26th Annual Colleagues in Jesuit Business Education Meeting
Michael P. Coyne, Fairfield Univerity
Utilizing the Ignatian Pedagogical Paradigm to identify and understand Ethical Issues in Managerial and Cost Accounting Classes
The role of ethics in Managerial and Cost Accounting is essential. Management(Cost) Accountants provide services and skills to help various stakeholders by providing timely accounting information. Management accountants must uphold a high degree of ethical standards in all functions and therefore need a solid foundation for identifying and resolving ethical issues. Studies have found that 80% of CPA’s and accounting professionals do more managerial accounting during their careers than financial accounting. Yet in most business schools’ undergraduate accounting curriculums have significantly more required financial accounting courses than managerial and cost accounting courses. Therefore, students’ exposure/experience with managerial accounting ethical issues can often be less than their experience/exposure to financial accounting ethical issues. Consequently, the need for managerial and cost accounting ethics discussions in the classroom and related case studies is great. This paper proposes an approach for discussing, identifying and understanding Management and Cost Accounting Ethical Issues utilizing the Ignatian Paradigm (IPP). The paper demonstrates how the five elements of IPP:( Context, Experience, Reflection, Action, and Evaluation) can be incorporated into discussions of various current management accounting/cost accounting ethical issues. The paper also discusses various active learning approaches (i.e., student surveys, exposure to exemplars, short essays, follow-up surveys).that are helpful in addressing ethical issues using the IPP Framework. The paper will also discuss how cases can be developed for managerial and cost accounting ethical issues utilizing IPP. While over the years the IPP has certainly been used to teach ethics in various financial and managerial accounting courses at Jesuit Universities, this paper hopes to show it can be helpful in addressing a myriad of fairly complex cost accounting ethical issues. Some of the specific cost/managerial accounting ethical issues in which an IPP approach can be used include the following:1.) Overstating costs included in Work in Process; 2.) Treating abnormal spoilage as normal spoilage; 3.) Mandating “across-the-board” budget cuts without considering alternative cost reductions; 4.) Using improper assumptions about cost and volume relationships to manipulate results; 5.) Outsourcing/Operating offshore to exploit lax environmental and labor standards; 6.) Treating period costs as product costs resulting in higher inventory and net income;7.) Choosing overhead allocation methods that distort cost and profit of certain products or subunits and 8.) Selecting inappropriate cost drivers to distort cost calculations.