Competencias

All of the study participants were in agreement that the ethical accounting competency, tone at the top, is most pertinent to decision making in particular circumstances. Tone at the top is an accounting competency used to describe an organization’s general ethical climate set by owners, chief executive officers and other members of top management. Attitudes and character of the owner trickles down to all members of the organization. Practitioners expressed their perspectives regarding the diverse approaches in which upper management in their organizations prescribe an ethical climate. One practitioner explained his perception of tone at the top in his organization, stating:

I think our tone at the top is definitely “do the right the thing.” Focus on, and whenever you do have an issue, find out what that problem is and correct it; and above all, be safe. So, it is an excellent tone at the top. Also, the tone at the top is very “I am going to let you manage your business.” I think that breathes through the organization. Like I said, that gives us that entrepreneurial spirit that a lot of companies don’t have. But, the tone at the top is critical. Both the president and CEO and our CFO are incredibly approachable and those two also have a lot of experience with company. Both of them have in excess of twenty-five years. But, yeah, there’s always, you can always have open discussions with them. Their tone, with their approachability and being able to discuss anything with them, keeps people from hiding things they are concerned about, which is important.

Another practitioner places responsibility of fraudulent activity with top management. He suggests one approach in achieving an ethical culture within an

organization can be through a robust compensation structure to obtain highly qualified individuals. Of tone at the top, the practitioner states

I think that is hugely important because every time there’s a huge fraud or there is an issue like that, there [sic] is usually one of two things. Either there is unethical behavior from the people at the top of the corporation, or the lack of control. They don’t care. They don’t have control of the employees. For us we have extreme controls in place here because we have five people that handle billions of dollars. So we have to. And the first thing that we do is, if you make it darn near impossible for them to steal, they're not going to go to the trouble. And another thing I think this company is pretty smart about. One of the things that you decide is that a lot of these ethical issues come up from compensation. And you'll find that a lot of that comes from you're never going to be able to

compensate for people who can't live within their means. They just have that slant to them that they want more than what they have. They can't be content. One of the things that companies do to harm themselves is high turnover rate. People that aren't competent for the position that they are in. Management that isn't competent. What you can do to avoid that is through your compensation structure. If you tend, if you will pay more, you tend to get a higher level person who is more competent. They will stay longer. And both those things are headed in the right direction. Versus trying to be cheap and not pay as much and have high turnover. That's when you have problems. It’s one of the things we have here, low turnover.

Two study participants discussed a challenging culture set by their owners and partners who adhere to a rigid, unaccommodating system in contrast to a more broad- minded, objective environment. One participant explains the challenge:

One thing I felt that was never stressed in my education was the whole tone at the top. And that's generally in business not just in accounting, but it is particularly applicable at accounting firms where you feel like rules are rigid and everybody would do the same work and it would turn out the same way, but that is not necessarily true. And in public accounting firms, if you know like ours, where you had sort of a dictatorial managing partner. Now, I believe he has a lot of integrity and he was very good at his job, but he was still very, you know, like a dictator. That's different than one where, you know, firms have, even with a managing partner, lots of partners that are a kind of a committee and you expect fair and balanced debate on things. And then coming here after that, where, you know, our president is completely the opposite of that. And realizing that his, it was sort of a microcosm, you will see how his integrity makes me want to be better. And it makes me want to never make him have to question me, because he has that level of integrity. So that's very important, I think. Not just in

accounting, but any setting you are going to be in.

The second participant relates her experience dealing with customary change in complex accounting and auditing standards that require additional process time. She considers the goal of the partners, which is profit oriented, and that of the employee, to present timely and accurate information. She discusses a rigid tone as follows:

