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Case Study Analysis: Accounting Theory

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Question:

Discuss about the Case Study Analysis for Accounting Theory.

 

Answer:

Introduction

The present essay aims to examine and analyse the normative ethical perspectives of teleological and deontological ethics. The case study depicts the ethical dilemma faced by Marcus, a financial accountant at Sportz’s who also has a keen interest in cloths designing. The case analysis presents the right course of action that should be taken by Marcus for resolving his ethical dilemmas. In addition to this, the essay also evaluates the statement of Deegan’s about the value judgement of researches on the basis of normative and positive accounting theory.

Ethical Issues Facing Marcus

As depicted from the case study above, the main ethical issues facing Marcus are maintaining trust and lack of integrity (Mizzoni, 2009). The case study analysis shows that Marcus, a financial consultant at Sportz Ltd has a keen interest in cloths designing. Charlotte, a designer at Sportz has revealed Marcus some of the cloths designs for the coming Autumn/Winter season. Charlotte, a close friend of Marcus has taken a promise from him for keeping all the details about these designs confidential.  As such, Marcus is facing ethical dilemma regarding maintaining the trust of Charlotte as he liked the designs very much and is planning to use a similar motif in designing the t-shirts that he sells at his own stalls in the local markets. The next ethical dilemma faced by Marcus is about the lack of integrity and honesty on the part of Leanne, director of Sales and Marketing at Sportz who is using unethical means to secure an overseas contract. Leanne has asked her friend to get the details of main competitor company of Sportz’s for ensuring that the tender of her company is more lucrative and Sportz’s gets the contract.  Leanne has told Marcus that getting this contract is essential otherwise the corporate office will be closed leaving him and other 68 people unemployed. Thus, Marcus is facing ethical dilemma that whether he should support Leanne or report her unethical activities to the top management.

 

Normative Ethical Perspectives of Teleology and Deontology

Ethical philosophy is categorised as a branch of philosophy that guides the decision-making process of businesses regarding morality. In this context, the normative ethical theories such as teleological and deontological theories are used for determining whether a particular set of actions are right or wrong. Teleological theory is a theory of morality that considers the ethical perspective of considering the action that produces good or desirable outcome. Teleological ethics emphasises on achieving utmost pleasure though taking that course of action which provides greatest happiness (Pojman & Fieser, 2008). On the other hand, deontological theory states that moral action of an individual is independent of the outcome achieved of good or evil. Thus, from the above discussion teleological ethics can be categorised as result-oriented theory while deontological theory can be referred to as duty-based ethics (Waluchow, 2003).

Advice to Marcus of Apropriate Decisions from the Teleological Ethical Perspective of 'Ethical Egoism'

Ethical egoism is a normative ethical theory that directs the behaviour of people that they should take the course of action that is in accordance with their own self-interest. The teleology perspective of ethical egoism states that it is rationale for the people to take the course of action that will benefit them. Thus, as per the ethical egoism theory Marcus is advised to take that decision that provides him good outcome. As per the teleological theory, Marcus should focus on the consequences more by selecting a particular course of action (Rhonheimer, 2000). There may be short-term and long-term consequence of Marcus as per the teleological ethical perspective of 'ethical egoism'. The short-term and long-term consequences for Marcus in the presented case as per the ethical egoism differ considerably. The short-term consequence for Marcus is that he can think of financial gain through copying designs from Charlotte through increasing sales of t-shirts and securing his job through supporting Leanne in her unethical decision. On the other hand, the long-term consequence of this course of action can be losing the job for Marcus if Sportz Ltd identifies the copied designs that he intends to sell at his stalls in the local market. Also, The Company can be legally sued for using unethical practice for stealing the tender details of its competitor. Thus, all these consequences need to be considered by the Marcus at the time of making his final decision. These decisions are based on ethical egoism as the theory also directs an individual to that action that produces positive results. In the same context, Marcus is also advised to consider both long and short-term consequences and select that course of action that delivers him good results (Rhonheimer, 2000).

