Changing The Ethical Standards Of Organizations

The scandals of Enron and WorldCom appear to be contagious and are the impetus for the media’s current focus on ethical issues.  Business has been and continues to confront ethical dilemmas that impact decision-making and financial reporting.  Codes of conduct and a focus on ethical standards continually surface as proposals to change the ethical values of organizations.  Many argue that it is the “tone at the top” that is the driving force behind any serious changes to the ethical culture in organizations.  This study presents the results of a survey of practicing CPAs.  A factor analysis identifies the actions and procedures that are linked with a management culture that emphasizes the importance of integrity and ethical values.  The results provide guidance on the key factors involved in invoking ethical change in organizations.  These results should prove to be of assistance to both educators and employers in the development of feasible programs that maximize the ethical potential of organization members

Does A Tone At The Top That Fosters Ethical Decisions Impact Financial Reporting Decisions: An Experimental Analysis

The accounting profession believes the reliability of financial reporting is affected by an organizations internal control, the foundation of which relates to the tone at the top of an organization. Despite attempts by organizations to create ethical environments, financial accountants are sometimes confronted with ethical dilemmas that may affect financial reporting decisions.An experiment that consisted of six different financial reporting scenarios was used to examine the influence of the tone at the top on financial reporting decisions. Subjects were assigned to three different organizational categories in terms of tone at the top a tone that fosters ethical behavior, a tone that does not foster ethical behavior, and a neutral tone. The results support the position that tone at the top does relate to financial reporting decisions