Does Professional code of ethics influence Professional Accounting Practice in Rivers State, Nigeria?

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1 Quest Journals Journal o Research in Business and Management Volume 4 ~ Issue 1 (16) pp: 14-1 ISSN(Online) : Research Paper Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? 1 Ferry Barineka Gberegbe, Gabriel A. idornigie, 3 Lilian Okorite Nkanbia-Davies Department o Accountancy Ken Saro Wiwa Polytechnic, Bori Department o Accountancy Ken Saro Wiwa Polytechnic, Bori Department o Accountancy Ken Saro Wiwa Polytechnic, Bori Received 1 December, 15; Accepted 4 February, 16 The author(s) 15. Published with open access at ABSTRACT:- Business ethics literature suggests that proessional code o ethics, personal value and punitive measures are likely to inluence proessional accounting practice. However, the levels o relationships are not the same in all proession and environment, and empirical evidence was lacking in Rivers State, Nigeria. This study investigated the relationship between the proessional code o ethics, personal culture/value and punitive measure, and proessional accounting practice in Rivers State. It employed qualitative approach to examine the relationship between proessional code o ethics, personal culture/ value, punitive measure and proessional accounting practice in Rivers State. The result revealed that there is signiicant relationship between proessional code o ethics, punitive measures and proessional accounting practice in Rivers State. This indicates that punitive measures can be used to enhance adherence to proessional code o ethics in proessional accounting practice. It is recommended that policy makers should increase awareness o the role o proessional accounting in the society and proessional bodies such as ICAN, ANAN and CITN should apply deterrence approach to increase adherence to proessional codes o Ethics in Nigeria.. Further study is recommended or other states and using other methodology. Keywords:- Codes, Ethics, Proessional I. INTRODUCTION Many o the recent corporate ailures and accounting scandals in the United States o America, Australia, and Europe (One Tel, Harris Scare and HIH in Australia, World.com, Global Crossing, Qwest, Dynergy, CMS Energy, Tyco, Adelphia, Peregrine, Sun beam, Baptist Foundation o Arizona, Waste Management and Xerox in the United States), together with the collapse o Arthur Anderson have raised public scrutiny o business and accounting practices, particularly on the eectiveness o proessional codes o ethics in accounting practice (Cahon and Martinov-Bennie, 5, Martinov - Bennie and Mladenovic 15). Several scholars in the ield o business ethics have argued that proessional accountants rarely use proessional code o ethics to solve the problem o compliance in their practice that have resulted to several accounting scandals and business ailures. Do these assertions still hold? Do proessional code o ethics inluence proessional practice in accounting? We need to increase awareness as to why and how to leverage proessional code o ethic eectively. There are concerns or the development and eective implementation o proessional code o ethics. First, critics argue that proessional code o ethics are or public relations than altering conduct and are used or window dressing. Second Ladd (1979 in Jamal and Bowie 1995) argued that proessional code o ethics is designed to protect the economic interest o the proessional rather than they are or protecting the public rom unethical conduct. Third, some o the provisions are viewed to show that particular morale positions o proessionals and don not represent the moral view o the society (community). In response to what appears to be an explosion o unethical behaviour in both the proit and not or proit sectors, within government and business, higher education and other organizations have added new positions to lead legitimacy and a public ace to support ethical behaviour (Messikomer and Cirka, 1). Proessionals are exploring means to improving proessional service and to regain public conidence (Frankel 1989). Department o Accountancy Ken Saro Wiwa Polytechnic, Bori Page

