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Ethics and Decision Making, Part 4

March 4, 2013 |  by  |  Ethics

In the book, I Robot, three rules of robotics are key. We can dissect these rules and apply them to our role as ethical accountants.

  1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.
    In accounting, we are concerned with omission and commission. It is harmful for accountants to allow omission in financial statements and tax returns, and it is equally harmful for accountants to include misleading information in financial statements and tax returns. For example, when completing taxes, it is important to let clients know the impact of taking an aggressive tax position. Materiality can be defined as the point at which the decision-making process may be altered. If an accountant omits a fact or includes misleading information that would have changed the decision, a user would have violated this first law.
  2. A robot must obey the orders given to it by human beings, except where such orders would conflict with the First Law.
    As accountants, we must follow the rules set forth by the AICPA, IRS, and other governing bodies unless the rules do not adequately portray the nature of the transaction(s) that we mean to describe. We cannot purposely mislead financial statement or tax return users, even if the rules allow us to take a deceptive position or are silent on how to report the transactions. Professional judgment can be defined as being prudent and skeptical. We must not blindly follow rules; we must be sure to question their applications. Knowing the rules does not make someone ethical. It is how we apply the rules that is important. If we take a position that is not well defined by the rules, it is crucial that we explain our reason for the position or can defend it if questioned. Transparency and well-documented support are key to understanding a position.
  3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.
    As accountants, we balance our self-interest with the interest of others. We introduced this concept of self-interest and interest of others in the first ethics blog post on this site. Our self-interest may be to make our clients happy instead of representing the financial statements and tax forms in the most truthful and transparent way possible. We must remember that our service is for the benefit of the users of financial data.

Remember that if you are wondering if a position is ethical or not, it is definitely worth a reexamination of the facts of the transaction and rules applying to the transaction. You should also consider a consultation with someone in your company or in the accounting industry that you trust to give you honest feedback. The AICPA even has an ethics hotline and e-mail that is free for members to access: 888-777-7077 and

About the Authors:

George is an instructor for the AuditSense team, specializing in providing ethics and core-level staff training. Since 1976, George has worked in many areas of accounting, focusing on Auditing and Accounting Education. In 1976, he participated in the Internal Auditor Intern Program at the Clark Equipment Company. While working for the public accounting firm of Deloitte, Haskins, and Sells, George served as a Senior Assistant Auditor and a Comprehensive Business Services Consultant.
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Elizabeth Pittelkow is an Accounting Manager at ArrowStream, and she works in the areas of accounting, taxes, and financial reporting. Elizabeth previously worked in Finance at Motorola and in Assurance at PricewaterhouseCoopers. While at PricewaterhouseCoopers, she audited large public-accelerated GAAP filers, IFRS filers, private equity-owned companies, and non-profit businesses.
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