 

Outline to Marcus from the Critics of Teleological Ethics

The critics of teleological ethics considers the approach to not to be ideal in selecting a particular decisions in the case of ethical dilemmas as faced by Marcus in the present case scenario. This is because teleology only considers the best outcome to be achieved and as such Marcus would face a conflict of interest in himself in selecting the best consequences. Thus, the critics would recommend Marcus to use Kant’s categorical imperative, a central philosophical concept on deontological ethics for taking right decision in the above case scenario. The imperative guides an individual to select a moral action irrespective of the outcome achieved as it is morally right (Waluchow. 2003).

Recommended Courses of Action for Marcus

In the above case scenario, Marcus is recommended to take a particular decision on the basis of deontological theory as it will guide him to take appropriate decision. Deontological theory will guide Marcus to take morally right decision as it does not only focus on achieving positive outcome for an individual. On the basis of deontological theory, Marcus should not copy the designs but only take idea and should develops his own designs. Also, he should inform top management about Leanne unethical practices so that right action can be taken for protecting company’s brand image (Mizzoni, 2009).

Explaination of what Deegan means by: "...no research... is value free’

The Deegan’s statement ‘no research... is value free’ means that all researches are done by considering a particular theory such as positive accounting theory etc and thus are based on value judgement (Deegan, 2014).

 

Justification of Deegan’s Statement with Reference to a Normative theory, and Positive Accounting Theory

The Deegan’s statement can be regarded as correct as researches are always based on value judgement as all perceptions are theory-laden. The authors in the researches should not try to enforce their personal opinion upon others as it is unscientific and should only provide implications of selecting a particular action. As such, all researches are based on value judgements obtained from societal theories. For example, normative accounting theory only provides suggestions to the accountants on the basis of a theoretical principle. The theory takes into account that individuals owns to select that particular course of action that are in their own self-interest and thus accountants should select specific policies that are based on theoretical principles (Deegan, 2014). Historical Cost Accounting (HCA) is a well-known normative accounting theory that assumes monetary unit to be stable and fixed all over the time. Therefore, as per the theory the book value of a particular company reflects the current value of assets. Thus, the theory is based on accounting principles and does not take into consideration about the current happenings inside it.

Similarly, positive accounting theory is also value laden as it argues that accountants while undertaking a specific research should not impose their own views but provide information about the expected outcomes of selected actions. This implies that selection of a particular accounting method should be based on theoretical basis rather than personal self-opinions of the researchers. Thus, on the basis of normative and positive accounting theory Deegan’s statement is absolutely right as all researches are value-laden. Researches whether use Positive accounting or normative theory is based on perceptions obtained from a societal theory in guiding a particular individual about the actions that should be taken at different situations. The accountants should select a particular action on the basis of accounting frameworks rather than relying on their personal opinions and views (Chatfield and Vangermeersch, 2014). The accounting frameworks and convention plays a fundamental role in guiding the decisions of accountants as per the Deegan’s statement. Thus, no research is value free that proves the stamen of Deegan’s to be absolutely right.

 

Conclusion

Thus, it can be summarised from the overall discussion held in the essay that organisations facing ethical dilemmas should consider the ethical perspectives of deontological ethics over teleological ethics in taking a particular decision. Also, all researches are based on theoretical perspectives and are therefore based on value judgement.

 

References

Chatfield, M. and Vangermeersch, R. 2014. The History of Accounting (RLE Accounting): An International Encylopedia. Routledge.

Deegan, C. 2014. Financial Accounting Theory. McGraw-Hill Education Australia.

Mizzoni, J. 2009. Ethics: The Basics. John Wiley & Sons.

Pojman, L. P. & Fieser, J. 2008. Cengage Advantage Books: Ethics: Discovering Right and Wrong. Cengage Learning.

Rhonheimer, M. 2000. Natural Law and Practical Reason: A Thomist View of Moral Autonomy. Fordham Univ Press.

Waluchow. W.J. 2003. The Dimensions of Ethics: An Introduction to Ethical Theory. Broadview Press.

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