2 Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? One o the more common suggestions or addressing ethical lapses in businesses and proessions is the use o proessional code o ethics. The unction o ethics and the need or accounting decision maker to possess ethical expertise so as to be able to conduct appropriate proessional judgement (Keim and Grant 3) is widely acknowledged by the public, regulators and the proession. ICAN, or example, recognizes the importance o ethical behaviour or Accounting Proessionals and provides its code to guide the behaviour o members (Bu and Yonkers 5). Proessional code o ethics is the glue that binds the proessional community together (Brien 1998), that guarantee the basic o trust between a proession and the society ( Russ Et 4). It provides a tangible standard against which the perormance o the proessional is measured (Tucker, Stathakopolous and Patti 1999, Coughlan 1). Also, some proessional code o ethics include punitive measures (including loss o membership), or members that violates the standard (Frankel 1989). This raise the question: Do unethical proessionals cease to count as proessionals (Brecher 14)? Do punitive measures inluence the level o adherence to proessional code o ethics? Some scholars have raised question about the role o proessional code o ethics on proessional practice and the proessions commitment to the enorcement o their code o ethics (Neu 1991 and Allen 1991). Others have asked: to whom do proessionals owe their primary allegiance? The main aims o this paper are: 1) to determine the relationship between proessional code o ethics and Accounting practice in Rivers State; ) to determine the relationship between personal culture/value and proessional code o ethics and 3) to determine the relationship between punitive measures and proessional code o ethics. These objectives give a new direction to ethics literature. This study is consistent with the recommendations o Kaptein and Schwartz (8), and Peterson and Krings (9) that suggested or research on the inluence o proessional code o ethics on every day practice (Messikomer and Cirka 1). To realize our objectives, we conducted an exploratory study to determine the relationship between Personal value/culture, Punishment, Proessional code o ethics and Proessional accounting practice in Rivers State, Nigeria. We ocused on proessional accountants that are in practice and analyzed the joint eects o proessional codes o ethics, personal culture/value and punitive measures on proessional accounting practice. We ound that there are positive relationship between proessional code o ethics, personal values/cultures and punitive measures. Our indings are not only scientiically relevant but also proessionally useul. Further, these indings will be useul to proessional accounting bodies, individuals and regulators. The next part o this paper is organized as: Conceptualisation, Methodology, and Discussion o indings, conclusion and limitation/recommendation II. CONCEPTUALISATION.1 Proessional codes o ethics A code is a set o rules: some may take the orm o advice rather than directive. In a proession, a code is an enabling document, a source o public evaluation and ways o proessional association that is used to improve the proession s reputation and public trust, deterrence to unethical behaviour, adjudication, support to a system and preserve entrenched proessional biases (Frankel 1989, Espinosa Pike and Barrainkua Aroztegi 14). A proessional code rests on the principle o a common technical and / or scientiic body o knowledge that guarantees competence. The proessional codes o ethics should protect members o an association, unction to promote the interests o an association, and should be respected by the embers (Hoivik ). Thus, proessionalism and personal ethics appears to be inseparable in as much as the very one concept the individual has in one s role as a proessional seems to change one s personal and proessional ethics (Callahan 1988). Proessional code o ethics indicates an understanding o a proessional group oriented to service and not or proit. This in turn appears to present proessionals as group in society who voluntarily subscribe to a superior ethic. Along a continuum, three types o proessional o codes o ethics can be identiied: aspirational code, educational code and regulatory code. An operational code is a statement o ideals to which proessional thrive or ull realization o human achievements (Frankel 1989). In the case o educational code, the proessional emphasis is on the understanding o its rules. Accordingly, deliberate eort is made to by the proessional to show how its code can be used to address ethic issues associated with proessional practices. Because values inluence what makes something good or what makes something desirable. The third type o code is the regulatory code. A regulatory code includes a set o structured rules that is used to control proessional conduct and as a channel o adjudicating grievances.. Regulation o Accounting Proessionals: The role o Proessional codes o ethics in Nigeria Using a unctionalist approach, sociologist holds that a proession by nature is a sel conscious community whose members knows their norms and identiy themselves to each other and people outside their organization (Brein 1998). The proession, as an institution, serves as a normative reerence group or individual 15 Page

