Ethical Realism

February 11, 2011

Philosophical Lobbying & Improved Ethics Requirements in Accounting

Filed under: ethics,outreach,philosophy — JW Gray @ 6:44 am
Tags: , ,

I discussed the need for philosophical lobbying (philobbying), and we recently found some success in California. If you want to be a CPA (Certified Public Accountant) in California, then you might have to take 10 units of ethics classes thanks to lobbying by the Center for Public Interest Law (CPIL) who hopes that such classes will help reduce the unethical behavior committed by accountants.1 I will discuss the new ethics requirement and why I think it’s a good idea.

What exactly is the ethics requirement?

Starting January 1, 2014, accountants will be required to take 10 units (3 or 4 classes) in ethics.2 The ethics classes are described in the following terms:

[A] program of learning that provides students with a framework of ethical reasoning, professional values, and attitudes for exercising professional skepticism and other behavior that is in the best interest of the investing and consuming public and the profession. At minimum, it includes academic work or independent study and shall include a foundation for ethical reasoning and the core values of integrity, objectivity, and independence consistent with the International Education Standards. (§5094.6(e)(2))

Why is this an example of philosophical lobbying?

Not only it it a philosophical answer to a social problem, but it presents philosophy instructors with new opportunities. There are tons of business schools, such as National University, that educates CPAs, but don’t teach the required number of “ethics” classes. Now it looks like they will have no choice. Either accountants will have to teach accounting ethics classes or accounting students will have to take ethics classes from philosophers.

Some people think the ethics requirement should be repealed because schools don’t offer the ethics classes, but obviously it’s not impossible to offer such classes. There are plenty of philosophy instructors out of work who would be happy to get a job teaching at a business school.

Some people might think it’s impossible to take 10 units of ethics classes. It might be mind-boggling, but it is certainly possible to take 10 units of ethics classes. That can include various accounting ethics classes and/or other philosophical ethics classes. In particular, ethical theories, applied ethics, meta-ethics, business ethics, philosophy of law, and political philosophy.

What are unethical forms of accounting?

The violations can be found in the IRS laws (Circular 230) and Professional Standards for CPAs. An examples of a famous scandal involving egregiously fraudulent accounting includes the Enron scandal.

There are some esoteric rules accountants might not even know about. For example, the IRS Disclosure and Use Rules states that a “tax preparer is prohibited from offering auxiliary services to a tax preparation client unless a consent form is received before offering the service (§301.7216-1(b)(2)(iii))”3 In other words, an accountant that wants to give you two minutes of free minor tax advice would need you to sign paperwork first. A video that describes this requirement can be found here.

Why is the ethics requirement a solution?

Ethics classes will not automatically make accountants more ethical, but they can offer the following:

  1. It can provide information about what counts as ethical and unethical behavior (in accounting). People who want to be ethical might make mistakes if they don’t actually know what counts as ethical.
  2. An ethics class can help us understand why there are certain laws and rules. We are more likely to remember and follow rules if we know why they exist.
  3. An ethics class can help people learn to think rationally for themselves about what they ought to do given their unique situation.

Additionally, some studies were cited as giving evidence that ethics courses could help reduce the amount of unethical accounting. For example, one study had data that “indicated that those students who had already taken a general ethics course and who also took the ethics and professionalism course scored significantly higher” in ethical sensitivity.4

Is 10 units too many? Perhaps the ethics requirement might be a little extreme. I don’t know that 10 units is the right amount to demand of students, but I would like everyone in college to have to take at least one philosophical ethics class whether it’s focused on their career or not. Moreover, it’s not totally preposterous to think that accounting students could take 3 classes in ethics because they could take (a) business ethics, (b) a class on professional standards in accounting and (c) a class on the Circular 230. All three of these classes could have a philosophical and ethical element.

Should business and accounting students take ethics classes?

Yes, everyone should be learning ethics. Ethics (and philosophy in general) is part of a well-rounded education that helps people think rationally, behave morally, and communicate well with others. I discuss the importance of learning philosophy in more detail in “Should I Take a Philosophy Class?

One extensive study by Richard Arum found that of the people attending college few have been attaining the basic skills of reading, writing, and critical thinking. “Students majoring in business, education, social work and communications showed the least gains in learning… [but students] who majored in the traditional liberal arts—including the social sciences, humanities, natural sciences and mathematics—showed significantly greater gains over time than other students in critical thinking, complex reasoning and writing skills.”5 It is clear that philosophy is a good way to improve our “critical thinking, complex reasoning, and writing skills” and offers a lot to a society that is increasingly declining in these skills.


I don’t know if the ethics classes taken by accountants can be the same ethics classes that philosophy professors generally teach or if they will only be accounting-specific ethics classes. Either way, I support an increased ethics requirement and I hope some philosophical thinking will be applied to the classes. I’ve heard that some business ethics classes have been “legalistic” rather than philosophical, but we need these classes to help people think for themselves rather than just memorize rules.

Finally, I hope some philosophy instructors teach some of these ethics classes, even if they must be specific to accounting. San Jose State University’s philosophy department teaches their business ethics course and I think philosophy instructors tend to be the most qualified people to help teach students the skills of rational and ethical thinking.

Updated (2/11/22): I added some clarifications including the possibility that the requirement might be “too extreme.” Someone also notified me that the increased requirement might have been meant to be 10 hours rather than 10 units. If that is true, I would like a source that could confirm it.

Update (2/11/22): If the ethics requirement is repealed and reduced to 10 hours, then the legislation isn’t as philosophical as I hoped and much more work will need to be done. I think we should demand that at least a single business ethics class is required for CPAs, and we should encourage the idea of multiple ethics classes. Any classes meant to cover “professional codes of ethics” or the IRS laws could be ethics classes, and we should seriously consider whether or not they ought to be.


1 More information about the role the CPIL played in the ethics requirement can be found here (PDF). In particular Ed Howard’s response (attachment 2) was informative.

2 See section 5094 of the California Business and Professions code.

3 Gray, Michael. “IRS Disclosure & Use Rules — A Threat To Your Practice and Our Profession?” Tax Trimmers. February 10, 2011. <>.

4 Bean, David F. & Richard A. Bernardi. “Accounting Ethics Courses: Do They Work?” The CPA Journal. February 10, 2011. <>. (Originally published January 2007.)

5 Rimer, Sara. “Study: Many college students not learning to think critically.” McClatchy. February 10, 2011. <> (Originally posted January 18, 2011.)



  1. It is important that ethics be incorporated into other classes as well.

    Business Ethics Training

    Comment by Josephson Institute - Business Ethics and Leadership — February 16, 2011 @ 5:46 pm | Reply

  2. This is an excellent idea, and must be implemented more broadly. Ethics should be implemented into many other curriculum, especially finance and business, which (as we’ve recently seen) tend to be lacking in such values.

    The implications of introducing such requirements at a younger age is even greater!

    Comment by Romney — March 14, 2011 @ 9:06 pm | Reply

    • Romney, Right, I don’t think accountants are the only people who need to be moral. What kind of changes would you like to see in educational requirements?

      Comment by James Gray — March 14, 2011 @ 9:29 pm | Reply

  3. Love the idea of combining philosophy and accounting. There’s value in in converging the liberal arts with other disciplines.

    Comment by Jim Tourville — March 24, 2011 @ 7:07 pm | Reply

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