They will also examine the importance of ethics classes in college. They will pave the way for future research into actions that can be taken to address the problems that currently exist within the accounting profession. They will play an important role the improvement of college curriculums so that they can be better prepared to meet ethical and moral challenges of their chosen profession. This study represents the first step to understanding the connection between college curriculum and the ability to maintain ethical standards in the accounting profession. CHAPTER 2 - LITERATURE REVIEW

In order to further establish a solid theoretical basis for the research at hand, we will examine the body of literature that exists on the topic at hand. The literature review will examine literature from many different, but closely related areas in order to examine many sides of the issues. For the most part, research will be recent, within the past five years. However, in some cases older works will be consulted if it is felt that they contribute to an overall understanding of ethics in the accounting profession.

Relationship Between The Individual and The Corporation

In order to understand how individuals contribute to corporate ethics we will examine the development of theory in this field. Feinberg (1968) describes four distinct types of collective or group moral responsibility arrangements. These are group liability without fault, group liability with noncontributory fault, contributory group fault: collective and distributive, and contributory group fault: collective but not distributive.

According to the group liability without fault arrangement, the entire group bears responsibility for the actions of one or several of its members. This is what we saw in the Enron scandal where the entire group was punished for the actions of a few, even if the punishment was nothing more than a loss of trust in the public eye. In the liability with noncontributory fault arrangement the entire group is held responsible for every member of the group even though it is the faulty behavior of a few that results in harm to others.

Feinberg's third model, contributory group fault: collective and distributive, says that because the blame is associated with the actions of each individual there is no amount left over that can be attributed to the group independently of its members. This concept has been proven by psychologists studying group behavior. One of the most well-known examples was a person in a major city who was stabbed multiple times in plain sight and no one stepped in to stop it (May, 1987).

The final model of collective responsibility is the only type in which the responsibility is not reduced to the individual. The contributory group fault: collective but not distributive. In this case, group moral responsibility is independent of the responsibility to any or all of its individual members. The group itself is at fault independent of any fault that is attributable to any individual member. One of the most profound examples of this is the atrocities of Nazi Germany. This group model leads to the statement, "I was only doing my job." It serves as an excuse for its members to do what is necessary in accordance to the group.

Feinberg's models are important because they demonstrate that there are different viewpoints on group and individual responsibility. Various corporations may exhibit characteristics of any one of these models. This is considered a part of the corporate culture of the organization. One can find examples to support any one of these models within the corporate world. Understanding this helps us to further develop our model of moral responsibility in corporations because it makes a point that there is no single answer to this question. The answer is different for each and every organization.

There are various viewpoints on the individuality and moral responsibility of corporations. Velasquez (1983) pointed out that corporate actions are the result of policies and procedures that are intentionally designed by the members of the corporation. Therefore, when harm occurs individuals are responsible to the degree that each one participated in the decision.

Another group...

He sees the corporation as a "machine" that is only capable of responding in a way that is consistent with the programmed behavior set by its collective. Ladd's argument would eliminate free will from the organization, and therefore would eliminate moral responsibility. In a famous experiment, Dan-Cohen (1986) replaced employees with computers and found that the computers could perform all of the daily functions of the corporation without human intervention.
In a literature review of relevant work, French (1984) can be found cited in many works. French argues that a corporation possesses functioning internal processes that make corporate decisions and actions possible by coordinating, subordinating, and synthesizing the actions of individual human members. He agrees with the argument that this transforms individual decisions into a corporate action that is solely for the benefit of the corporation rather than the individuals. French's argument would allow for the existence of corporate moral responsibility.

Arguments on the individualist extreme include Donaldson (1982) and Risser (1996). Donaldson believes that corporations are moral agents which are capable of bearing responsibility. However, he specifies two conditions that the corporation must meet in order to qualify as a moral agent. The first is the capacity to include moral considerations in its decision-making and the second is the capacity to maintain and modify its system in order to increase the probability that it will achieve its goals. In other words, the corporation must be able to respond to changes that may necessitate structural changes in order to achieve group goals. Risser went as far as to call this ability "moral responsibility."

Moral responsibility implies the ability to engage in responsive behavior. Therefore it implies liability for the results of one's actions. The court system in the United States can impose punishments to the corporation such as fines and restrictions on business. Stone (1975) feels that these sanctions do not address the inner processes of the corporation that will result in the necessary change. Because the responsibility is distributed over the group, each individual portion of the responsibility is less than if an individual committed the act. A corporation has no conscience and unlike the individual, cannot feel guilt or remorse for their actions.

Wolgast (1992) argued that accountability is an important element of the moral responsibility of the corporation. Enforcement is the most challenging aspect of accountability. Each corporation has a right to their own secrets and advantages. It is not required to make all of its secrets public, but there is a line where accountability is required.

Stakeholders have a right to review the quarterly and yearly financial statements to make certain that they continue to receive value for their investments. If the stakeholder does not feel that the investment is still a good decision they have the right to knowledge that allows them to make an informed decision. The corporation has a moral responsibility to provide accurate information to stakeholders for this purpose. Corporations have a responsibility to provide information that is accurate and true. Corporations that failed in this responsibility are often punished collectively by stakeholders that refuse to support their organization in the future.

We began our discussion of corporate moral responsibility with question of free-will and intelligence. A review of literature on the topic reveals several phrases that have crept into our vocabulary, such as "corporate responsibility," "organizational intelligence," and "corporate accountability" to name a few. Our purpose was to explore these concepts and decide if any of them could truly be applied to an actual organization. We found that corporations are the collective actions of individuals, and that this gives them characteristics that resemble both individuals and "machines." We found that although the responsibility of the individual is diffused throughout the group, individuals can still be held accountable for their actions to the group.