Rendering of services:

　　Revenue is recognized only to the extent of the expenses recognized that are recoverable.

　　If the costs are not likely to be reimbursed, then they must be recognized as an expense.

　　Professional and ethical duty of the accountant

　　1 Ethical theory:

　　A key debate in ethical theory is whether ethics can be determined by objective, universal principles. How important the consequences of actions should be in determining an ethical position is also a significant issue.

　　Ethical relativism and non-cognitivism:

　　.Relativism is the view that a wide variety of acceptable ethical beliefs and practices exist. The ethics that are most appropriate in a given situation will depend on the conditions at that time.

　　Ethical absolutism and cognitivism:

　　Absolutism is the view that there is an unchanging set of ethical principles that will apply to all situations, at all times and in all societies.

　　Deontological ethics:

　　Deontology is concerned with the application of absolute, universal ethical principles in order to arrive at rules of conduct, the word deontology being derived from the Greek for duty.

　　Teleological or consequentialist ethics:

　　There are two versions of consequentialist ethics:

　　Utilitarianism – what is best for the greatest number

　　Egoism – what is best for me

　　The teleological approach to ethics is to make moral judgments about courses of action by reference to their outcomes or consequences.

　　Utilitarianism is the best-known formulation of this approch and can be summed up in the greatest good principle – greatest happiness of the greatest number.

　　Teleological or consequentialist ethics: egoism

　　Egoism states that an act is ethically justified if decision-makers freely decide to pursue their own short-term desires or their long-term interests. The subject to all ethical decisions is the self.

　　2 Influences on ethics:

　　ethical decision making is influenced by individual and situational factors.

　　Individual factors include age and gender, beliefs, education and employment, how much control individuals believe they have over their own situation and their personal integrity.

　　Kohlberg’s framework relates to individuals’ degree of ethical maturity, the extent to which they can take their own ethical decisions.

　　Situational factors include the systems of reward, authority and bureaucracy, work roles, organizational factors, and the national and cultural contexts.

　　Kohlberg’s cognitive moral development:

　　LevelⅠ pre-conventional (rewards/punishment/self-interest)

　　LevelⅡ conventional

　　LevelⅢ post-conventional

　　Bureaucracy: is a system characterized by detailed rules and procedures, impersonal hierarchical relations and a fixed division of tasks.

　　3.The social and ethical environment

　　Firms have to ensure they obey the law: but they also face ethical

　　concerns, because their reputations depend on a good image.

　　Ethics: a set of moral principles to guide behaviour

　　Ethical problems facing managers

　　Social responsibility and businesses

　　4.Ethics in organizations

　　Leadership practices and ethics

　　Two approaches to managing ethics:

　　A compliance-based approach is primarily designed to ensure that the company acts within the letter of the law, and that violations are prevented, detected and punished.

　　An integrity-based approach combines a concern for the law with an emphasis on managerial responsibility for ethical behavior.

　　5.Principles and guidance on professional ethics

　　A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.

　　The fundamental principles

　　Integrity – straightforward and honest

　　Objectivity – should not allow bias, conflict of interest or undue influence of others

　　Professional competence and due care – members have a continuing duty to maintain professional knowledge and skill at a level required to ensure that a client or employer receives the advantage of competent professional service based on current developments in practice.