Accounting Theory

  1. What are the ethical issues facing John Snow

The ethical issue facing John Snow is integrity. As a professional accountant, the standards and practices reflected in some ways including the transparency of an audit. Professionalism in accounting is all about paying attention to both national and international accounting standards such as Accounting Professional and Ethical Standards (Raj, S. K.,& Roy, 2016). Therefore, sticking to accounting standards provides a reliable way of communicating report as well as financial accounts that auditors and other stakeholders can interpret. In this case, there is a conflict of interest because Sophie demands that Zirconium, her family business wins the contract for Venus Company overhaul. The primary challenge is that John Snow and his team of engineers already found Themartic Company fit to conduct the overhaul. According to Sophies’s demands, he stands to lose his position in Venus and the only way to safeguard his job is to act in favour of Zirconium. However, ethics in accounting needs one to provide full disclosure in financial reporting, and present facts of financial reports instead of concocting numbers to create a different desirable outcome that is far from reality- what Sophie is asking of John Snow. He is under immense pressure to yield to Sophie’s demands, at the same time remain integral and protect his position in the company as a new employee.

b. Ethical Egoism and the appropriate moral action for John Snow

Ethical egoism borrows from the normative theory that provides that there are certain kinds of favours, motivation, praises, that are fit for some situation (Raj, S. K.,& Roy, 2016). There are two versions: Individual ethical egoism and Universal ethical egoism. In the individual case, it reflects on the need for one to cater to their interest.  The second version of people ought to be aware of other concerns about their actions (Fleischman & Valentine, 2018). About ethical egoism, the best advice for John would be to act according to his interests. After all, he is looking to get out of his probation and start to enjoy full employment benefits. Whatever Sophie needs of him is only to manipulate the recommendation report in favour of Zirconium. However, when looking at the long term consequences of such a decision, the stories will indicate that Thermatic was more fitting of the position due to costs and other considerations. As such, the management would look for answers, and any manipulated figure would translate to dishonesty, illegal activity, and even fraud. While agreeing to Sophie’s demands will serve him for now, any implications of that decision in future will sabotage his position as professional. 

c. Would your answer to b, be different if John Snow pursued utilitarianism?

The ethical theory of utilitarianism dictates what is right from wrong by looking into the results of actions (Fleischman & Valentine, 2018). It is a measure of consequentialism. According to the utilitarian theory, provides the most ethical choice that will be for the greater good for most people. It is the only model that helps to justify war and also commonly used in moral reasoning in business because it helps to account for costs and benefits. However, the lack of ability to tell the future makes it hard to determine whether our choices today will be good or bad. 

When looking at the greater good, there are more people to lose than gain if anything goes wrong in future. For instance, if the company, the stakeholders, investors, and even the engineering team were involved in the vetting process (Raj & Roy, 2016). The Only parties that stand to gain from this arrangement are Sophie and John Snow. Therefore, it is necessary to remind John Snow that his actions will bear consequences and that there are those that will feel the pinch if anything goes wrong. The decision to do greater well will only be possible if John evaluates the numbers and sees who stand to lose through his choices. 

D. recommend any course of action based on deontological theory. Justify why this action stems from deontological ethics.

The deontology ethical theory uses the primary rule of separating right from wrong. According to Immanuel Kant, moral actions are usually in line with universal moral laws (Fleischman & Valentine, 2018). It is a simple rule to apply as it just requires people to act accordingly and follow the rules as per their duty. The approach is also complimented our natural intuition on doing what is right. Deontology does not wait for one to see the results of their actions. The only thing that one has to do is ask themselves if what they are doing is morally upright.  As such, this helps one to avoid uncertainty because the only thing they need to do is follow the rules.

Therefore, John should evaluate the right action based on what is right. If he goes ahead and gives in to Sophie’s demands, then that will be wrong because it is against the professional accounting ethics. Manipulation of records is fraud, and there is no question about it. As such, John has to report to the company about the Thermatic because it passed all the background checks and was in line with the provision of Venus, in terms of costs. 

e. which ethical theory do you think leads to the most appropriate course of action for John

The moral argument that leads to the most useful course of action for John would be a deontological theory (Raj & Roy, 2016). By using this Approach, implies that John does not have to weigh the consequences of his actions. It means that he will not have to act first to determine the results of his doing. According to this theory, John Snow has to evaluate whether what he is about to do is right or wrong. Therefore, by following moral rules, makes it easy to apply deontological theory. 

In this case, in the accounting profession, John Snow should be open about financial reporting by providing plain facts. Anything against the brackets is wrong. All accountants would act ethically despite any suspicious behaviours in the course of action. The thorough research conducted for recommendation provided facts on costs reduction without defrauding anyone. Therefore, it should be the right course for John.

Question 2.

  1. Accounting can be identified as socially constructed or socially constructing

Socially Constructed Accounting

On socially constructed perspective, it is the view of a number of key historical issues based on traditional view. The view explains historical issues such as overreliance of past data, belief in the prospective of objective histories. Evolutionary histories in accounting help to provide historical facts. When it comes to accounting, the histories assist in looking for progress in accounting. Take, for example, accounting methods in ancient kingdoms, development of book keeping, and new accounting methods during industrial revolution. As such, all these development led to different and new accounting methods to meet society’s needs.

