A MODEL OF AUDITORS ETHICAL DECISION-PROCESSES

Auditors and the audit profession have enjoyed the reputation of maintaining high ethical standards. Indicators now exist, however, which may portend an ethical crisis. Accounting and auditing associations have responded to this potential crisis by adopting and updating codes of ethics which provide rules and principles to guide members via a conservative ''Code-implied' model of ethical decision making. This study develops and tests an alternative ''five-element'' model, synthesized from three cognitive-developmentalist stage models. Both the AICPA Code-based model and the proposed five-element model were operationalized via a series of seven ethical dilemma vignettes. A total of 358 subjects including 129 student, 106 staff, and 123 manager-level auditors provided three sets of responses which were used to compare the Code-implied and five-element models: (1) the three-story version of the Defining Issues Test (DIT), (2) yes/no decisions to each of the seven vignettes, and (3) rank-ordered reasons for each of the ethical vignette decisions. Results obtained indicate that the five-element model describes how and why auditors make ethical decisions better than the Code-implied model. This finding does not denigrate the rules and principles included in the AICPA Code. To the contrary, rule-based reasons are the most significant influence on auditors' ethical decision making. The expanded model, however, provides a measurement of the degree to which other non-Code factors such as self interest and concern for others influence auditors' ethical decision making. The five-element model is presented as exploratory in nature, and may lead to increased understanding of auditors' ethical decision processes and subsequently to attainment of higher ethical levels.