Tone at the Top was a big issue at the CPA firm that I worked for because we had a lot of staff and senior accountants, who really wanted, you know, we had to do continuing education. And accounting standards are constantly changing and being revised, and so, especially with audit and assurance with generally accepted auditing standards. You know, there’re different procedures to apply and

different checklists. It can be very cumbersome. But, it is still necessary for quality control to make sure things are done right and, that the rules are followed. The tone at the top, the partners, were a lot older and had the attitude, “this is how we have always done it, and so this is how we are going to do it.” And so, when they have that attitude, when the upper level says that is what we have always done so this is how we are going to do it and the lower level says “but, this is what you are supposed to do.” It is like, why am I going to waste my time doing what I am supposed to do if you are telling me you don’t want me to do it. It really is hard because they are the ones that make the ultimate decision and when you are doing all of these standards that are required, but they consider

unnecessary. So, then they are coming down on you, saying “why did you spend so much time doing this?” So, it was really challenging to get the difference. I don’t feel like they were unethical. I think they just really had an attitude of “well this is how we’ve always done it and so this is how we are going to keep doing it.” I guess, in a way, it is a little unethical. I think ethics is probably one of the biggest areas, one of most important parts of accounting—using your judgment, knowing the rules and following them. Being a small company, the owners have a different objective. They want the company to be extremely

profitable, but not pay any taxes. I am not sure how that works. But that is how it is, you know. I feel like I am always the bearer of bad news.

Another study participant describes her organization’s ethical climate and its

development as the business has grown. Through her experience, she relates the benefits of an open-door policy:

I think as a company, as a leader, as a manager, you always want to make sure that you are taking care of your employees, the environment, your company, and the company's equipment. To me, when I think about things like health and safety and what have it, it's not just taking care of people it's about taking care of the equipment as well. And that is an ethical responsibility, a moral

responsibility. It is an integrity issue. You are being entrusted to take care of something and to work with something.

We are a smaller company, granted we have 185 employees to date. Not so long ago we only had 36 and it was a very small mom and pop company. We didn't have a lot of formal processes, a lot of formal procedures. In the last five years our revenues have grown rather rapidly. Our staff has grown rather rapidly. We've got problems today that we never knew we were going to have eight years ago. And some of the things that we have had to learn is that we now have to encourage people to come talk to management because they feel so far removed from us. Where it used to be that you sit down at the end of the day and

everybody would sit down, this predates me, but they used to all sit down on Friday evenings, crack open a beer on the back of the truck and sit around and talk. We don't do that anymore; you can't do that. So as you've grown, and you've

gotten further from your people, their willingness to talk and tell you what problems may be out there. They are not quite as open as they used to be. Even our handbook talks about it. If there’s something wrong, something unsafe you need to come tell somebody. I had one of my staff sitting in here this afternoon. He said, “I need to talk to you.” I said, “Ok, talk to me. Well there's some stuff going on, and I'm like, yeah. Well I don't know if I need to tell you or not.” I said, “well let's break it down. Is anybody being unsafe? “No”. I said, “is there a moral or ethical issue?” “No. I just don't think they like what is going on.” “Well then, I can't do anything, if they're not willing to talk to me or somebody else.” But that was my first question. Is it safe? Is there a moral or ethical issue?

Another practitioner demonstrates how policy enforcement is a positive way to set the tone and culture of what is expected in an organization, but is not always carried out. He uses a company’s work schedule policy as an example:

Even right down to the thing, something as basic as if our policy is everybody has to be at work at 8 o'clock, and people show up about 8:10, 8:15, 8:20, and upper management never says a thing about it. Even though there's a policy that says you're supposed to be here at eight. They don't enforce that policy. They seem indifferent to it. They are setting the tone; they're sending the message that's not really our policy. It's written down, but it's not really our policy. So I think the tone, it always starts from the top. And if the organization emphasizes we're going to do things the right way, we're going to be ethical, we're going to follow the laws, there's no exceptions in our, you know that's part of our creed or our bylaws. That filters down. But I do feel that the top people, you are talking about

that guy, well if it was ok for him to do it, and it was a little on the shady side, I guess it's ok. Because he didn't get in trouble for it. So it's kind of infectious, I guess. As far as at the top. You lead by example. Something as simple as coming to work on time. That's not really so much the ethical, but you know really, it is, because if you are being paid to work from 8-4, and you come in at 8:15, you are stealing a little bit from the company. I know people can justify that in their mind, and say well I can work just as hard in seven hours as I do in eight. Because I see other people standing around talking. But again, that's the tone at the top. That's what's acceptable.