An Examination of the Effect of a Code of Conduct on Business Students' Perspectives regarding Academic Fraud (2005)

ABSTRACT The purpose of this study is to examine the ethics education program of a military academy for potential enhancement of accounting ethics programs. The military academy emphasizes the core values of its honor code that are similar to the American Institute of Certified Public Accountants' (AICPA) Code of Professional Conduct. Using a survey describing two situations of academic fraud, the ethical perceptions of business students at the military academy are compared to those of accounting students at a control university to determine if there are any measurable differences attributable to the academy's ethics program. This study found that military academy students were significantly more likely than the control group to perceive academic behavior as unethical when it directly violated their core values, but were not more likely to perceive academic behavior as unethical when it did not violate their core values. These results indicate that the ethics education program at the military academy may have been useful in aligning students' ethical perceptions with their code of conduct. This implies that ethics education in accounting programs may want to emulate aspects of the academy's ethics program, most notably emphasizing the accounting profession's code of conduct to accounting students. INTRODUCTION Recent years have seen an increase in the interest of teaching accounting ethics. Driving this interest are the significant changes in the ethical environment in which accountants work, and the profession's acknowledgment of the importance of education in the process of influencing ethical behavior of future accountants. Several well-publicized cases of fraudulent financial reporting caused the accounting profession to fund a study of the ethical education of accountants by the National Commission on Fraudulent Financial Reporting or the Treadway Commission (1987). Upon completion of the study, the Treadway Commission recommended more extensive coverage of ethics in accounting curriculums. In 1988, the American Institute of Certified Public Accountants (AICPA) adopted a new Code of Professional Conduct, which emphasizes the importance of education in ethics. What is especially noteworthy in this Code is that it emphasizes education as a means for influencing the ethical behavior of future members of the accounting profession (Anderson & Ellyson, 1986). Another reason many business colleges are interested in teaching ethics is that the American Assembly of Collegiate Schools of Business (AACSB) has stressed the importance of increased ethics education in the business school curriculum (Karcher, 1996) and requires an ethical component in the business curriculum as a condition of accreditation. Certainly, the recent wave of widely publicized corporate scandals, such as Enron and WorldCom, has also underscored the importance of accountants behaving ethically (Melancon, 2002). Many issues in teaching ethics to accounting students have been studied in prior research. For example, the questions of whether accounting professors should teach ethics (e.g., Oddo, 1997; McDonald & Donleavy, 1995), how ethics should be taught (e.g., Loeb, 1994; Armstrong, 1993), and the effectiveness of teaching ethics (e.g., Bay & Greenberg, 2001; Duizend & McCann, 1998) have all been addressed, often with no clear answers. The issues related to teaching ethics in the accounting curriculum are more than academic, as evidenced by research that documents the existence of unethical behavior among accountants (e.g., Gibson & Frakes, 1997; Schaefer & Welker, 1994), in addition to the recent corporate scandals. The purpose of this study is to examine the ethics education program of a military academy for potential enhancement of accounting ethics programs. The core values of the honor code of the academy are described, noting their similarity to the AICPA's Code of Professional Conduct (2003). …