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TEACHING OF ACCOUNTING ETHICS AN EXPLORATORY STUDY ON ACCOUNTING LECTURERS IN INSTITUTES OF HIGHER LEARNING IN MALAYSIA

Jaspal Singh1 and Madhavan Poduval2

INTI University College, Malaysia (1jaspal_singh@intimal.edu.my; 2madhavan@intimal.edu.my)

ABSTRACT The increasing globalization of the accounting profession and recent accounting scandals have brought about a growing research interest on accounting ethics and the need for inculcation of accounting ethics education. Unless there is a change to corporate values and behavior, accounting graduates will continue to be confronted with a variety of ethical dilemmas in the work environment. There is evidence that accounting education has failed to develop students’ intellectual and ethical maturity. To this effect, the Ministry of Higher Education in Malaysia has taken an encouraging step by issuing the Reassessment Report on Accounting Programme at Public Universities of Malaysia 2006 (Hala Tuju 2). This report requires the Institutions of Higher Learning (IHL) in Malaysia to incorporate the twelfth learning outcome of the Bachelor in Accounting Programme, which is to ‘Demonstrate Behaviour Consistent with Professional Ethics and Social Responsibility’ and also to meet the requirement of International Federation of Accountants International Education Standards, IES 4, which is, Professional Values, Ethics and Attitudes. This study, first of all determines that the lecturers are aware of the need to teach accounting ethics. To this effect, professional values and ethics should be embedded in all courses in the Bachelor in Accounting programme, but it is also taught only as a stand-alone course. This study determines at which level the topic of accounting ethics is being taught in both as stand-alone and embedded. The teaching methodology in teaching accounting ethics is determined for both, as stand-alone and embedded and what source materials are being used to teach accounting ethics. Finally, this study determines the assessment techniques adopted when accounting ethics is taught as a stand-alone course and embedded in other courses. This exploratory study is conducted via close-ended questionnaires administered to accounting lecturers in public and private Institutions of Higher Learning in Klang Valley. KEYWORDS Accounting ethics, Accounting scandals, Accounting frauds, Bachelor of Accounting, Accounting lecturers, Institutes of higher learning, Hala Tuju 2 INTRODUCTION Financial reports provided to users are not always showing the actual picture of a firm’s value or profits. Accounting fraud is when the financial statements are misstated on purpose to mislead the users of financial statements. This misstatement of financial information that is synonymous with accounting fraud is defined by Gerety and Lehn (1997) as disclosure violation, from failure to file appropriate and required financial statements with regulators to internal fraud that shows lack of proper internal controls to wilful misinterpretation of the financial health of the firm.

Proceedings of the 2nd International Conference of Teaching and Learning (ICTL 2009)INTI University College, Malaysia

