Academic Study Finds CPAs in Industry, Particularly Government, Perceive a Less Ethical Environment than CPAs in Public Practice

MARCH 15, 2017    POINT OF VIEW / RECENT DEVELOPMENTS

An article in Accounting Today and CPA Practice Advisor described findings of an academic study "An Investigation of Ethical Environments of CPAs: Public Accounting Versus Industry" appearing in the Spring 17 issue of Behavioral Research in Accounting, which found that CPAs in industry perceive their environments to be less focused on ethics than CPAs in public practice.  CPAs working in government had even lower perceptions of their workplaces.  The full study is available in the American Accounting Association's publication Behavioral Research in Accounting. 

The researchers surveyed approximately 900 accountants who were members of CPA societies. A heavy majority of those surveyed, well over 600, were in public practice, 127 were employed in industry, 62 in government, and 39 worked for non-profit companies. Respondents indicated on a scale of 1 (strong disagreement) to 7 (strong agreement) to twelve (12) statements about their firms, e.g., existence of firm ethical values, an ethics training program, code of conduct, or sanctions imposed on unethical conduct.  The researchers equated a higher overall score with a greater level of perceived ethics in the respondent's workplace.  Aggregate individual scores between 12 and 84 were possible; the mean score for respondents in public practice was 73.32, for industry, 67 and government, 63.81.  The researchers concluded that scoring differences between public accounting and industry and big 4 (736.11) vs. non-big 4 firms were statistically significant with the largest factor being ethics training.  Note: While researchers characterized the findings about the perceived ethical environment at big 4 workplaces to be "counter-intuitive," I was not surprised in the least, based on my own experience working in and with the larger firms. 

The researchers observed that CPAs making a move from public to private accounting, which is very common, should take note that they may face a harsher and less ethical environment in those companies.   I agree, and based on other research I've recently seen (see my blog dated 2/1/17), this appears to be a global issue in industry.