The best model to analyze Case Study 1-7 is Rest’s Four-Component Model. Rest’s Model
concludes that ethical action is the result of four psychological processes made up of moral
sensitivity (recognition), moral judgement (reasoning), moral focus (motivation), and moral
character (action) (Mintz, 2020). This model relates to case 1-7 as Kevin recognized he was
placed in a compromising position as soon as Joyce admitted to ghost-ticking. With Kevin
knowing this, he now has to analyze the reasoning behind this problem and how it pressures
himself, the firm, and the client to deal with the consequences of his actions going forward.
Kevin now must focus on taking moral action and follow through with ethical decision
making. Kevin’s ethical motivation will influence his intention to comply or not comply with
his ethical judgement in the resolution of the ethical dilemma. The potential loss of a job or
client is enough of a motivating factor to compromise Kevin’s integrity and inhibit ethical
action. Now Kevin must have his actions be in line with his ethical intentions.
This model is more suited to the current case as it is what Kevin should consider and utilize.
Kevin is still very new to the firm. This model is the most practical and easy for him to relate
to with this ethical dilemma. The situations in the case were very relatable to the steps of this
model.
Examining Kevin case by using Kohlberg’s theory on decision-making model, the best
model that is best used to analyze Kevin case is the stage three model, Fairness to others, in
this model individual is not motivated by rules but seeks to do what is in the perceived best
interest of others, especially those of family or work organization. In Kevin case, he was more
concern with putting in extra time he needed since he was new in the job without asking for
extra pay from Moe and BO. With that Moe and Bo would be able to keep their client without
having to charge the client more to pay Kevin. In this case Kevin was more concern about the
interest of the company rather than himself.
In Rest’s four component model of ethical decision making the best model that I can use to
analyze Kevin case is the moral focus model because decision makers focus on taking the
moral action and follow through with ethical decision making. Moral values may conflict
with other values. Moral motivation reflects an individual’s willingness to place ethical
values. In Kevin case, Kevin made the decision of taking the work home so he could use the
extra time to do his work well instead of Ghost-ticking which may affect the integrity of the
company if the client realize that their audit service was not provided with due care.
Kohlberg's Theory on Decision Making
Kohlberg’s theory of ethical development is founded on the belief that people change their
decision-making reasoning over time based on additional education and experiences.
Kohlberg’s stages of moral development are classified into six stages: Stage 1, the right
choice, is determined by someone’s obedience to rules and authorities. Stage 2,
rules/authorities are only considered if they satisfy an individual’s needs. Stage 3, an
individual is not focused only on rules but rather interested in the best interest of others,
especially those they love. Stage 4, individuals focus on their duty to society, respect for
authority, and maintaining social order. Stage 5, an individual has an orientation to moral
principles that shape the laws and role systems a society may have. Stage 6, individuals
believe the rights, rules, and social agreement are valid because they rest on the premise of
universality (Mintz & Morris, 2020).
Some argue that Kohlberg’s stages involve moral thinking, not directly necessarily moral
action. Many people can preach high morals and not necessarily behave according to what
they preach (Sabellano, 1971). When examining Case 1-7 under Kohlberg’s theory is
essential first to determine what stage of moral development describes Kevin’s moral
character. For example, in stages 1-2, Kevin would probably have decided to either take the
work home to complete on nights and weekends to obey the rules mandated by management,
or he would have started doing ghost-ticking per his friend’s recommendation.
However, his resolution would probably be different in stages 3-4. He would have considered
the needs of others and his own. For example, in stage 3, he would face the dilemma of
reporting his friend Joyce’s misconduct, someone he cares for, or in stage 4, he would report
Joyce’s misconduct due to his duty to society and probably take the work home to respect
management desires. Finally, in stages 5-6, he would report Joyce according to his moral
principles and duty to society. Also, he would not take the work home because it represents an
abuse of employees’ time off. My examples are based on moral development; people don’t
always let their moral beliefs lead their actions.
Rest's Four-component Model of Moral Development
Rest model concluded that ethical decisions go through the following psychological
processes: moral sensitivity, which refers to the ability to recognize that our actions affect the
welfare of others; moral judgment, which relates to developing moral reasoning over time;
moral focus, which refers to individuals’ willingness to focus on ethical values and follow
through considering that sometimes these conflict with other values. Finally, moral character,
individuals with solid moral characters are more likely to follow through with ethical
intentions because they can withstand pressure (Mintz & Morris, 2020).
Based on Rest’s four-components model, Kevin would go through the following
psychological process to resolve his ethical dilemma. First, he would need to recognize how
taking work home or ghost-ticking could affect other stakeholders. Then he would need to
evaluate his commitment to his moral values and how far he is willing to stand up for his
values. Finally, in my opinion, the most important, he would have to possess a solid moral
character to handle the pressure imposed by others to successfully follow through and use the
appropriate moral values to resolve this dilemma. For example, Joyce could pressure Kevin
not to report her for misconduct and to consider doing ghost-ticking to achieve management’s
goals.
The Ethical Decision-making Model
The ethical decision-making model is categorized into four processes: identifying the ethical
and professional issues, identifying and evaluating various courses of action, reflecting on
relevant morals and appropriate righteous acts, and finally, taking action considering
professional obligations (Mintz & Morris, 2020). When applying the ethical decision-making
model to Kevin’s ethical dilemma. The following processes must be followed to resolve the
dilemma successfully:
Identifying the ethical and professional issues: Kevin's scenario has some ethical problems.