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As posited by Glover and Aono (1995), fraud involves misallocation of resources or distorted reporting of the availability of resources. According to Glover and Aono (1995), fraud is caused by not giving importance to ethical behaviour, due to social and educational imbalances. The statement by Glover and Aono (1995), mentions that accounting fraud is caused by an ethical problem, which is indeed behavioural in nature. It also indicates that ethical behavioural malfunction is a social problem that is caused by defects in the education system. The issue of accounting fraud has to be tackled from the root of it, which is education. The detection of accounting fraud alone will not end the problem, we have to look at the prevention of it as well. (Haberman, 2003) The prevention must go hand in hand with the notion of having tighter and more stringent rules and regulations. ‘Accounting ethics involves a narrowly prescriptive approach as exemplified by the ethical codes of the professional bodies’ (Gowthorpe and Blake, 1998: 4; cited by Ho, 2007: 29) and it has to be inculcated in students, through the accounting syllabus so the students are prepared to confront any ethical dilemma. Low et al., (2008) posited that it is important to have ethics as part of an education programme and it is also still possible to mold the thinking of the accounting students who will enter the business environment once they graduate. RATIONALE FOR THE STUDY Accounting fraud has adverse effects on society and it is important that we acknowledge these damages that accounting fraud can force upon the society. The major corporate collapses in the United States of America, Australia, Europe and even in Malaysia, have paved the creation of more serious attempts to bring back the faith of public and other users of accounting information on the credibility and integrity of financial reports. The Ministry of Higher Education in Malaysia has taken the first step by issuing the Reassessment Report on Accounting Programme at Public Universities of Malaysia 2006 (Hala Tuju 2). This report requires the Institutions of Higher Learning (IHL) in Malaysia to incorporate the twelfth learning outcome of the Bachelor in Accounting Programme, which is to ‘Demonstrate Behaviour Consistent with Professional Ethics and Social Responsibility’ and also to meet the requirement of International Federation of Accountants International Education Standards, IES 4, which is, Professional Values, Ethics and Attitudes. The Malaysian Code on Corporate Governance, which was revised in 2007, has highlighted integrity as one of the important qualities required in recommending candidates for directorship. The provisions under Companies Act 2007, highlighted in section 167(A) that it is mandatory for public companies to set up a system of internal control to provide for a reasonable assurance. Section 174(8A) also highlights similar focus, as it mentions that it is mandatory for auditors of a public company to report to the Registrar of Companies of any fraud and dishonesty committed by any officer of the company. The commitment showed by the Securities Commission indicated the importance of ethical behavior where the integrity of directors is always emphasized and the mandatory requirement to report any fraud.

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Mohammad et al., (2002), posited that the curriculum of some government universities in Malaysia, did not discuss ethics and ethical issues as a part of the syllabus in the training and educating accountants. It is also mentioned that many of the aspiring students who intended to become accountants are not well exposed to ethics and ethical issues. It is evident that no proper ethics coverage in syllabus is a terminal problem as the quality of students that will be produced will not be at par and obviously would not be able to tackle ethical dilemmas effectively. Kelly (2004) posited that the recent challenges to the accounting profession, which included the Enron bankruptcy and the indictment and conviction Arthur Andersen, have reinforced the requirement that accountants must adhere to the highest ethical standards. The personal values and ethical perceptions of accounting student are attributes that can indicate their moral reasoning ability, therefore, it is important that ethical values and positive perceptions are to be taught to these students through an intervention at tertiary level. According to Chan and Leung (2006), accounting students who are exposed to a core course of ‘Ethics in Accounting’, in their accountancy degree curriculum, have higher ethical sensitivity ability, compared to the students who are given only a few hours of integrated ethical interventions of their entire curriculum coverage. As posited by Ghaffari et al., (2008), ethics is taught at various levels at tertiary education and it is common to include ethics as part of a curriculum due to recent accounting scandals. Despite the widespread agreement that ethics should be an integral part of accounting education, the implementation has been slow, but many studies have concluded that ethics education has a positive effect on students. Teaching method used must be able to train the accounting students to assess the consequences of their actions onto the society, the organization they work for and onto themselves (Edward, 2007). Integrated or embedded approach to teach accounting was preferred pedagogically over a stand-alone course (Madison and Schmidt, 2006; cited by Hurtt and Thomas, 2008), but this was earlier contended by (Swanson 2005; cited by Hurtt and Thomas, 2008) that integration leads to superficial, uninformed, and mostly insufficient coverage and asserts that the integration approach places a burden on faculty members who may be uncomfortable with teaching ethics. OBJECTIVES OF THE STUDY The objectives of this study are to determine whether lecturers are aware of the need to teach accounting ethics and to determine whether accounting ethics be embedded in the relevant courses or taught as a stand-alone course. Other objectives are to determine at which level the topic of accounting ethics is to be taught, to determine the teaching methodology adopted in teaching accounting ethics and to determine the assessment techniques used in both, as a stand-alone course and as embedded in relevant courses and finally to determine what source materials are being used to teach accounting ethics.

