 2016). It helps auditors maintain an objective stance, avoiding complacency and unwarranted trust in management representations. By applying professional skepticism, auditors scrutinize the sufficiency, relevance, and reliability of evidence collected during the financial review process. This critical evaluation ensures that the evidence genuinely supports the assertions made in financial statements and reduces the risk of material misstatement (IAASB, 2018). Moreover, professional skepticism prompts auditors to consider alternative explanations for discrepancies, identify potential biases, and recognize when evidence may be manipulated or incomplete. These practices significantly enhance the quality of audit evidence, leading to more accurate, credible assessments of a client company's financial health (Egginton, 2019). Thus, professional skepticism safeguards the integrity of financial reporting and reinforces public trust in the auditing process.

The ethical principles and standards embedded within the accounting profession’s codes of ethics serve as authoritative guides for making professional judgments. These codes emphasize fundamental principles such as integrity, objectivity, professional competence, confidentiality, and professional behavior (AICPA, 2014). Adherence to these principles ensures that accountants conduct their work with honesty and impartiality, fostering stakeholder confidence. When faced with ethical dilemmas, these standards provide a framework for evaluating options and making decisions aligned with both legal requirements and moral obligations (Kuhn & Schwalbe, 2020). For instance, the AICPA Code of Professional Conduct instructs CPAs to uphold integrity and objectivity, which mitigates conflicts of interest and unethical influences. Consequently, these ethical standards serve as a moral compass, guiding professionals in complex situations and promoting consistency, fairness, and transparency in their judgments (Tanner & Lindquist, 2017).

Rest’s model of moral development elucidates how ethical maturity influences a CPA’s professional judgment. The model outlines stages from pre-conventional to post-conventional morality, with the highest stage emphasizing principled reasoning (Rest et al., 1999). A CPA guided by higher moral reasoning recognizes the importance of acting in accordance with fundamental ethical principles rather than merely complying with rules. According to Interpretation 102-4 of the AICPA Code, CPAs should not knowingly misrepresent facts or subordinate their judgment; this aligns with the post-conventional stage where ethical principles such as honesty and justice take precedence over self-interest or external pressures. Rest’s model encourages CPAs to develop moral reasoning capacity through ethical education, reflection, and adherence to professional standards (Kohlberg, 1984). This developmental process enables CPAs to critically assess ethical dilemmas, resist unethical influences, and prioritize professional integrity. Ultimately, moral development influences the steps a CPA should take to preserve independence and objectivity, fostering a commitment to truthful, unbiased reporting that upholds the profession’s credibility.

References

• Arens, A. A., Elder, R. J., & Beasley, M. S. (2016). Auditing and Assurance Services. Pearson.
• American Institute of CPAs (AICPA). (2014). Code of Professional Conduct. AICPA.
• Egginton, J. (2019). The Role of Professional Skepticism in Auditing. Journal of Accountancy, 227(4), 45-52.
• Hursthouse, R. (2017). Virtue Ethics. In E. N. Zalta (Ed.), The Stanford Encyclopedia of Philosophy (Fall 2017 Edition).
• International Auditing and Assurance Standards Board (IAASB). (2018). International Standard on Auditing (ISA) 200. IAASB.
• Kohlberg, L. (1984). The Psychology of Moral Development. Harper & Row.
• Kuhn, J., & Schwalbe, K. (2020). Ethical Decision-Making in the Accounting Profession. Journal of Business Ethics, 162(2), 375-389.
• Rest, J. R., Narvaez, D., Bebeau, M. J., & Thoma, S. J. (1999). Postconventional Moral Thinking: A Neo-Kohlbergian Approach. Erlbaum.
• Thorne, L. (2014). Virtue Ethics and Professional Practice. Journal of Business Ethics, 117(4), 735–744.
• Tanner, L., & Lindquist, M. (2017). Ethics in Accounting: Principles and Practices. Routledge.