Personal Ethics and Financial Reporting: a personal experience

By Crystal McGee
ACCT 2010

Phil Zimbardo, PhD, said Decades of evidence shows us that situations can persuade even the
most ethical and compassionate people to betray their own values. Like in the white-collar
video, sometimes all it takes is a specific situation or a traumatic event to cloud our judgement.
Where clear boundaries once existed, they then become grey. There are a lot of factors when it
comes to ethical decisions like integrity, honor, morals, character, and values. What will happen
if I do? What will happen if I dont? Will I get caught? I will only do it this one time. Ethics and
morality are about doing what you know is right. Here is another example: your boss comes to
you and wants you to falsify documents. Its not a huge deal, but what would you do? This is
where ethics come into play. What if your boss says you are fired if you dont do it? Sometime
there are consequences for being an ethical person. But they are ultimately better than being
unethical.
Here is another example: say you run a business. Someone comes in, but you judge that their
morals are not up to your standards. Say you decide not to assist them. Was that ethical? For our
culture that is unethical, but in other cultures it might be considered ethical. Ultimately, every
person develops and redefines their own set of ethics.
My family taught me about personal ethics from an early age. I was taught to always be honest:
dont cheat, dont steal, dont lie, and treat people with respect. I have watched my family go
through ethical dilemmas. By watching, I also learned what to do in certain situations. And
sometimes I also learned what not to do because no one is perfectly moral. Also, my faith has
helped me to learn right from wrong; this keeps me grounded. Faith also keeps reminding me to
keep going even when times become unbearable. My morals are the most important thing to me
and always have been. Most of my sense of ethical morality was taught to me by my faith. I, for
the most part, surround myself with great friends who uplift me and tell me the truth no matter
what. I also feel comfortable enough to do the same.
I worked for a company in which I had some responsibilities in accounting. I realized that a lot
of what was going on was illegal and unethical. I brought it up to the manager and they allowed
me to fix the procedures so that they became legal. However, a new manager from a bigger
company entered the equation and insisted that we do things his way. And his ways were
quicker, cheaper, more lucrative and very illegal/unethical. I ended up talking with my
accounting instructor at the time, and they advised me to talk with the managers which failed.
I tried to explain how their policies violated the laws, and how I could do the job without
violating the legal statues. I was berated, met with derision, and I was even called names. Despite
all the mistreatment and coercion, I refused to give in and break the law. I continued to get
advice from my instructor who advised me to quit my job. Soon after I quit, the company ended
up in bankruptcy. One of the managers lost their license due to this and other infractions. In
retrospect, I had 2/3 of the components fraud triangle. There was the opportunity to compromise
my morality. There also was a lot of pressure from the management to fall in line with their
methods. But I did not rationalize away my ethics. I learned a lot from this experience. If I was to
ever be in a similar situation, I would report it sooner and not give so many opportunities to
come clean.

As in the example above, my personal ethics can have a lot of impact on a companys financial
reporting processes. The key thing is to continue to not rationalize and to keep my ethics sharp
no matter the consequences. In conclusion, if everyone were to do their part the company would
not have to worry about unethical behavior. Or consequences that come from unethical behavior.
My leading quote is by Phil Zimbardo, PhD, founder of HIP, and a social psychologist. He is also
the man who conducted the famous Stanford Prison Experiment in 1971. Although no harm was
meant, and the experiment was done so we could better understand ourselves, the experiment
itself reportedly caused damage to people. We can learn from this and from others examples,
both inside and outside of business. We need to be careful in how we make our decisions
because even with the best intentions, it can be quite devastating.