Kohlberg’s Theory
According to Kohlberg’s Stages of Moral Development, it “involves creating increasingly
complex cognitive rationale for making moral decisions” (Mathes, 2021). This approach focuses
on a person’s moral judgment to determine what is morally right and wrong in situational
dilemmas. There are three levels of Kohlberg’s Theory, preconventional, conventional, and
postconventional. The preconventional level is characterized by acting in one’s self-interest.
The conventional level is described as one’s concern for others and duty to societal order. The
postconventional level is representative of societal rules and ethical principles. Each level
consists of two stages that more deeply define the moral reasoning behind human decision-
making. Stage 1 obedience to rules and authority, stage 2 satisfying one’s own needs, stage 3
fairness to others, stage 4 law and order, stage 5 social contract, and stage 6 universal ethical
principles (Mintz & Morris, 2020).
In the case study “Eating Time,” Kevin must determine if underreporting his time and utilizing
ghost-ticking are moral and ethical decisions. Examining this case study through Kohlberg's
theory creates three unique decision-making perspectives.
• Utilizing level 1’s approach, Kevin may engage in eating time if he perceives that the
partners are okay with it because they did not discourage him from doing so. He may
also believe that utilizing eating time and ghost-ticking will give him the much-needed
efficiency to garner a positive performance evaluation. Plus, other colleagues employ
this method, so it must be okay.
• Under level 2, Kevin might decide that eating time and ghost-ticking are used by many
colleagues and are more beneficial to the firm and clients to keep within the time
budget. In contrast, he may conclude that eating time and ghost-ticking are harmful
practices that he will not participate in and must expose his colleague Joyce’s use of
this method because of his duty to the public.
• Using level 3, Kevin would explore the consequences of eating time and ghost-ticking
and whom it would affect. This would lead him to the conclusion that eating time is
against company policy, and he will not use it. Its long-term adverse effects would lead
to low-quality audits and create more significant time burdens for the firm, colleagues,
and clients. Similarly, Kevin would determine that ghost-ticking is against the AICPA’s
Code of Professional Conduct because it violates the integrity and public interest
principles, and he will not participate. It could also lead to fines, sanctions, and
prosecution for the auditors, firm, and clients due to significant misstatements or
failure to uncover embezzlement.
Rest’s Four-Component Model of Ethical Decision Making
According to Rest’s Four-Component Model of Ethical Decision Making, ethical behavior results
from a multiphase decision approach. Rest’s model details four distinct cognitive processes,
moral sensitivity, moral judgment, moral focus, and moral character. Moral sensitivity is a
person’s ability to empathize and recognize how actions may affect others. Moral judgment is
the acknowledgment of relevant rules, principles, and codes of conduct and the evaluation of
the choices and outcomes of an ethical decision. Moral focus is one’s ability to know the action
necessary for an ethical decision and be able to follow through. Moral character is a person’s
will to overcome external pressures and the courage to act on their ethical intentions to solve
the situation (Mintz & Morris, 2020).
Using Rest’s model as a guide to examine the case study, we can see the thought processes
necessary for Kevin to make ethical decisions.
• Starting with moral sensitivity, Kevin recognizes that his inexperience in working on an
audit takes him longer to complete than his predecessor. He perceives this
circumstance as negatively affecting the firm and the client and suggests that he would
underreport his time for the audit. After he meets with the partners, Kevin consults his
friend and colleague Joyce and is told that she increases her productivity by ghost-
ticking. After asking what ghost-ticking is, he immediately knows there is an ethical
conflict and wonders, “what kind of firm am I working for?” (Mintz & Morris, 2020,
p.52).