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RESEARCH METHODOLOGY Based on Gall et al., (1996), this study shows more characteristics of a quantitative research and a sample that represents population will used to study the behaviour and other observable phenomena on lecturers teaching accounting courses for Bachelor of Accounting programme in Institutes of Higher Learning in Malaysia. The use of statistical methods to analyse data will result in a creation of an objective report or reports of the research findings, which is not personal. (Gall et al., 1996). This study is based primarily on questionnaire surveys that were respondent-completed, where the questionnaires were self-administered by the researchers and the respondents were presented a set of questionnaire sent to them via email to be completed. As posited by Ticehurst and Veal (2000), questionnaire surveys provide a rather easy method of quantifying results for organisations that rely on quantified information in their decision making. Ambiguity as to how data is collected and analysed can be eliminated, and relatively complex information can be rather easily summarised, because questionnaires have the capacity to gather a wide range of complex information. This study used captive group survey, as type of questionnaire, where members of groups were used as subjects that would be tested or surveyed. The questionnaire consisted of open-end and closed or pre-coded questions, where a defined set of possible responses were provided and the respondents have to choose from the set of possible answers given, and as being directed by the questionnaire’s requirements. The respondents of this study were lecturers teaching core accounting courses, such as financial accounting, management accounting, auditing and taxation, for the Bachelor of Accounting programme at selected public and private Institutions of Higher Learning in Klang Valley. FINDINGS In total, 68 responded to the emails but only 49 started on the questionnaire and 41 completed the questionnaire, from which two were not usable. So only 39 questionnaires were usable for the purpose of this exploratory study, and on average the respondents required about seven minutes to complete the questionnaire. From the 39 respondents, mainly were from private university colleges at 74.36%, followed by from private university at 23.08% and from public university at 2.56%. 64.10% of the respondents were lecturers, while senior lecturers made up 30.77%, with associate professors at 5.13%. In this study, the respondents, who are academicians, were asked whether are they aware of the need to teach accounting ethics to accounting students. All 39 respondents said that there is a need to teach accounting ethics to accounting students. When the respondents were asked whether accounting ethics features within the accounting curriculum or not, only 71.79% of the respondents said it did, 25.64% said no and 2.56% said they do not know.

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Further, this study wanted to determine whether accounting ethics is taught as a stand-alone course or is it embedded in other courses. The results showed that 69.23% of the respondents taught accounting ethics as embedded in other courses, while 30.77% taught it as a stand-alone course. From the respondents that said accounting ethics is to be taught as a stand-alone course, 83.33% said that accounting ethics is made a compulsory course, and 16.67% said that they do not know, whether it is to made compulsory or not. It was also determined that, if accounting ethics is taught as a stand-alone course, 66.67% conformed that it is taught in the second year, while 25% said that it is taught in the third year, and 8.33% said in the fourth year, while none said that it is taught in the first year. But for the respondents who said accounting ethics is to be taught as embedded in the curriculum, 58.93% said that accounting ethics is taught is the second and third year, with the least in the first year, at 19.64%. The respondents who taught accounting ethics as embedded is other courses, were also asked, in which course is it embedded in, with 27.69% confirmed in Corporate Governance course, followed by Financial Accounting and Auditing, both at 24.62% each, and Management Accounting at 13.85%, and least was Taxation (9.23%). From the respondents that taught accounting ethics as a stand-alone course, the most preferred teaching method used is presentation, followed by case study and lecture. But for the respondents who said accounting ethics is to be taught as embedded in the curriculum, the most preferred teaching method used is case study, followed by problem based learning and lecture. As to what source materials were used in the teaching of accounting ethics, equal number preferred the use of textbooks and case study at 24.51% each, followed by articles (23.53%) and journals (21.57%). Other source materials used are audio-video materials and also newspaper reports. As for the assessment techniques adopted, the stand-alone respondents preferred exams with essay questions and coursework with assignment. For those who said that accounting ethics is embedded in the curriculum, only 55.56% of them said that it is assessed, with the remaining said that it is not, and the most preferred method of assessment techniques used were coursework assignment and exams with essay questions. It was also recommended that case study is used as one of the assessment technique. CONCLUSION The findings of this study concluded that the lecturers are aware that there is a need to teach accounting ethics to accounting students and most of the lecturers teach accounting ethics as embedded in the relevant courses in the Bachelor of Accounting programme. Having said that, accounting ethics is also taught as a stand-alone course, which is not in line with the recommendation of the Reassessment Report on Accounting Programme at Public Universities of Malaysia 2006 (Hala Tuju 2), issued by the Ministry of Higher Education for the Institutions of Higher Learning (IHL) in Malaysia. There are some accounting lecturers who confirmed that accounting ethics does not feature in the curriculum of the programme that they are teaching. It is obvious from this study that most accounting lecturers prefer the use of essay questions in examinations and assignments for coursework as assessment techniques, but it was also concluded that some accounting lecturers do not assess the students, especially when accounting ethics is embedded in the curriculum. It is also evident