First, the managers seem okay with Kevin’s idea to work nights and weekends to avoid going
over projected times. It is unethical to abuse employees’ time off and overwork them. Second,
Kevin knows that one of his coworkers is committing professional misconduct. Joyce’s ghost-
ticking actions are against the auditor’s function and responsibility in AS 1001 “The auditor
has a responsibility to plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether caused by error or
fraud.”
Evaluating the possible course of action: Kevin must determine the consequences of reporting
or not reporting Joyce’s misconduct and taking work home to complete on nights and
weekends or refusing to overwork, considering the legal and moral implications of these acts.
Reflect on moral Consequences: Kevin must evaluate how his course of action would affect
stakeholders. For example, reporting Joyce would affect her professional reputation, she
could lose her job, and legal action could be taken against her. However, if Kevin doesn’t
report her, the investors and partners of the companies audited by Joyce would eventually be
affected, and Kevin would be committing an unethical act. Suppose Kevin decides to take
work home, and the partners agree with it. In that case, they will both be committing an
unethical act, the managing partners by overworking their employee and Kevin by allowing
the abuse that would eventually affect other employees.
Taking Action: finally, Kevin must find support and follow through. Considering his
professional obligations and moral standards, he must report Joyce for her misconduct and
refuse to take work home because both acts would be unethical. d
The ethical decision-making model provides a detailed guideline for analyzing ethical
situations, which is why I believe it is the most effective method to analyze Kevin’s ethical
dilemma. Kohlberg’s theory explains important facts regarding how an individual moral
character is developed, but it doesn’t provide guidelines on how to analyze an ethical
dilemma. While the four components of moral development explain the individual’s
processes involved during an ethical dilemma, they still don’t offer a step-by-step process to
successfully resolve a moral dilemma as the ethical decision-making model does.
The ethical decision-making model is best suited for Case 1-7. With step 1 considering the
potential consequences once a situation is laid out along with a solution and the possible
outcomes. That is normally as far as a deciding factor would go, one would see a horrible
consequence and quickly decide that it’s not worth it. If one can get past step 1, then that
means the situation is not really that ethically challenging. In my opinion. d
Kohlberg’s theory; Preconventional – individuals are very self-centred; rules are beneath
them. Conventional – individuals become more aware of other interests/feelings, thus
increasing the responsibility of doing right by others. Postconventional – laws above all else,
they were created for a reason and should be upheld by everyone involved for them to work.
Rest’s theory: moral sensitivity – interpreting situations as moral, moral judgement – of what
‘ideally’ ought to be done to resolve ethical dilemma, moral focus – after deciding on the best
action, decision makers must be focused on taking the moral action and follow through with
ethical decision making. Moral character – if one is truly moral
Ethical decision-making – magnitude of consequences – degree to which an individual may
be harmed or benefited by the action, temporal immediacy – length of time between the
action and consequences, social consensus – degree of agreement among social groups,
proximity – nearness of the decision maker to the individual potentially affected by the
consequences, concentration of effect - relationship between the number of people affected
and the magnitude of harm.
Examining Kevin’s case from using Kohlberg’s theory, he would likely be apt to engage in
the ghost-ticking as a way to keep his work performance at a satisfactory level for his
supervisor to meet his own needs if he were still in the pre conventional stages. In the
conventional stages, it is not clear how he would act, as he could determine it is fair to the
firm’s client to keep their billed hours within budget and keep their business, but to act within
the law and not engage in fraud, he would not engage in ghost-ticking. In the post
conventional stages, Kevin should be aware of the harms of not following through all stages
of the audit process and the risk of missing issues that would be discovered from not skipping
over those tasks. The universal ethical principles of accounting would deem ghost-ticking
unethical, as it misrepresents his work product and view fraud as universally unethical.
The best model to use as it requires Kevin to have growth in his moral compass. As
accountants, we are required to look at situations from a public perspective, as to ensure that
the information provided by our work is accurate and truthful. To comply with this
requirement, we must look at situations from a post conventional viewpoint, with the
understanding that some boundaries are never to be crossed.
References:
Mintz, S., & Morris, R. (2020). Ethical obligations and decision making in accounting (5th
ed.). McGraw-Hill Education, New York, NY.
Public Company Accounting Oversight Board (2002). AS 1001: Responsibilities and
Functions of the Independent Auditor. https://pcaobus.org/oversight/standards/auditing-
standards/details/AS1001
Sabellano, L.H. (1971). Stages of Moral Development According to Kohlberg Stages of
Moral Development by Lawrence Kohlberg (1971) I. Pre... Academia.
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to_Kohlberg-with-cover-page-v2.pdf?Expires=1661711347&Signature=VftAbAPfB-
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N18JCUvwNWyTQtZqq2iYBZpJdkMKuRjkXWUXd6DgiOZQ03COhf2i4h9NESh24b0NZ
3pV9wywdW2RSjIj95oXy4KFTBk2zA__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA
Mintz, S., & Morris, R. (2013). Ethical obligations and decision making in accounting (3rd
ed.). New York, NY: McGraw-Hill.
Mintz, S. M. (2020). Ethical obligations and decision making in accounting: Text and cases.
McGraw-Hill Education.