• Moving to moral judgment, Kevin must consider his potential choices and the possible
outcomes. His options are to underreport his time or not and to use ghost-ticking or
not. With each choice comes an impending consequence. If Kevin underreports his
time, the firm may allocate less time to the audit area the following year, resulting in
further time cuts in successive years. If Kevin does not underreport his time, the client
will be charged more for future audits, the firm may lose money or the client, and Kevin
may lose his job. Like eating time, if Kevin utilizes ghost-ticking, the firm may allocate
less time to the audit in the future. However, this deceitful practice can have far more
costly ramifications as it can result in missing a material variance that leads to an
erroneous conclusion on the financial statements and, subsequently, SEC sanctions on
Kevin and the firm, assuming the client is a public company. Additionally, about the
ghost-ticking, Kevin must decide whether or not to inform on his friend and colleague
Joyce for engaging in ghost-ticking. If he does blow the whistle on Joyce, he will lose a
friend and alienate himself from the auditing staff. If he does not tell on Joyce, she will
likely continue until she gets caught, and she could face being fired, sanctioned, and
fired from her job.
• Using the moral focus process, Kevin will have concluded that he should not eat time or
ghost-tick. Furthermore, he would also determine that Joyce should not be using ghost-
ticking on her audits.
• The final process, moral character, maybe the hardest step to take. This will involve
Kevin holding on to his convictions that both practices are dishonest and his intentions
not to apply these methods in his work. Kevin must not fold under the pressure of
other individuals within the firm and risk possibly getting fired, losing a friend, or being
seen as a snitch within the firm.
Integrated Ethical Decision-Making Model
The integrated ethical decision-making process is inspired by “Rest’s Model and Kidder’s
Checkpoints to provide a basis for ethical decision making when accounting issues create
ethical dilemmas” (Mintz & Morris, 2020, p. 84). It involves the following four steps, identifying
the ethical situation, identifying what must be done, considering the consequences and
pressures, and taking action.
If these are applied to the same scenario as the previous models, the results end up being
generally the same as with Rest’s Model.
• Step 1, Identify the ethical and professional issues. The issues involved in the case study
are the suggestion and tacit approval from the management for underreporting time
and the knowledge that Kevin’s colleague Joyce is utilizing the deceptive ghost-ticking
method. These concerns violate several of the AICPA’s Code of Professional Conduct
principles and auditing standards.
• Step 2, identify and evaluate alternative courses of action. Kevin must establish the
consequences of taking action against the issues identified in step 1 and determine
whether legal issues would be involved.
• Step 3, reflect on the moral intensity of the situation and virtues that enable ethical
action to occur. Kevin must consider how his decision could affect the parties involved.
If he reports his colleague and friend Joyce, she could get fired, and Kevin will likely
lose a friend. If he stays quiet on this matter, he is violating the professional code, not
protecting the public interest, and eventually, it could hurt Joyce’s clients and the firm.
If he takes work home and eats the time, this will affect future time budgeting for the
audits and cause low-quality audits.
• Step 4, take action. Kevin must be steadfast and conclude that what Joyce is doing is
unethical and against an accountant’s professional obligations. Therefore, he must turn
her in for her misconduct.
Best Method
The integrated ethical decision-making model is the best model to use in analyzing the case of
“Eating Time” and other ethical situations. I chose this method over the other two because it
provides a comprehensive guide in determining how to make ethical decisions. While
Kohlberg’s theory helps one understand the cognitive processes that lead to moral
development and Rest’s Model enhances a person’s awareness of moral reasoning to perform
ethical actions, they both leave some ambiguity. The integrated ethical decision-making model
goes a step further to aid an individual who may find themselves in an ethical dilemma by
detailing pivotal questions that one will want to ask when seeking to identify the correct course
of action. This may be more helpful to some individuals because we all have strengths and
weaknesses. It may be difficult for some people to establish what questions are relevant to be
asked. Thus, viewing a list of questions for each process would be beneficial.
References
Mathes, E. W. (2021) An evolutionary perspective on Kohlberg’s theory of moral development.
Current
Psychology 40(8), 3908. https://doi-org.ezproxy.snhu.edu/10.1007/s12144-019-00348-0
Mintz, S. M., & Morris, R. E. (2020). Ethical obligations and decision making in accounting
(5th ed.). McGraw Hill Education.