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that multiple choice questions for examinations is least preferred to be used as an assessment technique for both stand-alone and embedded in relevant accounting courses. As for the teaching methodology used, most accounting lecturers teaching accounting ethics prefers the case study, presentation and problem based learning methods, with relying less on the conventional lecture method, this seems to be a more favourable trend, but other methods such as role play and debate are least preferred. Taxation was the least embedded with accounting ethics followed by Management Accounting, compared to other courses, such as Corporate Governance, Financial Accounting and Auditing, that received more preference, in terms of embedding accounting ethics in its syllabuses. Textbooks, case studies, articles and journals are still the main source of material used in the classroom, but a few also used VideoCDs and newspaper reports. It was also highlighted that there is a lack of awareness of the importance of accounting ethics, emphasis on ethical and unethical behaviour and real life cases should be included in syllabus. Accounting or auditing specific cases must be taught to make students understand the impact and importance of fraud and ethical issues to public, economy and accounting profession. The limitation of this study is that it did not get enough response from the accounting lecturers especially from public universities; therefore the result of this study represents mostly the accounting lecturers of private universities and private universities colleges in Klang Valley. This is only an exploratory study and a more in-depth research can be initiated in the future to study the relationship between the teaching and industry experience and also the qualification of accounting lecturers and the assessments techniques, teaching methods and source material used. LIST OF TABLES

Table 1. Survey statistics

Viewed 69 Started 49 Completed 41 Cannot be used 2 Usable 39

Table 2. Type of institution of higher learning

Count Percent Public University 1 2.56% Private University 9 23.08% Private University College 29 74.36% 39 100%

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Table 3. Designation of respondents

Count Percent Lecturer 25 64.10% Senior Lecturer 12 30.77% Associate Professor 2 5.13% Professor 0 0.00% 39 100%

Table 4. Assessment techniques

STANDALONE EMBEDDED

Count Percent Count Percent Exams-Multiple Choice Questions 1 4.35% 2 7.14% Exams- Essay Questions 10 43.48% 10 35.71% Coursework- Assignment 8 34.78% 13 46.43% Coursework- Test 4 17.39% 1 3.57% Other 0 0.00% 2 7.14%

Table 5. Assessment techniques

STANDALONE EMBEDDED

Count Percent Count Percent Case study 8 28.57% 19 31.15% Debate 0 0.00% 5 8.20% Presentation 9 32.14% 7 11.48% Problem based learning 3 10.71% 13 21.31% Role play 1 3.57% 5 8.20% Lecture 7 25.00% 12 19.67% Other 0 0.00% 0 0.00%

Table 6. Source material used

Count Percent Textbooks 25 24.51% Journals 22 21.57% Case studies 25 24.51% Articles 24 23.53% Other 6 5.88%

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