3 Punitive measure Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? practitioners and with a code o ethics that clariies the norms that should govern behaviour, or both its members and outsiders (Frankel 1989). In Nigeria, accounting proessionals are regulated by proessional bodies such as the Institute o Chartered Accountants o Nigeria (ICAN), Association o National Accountants o Nigeria (ANAN) and the Chartered Institute o Taxation o Nigeria (CITN). Each body has a set o proessional code o ethics or her members. Accounting proessionals, with license or proessional practice in Nigeria, are expected to operate within the proviso o the code that imposes a responsibility o sel regulation. They are expected to support others in perorming their unctions and report violators to the supervisory and regulatory bodies (ICAN, ANAN, CITN, and Financial reporting council). However, this approach appears to have ew rewards and too many risks related to reporting errant members. Accordingly, other means o social control licensing, peer review and mandatory reporting principles have been adopted. In the light o the above, we raise the question: Do punitive measure (including the withdrawal o license) inluence the level o adherence to proessional codes o ethics in Nigeria..3 Framework or the evaluation o Proessional codes o ethics in Nigeria We propose three criteria that should be used to achieve some level o compliance with proessional code o ethics in Nigeria. First, a proessional code o ethics should have local perspective. That is, the guidelines on proessional conduct must be consistent with the values recognized by the Institute o Chartered Accountants o Nigeria (ICAN) or Association o National Accountants o Nigeria (ANAN). The individual value can provide the basis o assessing proessional codes o ethics in terms o personal culture, so that the likely success o proessional code o ethics or ICAN or ANAN members can be predicted. In Accounting Proession, the integrity principle requires accountants to be honest and straight orward in perorming his assignment. What constitute straight orward and honesty may be a unction o individual believe, in particular, his willingness to be transparent to non members o Accounting Proession. Second, the proessional code or ICAN or ANAN members must be able to satisy or proscribe behaviours. Thus, we recognize the use o punitive measures to check unethical behaviour. Velayutham (3) asserts that disciplinary measures can be used to support enorcement o proessional code o ethics. Third, the mere existence o proessional code o ethics is not enough to guarantee an individual proession s compliance (Cohen, Pant and Sharp, 199). Miller (in Cohen et al. 199) acknowledges that proessional code o ethics may be respected more in one place than in another. Accordingly, we recognized proessional code o ethics as an important valuable. Personal value/culture Proessional practice Proessional codes o ethics IV. METHODOLOGY In this section, we will explain the method and procedure used in gathering data. 16 Page

4 Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? 4.1 Participants The research population includes licensed accounting proessionals that are resident in Rivers State, Nigeria. In Nigeria, there are 1,814 Proessional Accountants that renders services to individuals and organizations in both the private and public sector respectively. However, due to the limitation o time, budget and geographical distance, it was not possible to collect data rom other states in Nigeria. Rivers State was selected or reasons o convenience, cost and or the act that it is made up o Proessional Accountants rom dierent tribes that can communicate in English Language. A sample o 9 experienced Nigerian Proessional Accountants and partners o practicing irms were selected. They were selected because they are amiliar with all aspects o accounting judgement process in terms o both technical and ethical issues. 4. Data collection This is an exploratory study that determines the relationship between (how much) proessional code o ethics (what) inluence proessional practice (who) in Rivers State (where) in 15 (when). This paper adopts a quantitative approach that is consistent with exploratory research. Quantitative approach involves choices about the phenomenon and variables to observe and the level o detail or observation. The primary data was gathered by means o questionnaire. The study questionnaire was compiled in English and was randomly administered across proessional accountants and partners in practice across Rivers State. In order to guarantee participants anonymity, the questionnaire does not ask or personal identiication. 9 copies o questionnaires were administered and 74 were received, which represented 8.% level o success rate o rate. V. RESULTS Table 1: Demographics o the Respondents Demographics variables No. o Respondents Percentage (%) Age Male Female Total Proession In accounting practice In partnership Total Years o membership -5years years years years Above years Total Table 1 show that 9.5% o the respondents were male and 9.5% representing emale proessional accountants that participated. Further, 5.7% represents those that are not in partnership and 74.3% or those in partnership. Nineteen respondents (5.7%) have been member o their respective proession between -5 years while 39.%, 16.%, 4.1% and 14.9% have been member or 6-1 years, years, 16- years and more than years respectively. Also, it is established that most o the respondents have at least 6 years proessional experience (74.3%) Hypothesis one H: There is no signiicant relationship between proessional code o ethics and proessional accounting practice in Rivers State. H1: There is a signiicant relationship between proessional code o ethics and proessional accounting practice in Rivers State. 17 Page

5 Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? Table : Relationship between Proessional Code o Ethics and Proessional Practice Do proessional codes o ethics inluence e e the activities o your proession? Strongly agree Agree Total 74 e , K Correction coeicient, r Critical value o r.55. N ( k 1) ( 1) The calculated r (.49) is greater than the critical r (.5) at 5% level o signiicance. Thereore, the null hypothesis is rejected. Hence, this study establishes that there is a signiicant relation between proessional code o ethics and proessional accounting practice. Hypothesis two Ho: There is no signiicant relationship between personal value / culture and adherence to proessional code o ethics in Rivers State. H1: There is no signiicant relationship between personal value / culture and adherence to proessional code o ethics in Rivers State. Table 3: Relationship between personal value / culture and adherence to proessional code o ethics. Do personal cultural values inluence e your adherence to proessional codes e o ethics? e Strongly agree Agree Indierent Disagree Strongly disagree Total Degree o reedom k 5, The correlation coeicient r is r N ( k 1) (5 1) 18 Page