The socially constructed accounting system help came about due to the demand of having better processes. The society was changing due to the revolution of the market and accounting had to meet the needs of the user. This system seems to have a fair approach in terms of satisfying business demands. For example, the exploitation of computer systems came as a resulting of wanting to incorporate faster, efficient, and cost friendly means in business accounting. Therefore, the advantage is that it served all the stakeholders in the market by making processes easier for everyone. The recent cloud accounting helps to time lag issues caused by desktops. 

Both systems of social constructivism have their advantages and disadvantages. When looking at the past historical accounts in accounting, each has a purpose of improving business systems by creating records for follow up (Humphrey & Scapens, 1996). However, socially constructing accounting is more suitable because it started as a way of keeping accounting records for reference. According to significant accounting events in history, socially constructed accounting came as a result of streamlining bookkeeping in business and provide a model for following up business records (Humphrey & Scapens, 1996). For example, the formation of the accounting board in 1973 was created to solve accounting conflicts and create fundamental principles (Humphrey & Scapens, 1996). Between 1932- 1952, the committee in charge of accounting procedures built a bulletin that addressed the need to create uniformity in accounting.

Social Constructing Accounting

A look into the socially constructing accounting reveals that it stems from the need to cater to the society (Dillard, 1991).  Several key historical issues promoted changes in socially constructing accounting. These stemmed from the need to adopt new approaches and do away with old. The new historians have stepped in to challenge interpretations and situations laid by old accounting.  As such, the socially constructing accounting is one that argues that accounting has impacted in the society.  There are first events that took place in the 20th century that show that accounting had to adapt to fit the needs of these developments. For example, Sombart argues that the implementation of book keeping business owners was so efficient that it paved way for them to look into capital growth hence, capitalism. Take, for instance, following the collapse of the stock market in 1929; accounting had to create a tool to show profit and losses (Dillard, 1991). As the business dynamics continued to change, accounting principles and standards also increased to ensure that every segment was functional. The changes in accounting during the 1920s and 1950s such as profit and loss sheets, audit sheets, invoices, balance sheets, helped to account for the monies, and transactions process (Dillard, 1991). These measures were put in place to protect users as well as for accountability. 

It is safe to state that the distinction between the accounting history eras stems from different interpretations of what development in accounting management is all about. For example, one of the most significant eras in business accounting was the industrial revolution that brought forth the need for mass production and enhanced technology (Humphrey & Scapens, 1996). These developments helped to boost businesses leading to demand developed accounting systems. Technology such as railway development paved the way for the development of costing techniques that held the customers accountable (Humphrey & Scapens, 1996). Also, technology such as computerized accounting stemmed from the industrial events of the 20th century. The business arena became complex, and this required better accounting systems and practices. Another influence of technology was that it opens up the global market and international business standards. All these changes reflect on the demand for businesses to accommodate updated accounting practices. Where socially constructed accounting is not available, a company can opt for socially constructing perspective. According to this approach, instead of accounting being non-resistant to business developments in the society, has intervened by being part of the process. 

b. which view of accounting history best describes the development of accounting?

After taking a look into both systems, it is best to provide that socially constructing perspective is the most appropriate to reflect developments in accounting. First, the aspect identifies the need in society and steps in to provide a solution. As such, the approach is creating an answer for the good of society by streamlining business processes. Earlier, there is mention of significant accounts in history that reveal the way the perspective helped to build workable models and regulations for a better market. On the other hand, the socially constructing perspective is all about promoting a capitalist society where everybody is catering for their interests (Dillard, 1991). As such, everything falls under either assets or liabilities. The perspective reduces the value of the social being and promotes capitalism. 

In turn, capitalism created a loophole for wealth disparity poverty, among others. The system only pays attention to profits as opposed to making things efficient in society. The demand for legal changes in accounting was put to protect the users’ instead of the greater good of the community. While some of the systems appear to be developmental, they are there to track the records of money exchanges and profits. As such, everything falls into either an asset or liability, including human resources (Humphrey & Scapens, 1996). While accounting professions seem to be promoting objectivity, under the social constructivism systems, they end game is just profit making. 

However, the analysis of the views shows that the present day society needs both the socially constructing and socially constructed perspective (Humphrey & Scapens, 1996). The former has the most advantages because it shapes the way people approach business performance. During the 21st century, the socially constructed systems helped to address accounting issues in the society (Humphrey & Scapens, 1996). For example, keeping records like in book keeping. During the 21st century, the socially constructed systems helped to address accounting issues in the society (Humphrey & Scapens, 1996). For example, keeping records like in book keeping. 


Dillard, J. F. (1991). Accounting as a critical social science. Accounting, Auditing & 

Accountability Journal, 4(1).

Fleischman, G. M., & Valentine, S. R. (2018). How Outcome Information Affects Ethical 

Attitudes and Intentions to Behave. Behavioral Research in Accounting.

Humphrey, C., & Scapens, R. W. (1996). Methodological themes: theories and case studies of 

organizational accounting practices: limitation or liberation?. Accounting, Auditing & Accountability Journal, 9(4), 86-106.

Raj, S. K., & Roy, S. (2016). Accounting Theory: An Ethical Perspective of Real Life Scenarios. 

International Journal of Business and Social Research, 6(10), 47-55.

Vosselman, E. (2016). Accounting, accountability, and ethics in public sector organizations: 

Toward a duality between instrumental accountability and relational response-ability. Administration & Society, 48(5), 602-627.

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