The Moral Reasoning of Public Accountants in the Development of a Code of Ethics: the Case of Indonesia

The objective of this study is to explore the user’s perceptions of the role of moral reasoning in influencing the implementation of codes of ethics as standards and guidance for professional audit practice by Indonesian public accountants. The study focuses on two important aspects of influence: (i) the key factors influencing professional public accountants in implementing a code of ethics as a standard for audit practice, and (ii) the key activities performed by public accountants as moral agents for establishing awareness of professional values. Two theoretical approaches/models are used as guides for exploring the influence of moral reasoning of public accountants: first, Kolhberg’s model of moral development (Kolhberg 1982) and, secondly, the American Institute of Certified Public Accountants (AICPA)’s Code of Conduct, especially the five principles of the code of ethics (1992, 2004). The study employs a multiple case study model to analyse the data collected from interviewing 15 financial managers of different company categories (as users). The findings indicate that (i) moral development is an important component in influencing the moral reasoning of the individual public accountants, (ii) the degree of professionalism of public accountants is determined by the degree of the development of their moral reasoning, and (iii) moral reasoning of individuals influences both Indonesian public accountants and company financial managers in building and improving the effectiveness of the implementation of codes of conduct. It is concluded that the role of moral reasoning is an important influence on achieving ethical awareness in public accountants and financial managers. The development of a full code of ethics and an effective compliance monitoring system is essential for Indonesia if it is to play a role in the emerging global economy.