Friday, April 07, 2006

Another Sidebar on Ethics

As some of you may recall, I am a CPA in real life. As such, I have to live by certain rules that govern the accounting profession. One of those rules is that I am supposed to be in a process of continuous learning, so that my accounting knowledge never goes stale. Granted, there are a lot of areas of accounting knowledge, and I have probably forgotten more about accounting than I have learned since passing the CPA exam.

I'm getting off on a tangent, so allow me to back up a bit. We are in the process (at the foundation) of having our financial statements audited, and this week was the time for the auditors to do their field work. So, in addition to this business about my lung rising to the surface, I also had accountants poring over all our records, asking probing questions and demanding evidence about various the way we do things. A very low-stress environment, you understand.

Anyway, the auditors were planning to be done by Thursday so that they could attend an ethics seminar at MU on Friday. (Part of the continuing education CPAs are required to have every year is at least 2 hours related to ethics). Well, it was free, and there's nothing an accountant likes more than free CPE, so I decided to join them. I figured at the very worst, I would have my ethics requirement done for the year in April. One of the scheduled presenters (Lynn Turner, former chief accountant for the SEC) couldn't make it, so the other speaker modified his presentation to fill the entire two-hour slot. Now, most CPA ethics seminars are interminally boring, so I was a bit concerned about my ability to stay awake for a two-hour presentation.

I needn't have worried. The fellow's name is Patrick Kuhse, and he has quite an interesting history, including a four-year stint in the federal pen for bribery, plus the three years he was on the lam in Costa Rica and various Central and South American countries before he got tired of running and turned himself in. He also owes the government (actually, the state of Oklahoma) about $4 million in restitution, which he hopes to have paid off in the next few years.

During his time in prison, he interviewed his fellow inmates, both white-collar criminals like himself and violent criminals. Based on his interviews, he developed a set of lapses in critical thinking that can lead to unethical actions:

  • Entitlement. The idea that you are owed something because of who you are, and that you are justified in taking it for yourself.
  • Rationalization. Making excuses for your behavior.
  • Victimitis. Rather than taking responsibility for your actions, you play the part of the victim instead.
  • Super optimism. Thinking that you can do anything just as good as an expert, and that you can do no wrong or not get caught.
  • Situational ethics. A sliding scale of responses to ethical dilemmas depending on your stake in the outcome.
  • Affection Disconnection. Getting so caught up in pursuit of your goal that you ignore the advice of your mentors and loved ones or don't realize how your behavior is affecting them.
  • Laziness and Sloppiness. The way most criminals get caught, it happens because of arrogance.
All these breakdowns can lead to seemingly unimportant decisions that can snowball and cause your moral compass to stray from true north. Important lessons to remember, and not just for CPAs.