6 Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? C C N The calculated r (.4) is less than the critical r (.5) at 5% level o signiicance. Thereore, the null hypothesis is accepted. Hence, this study establishes that there is no signiicant relationship between personal value / culture and adherence to proessional code o ethics. Hypothesis three Ho: There is no signiicant relationship between punitive measures and adherence to proessional code o ethics in Rivers State. H1: There is a signiicant relationship between punitive measures and adherence to proessional code o ethics in Rivers State. Table 4: Relationship between punitive measures and adherence to proessional code o ethics. Do punitive measures inluence your e member s behavior on adherence to e proessional codes o ethics? e Strongly agree Agree Indierent Disagree Strongly disagree Total Degree o reedom k 5, Correlation coeicient r (5 1) N ( k 1).4 The calculated r (.4) is greater than the critical r (.5) at 5% level o signiicance. Thereore, the null hypothesis is rejected. Hence, this study establishes signiicant relationship between punitive measures and adherence to proessional code o ethics. 19 Page

7 Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? Table 5: Correlation Matrix between Research Variables Proessional Cultural values Punitive measures codes o ethic Proessional codes o ethic 1.41 (.38).184 (.119) Cultural values.41 (.38) (.334) Punitive measures (.119) (.334) * p<.5, signiicant at 5%. Values in the parentheses are the p-values. Table 5 shows the relationship between the each o the variable. The result reveals that there is a signiicant relationship between proessional ethics and cultural values(r.41, p.38, p<.5). The relationship between punitive measures and proessional ethics was ound to be positive (r.184, p.119, p>.5). Positive relationship was also obtained between personal/cultural values and punitive measures (r.115, p.334, p>.5). VI. DISCUSSION The role o ethics and the necessity or accounting decision makers to possess ethical expertise so as to be able to conduct appropriate judgements is widely acknowledged by the society, regulators and proessionals. Accordingly, ICAN, ANAN, FRC and CITN develop codes o ethics that are used to guide the behaviour o members o accounting proession. Proessional accountants explore code o proessional ethics as a way o improving the proessional service and to regain public conidence. This study is consistent with the recommendations o Kaptein and Schwartz (8) and Peterson and Krings (9) that suggested or research on the inluence o proessional code o ethics on every day practice. Further, behavioural literature show that some proessional code o ethics includes the use o punitive measures (including loss o members) to get members o an association s commitment to codes o ethics. These relationships have not been examine in Rivers State This study is the irst to determine the relationship proessional code o ethics, punitive measures, personal value and proessional accounting practice in Rivers State, and the result have implication or Proessionals, Policy makers and Accounting practice in Nigeria. The indings agree with those that encourage regulators to apply deterrent approach (punitive measures) in increasing adherence to proessional codes o ethics among practicing accountants in Nigeria. It should be applied on members that violate proessional standards (Frankel 1989). The indings indicate that proessional code o ethics inluence proessional accounting practice in Rivers State, Nigeria. However, personal value/culture does not show signiicant inluence on the use o proessional code o ethics. We attribute the outcome to the conceptions and interpretations o the question. However, the correlation matrix between research variables reveals that there is positive relationship between proessional code o ethics and personal values/culture, punitive measures and proessional code o ethics, and personal values/culture and punitive measures. VII. CONCLUSION The oregoing results indicate the need to adopt punitive measures and proessional code o ethics in proessional accounting practice in Nigeria. The punitive approach recognizes proessional code o ethics as structured rules that should be used to regulate proessional conduct. It will act as deterrent to unethical behaviour and support to preserve entrenched proessional integrity. Based on these indings, it is evident that proessional code o ethics and punitive measures inluence proessional accounting practice in Nigeria. VIII. LIMITATION AND RECOMMENDATION This study has limitations, in particular because o its research method. The correlated data do not allow causal interpretation o the results. In addition, despite the beneits o convenience sampling technique, this work is limited in scope. Finally, the relationship between the orms o proessional code o ethics was not evaluated. Thereore, it is recommended that urther study should be conducted to address the limitations o scope, methodology, causality and orms o proessional code o ethics. Page

8 Does Proessional code o ethics inluence Proessional Accounting Practice in Rivers State, Nigeria? REFERENCES [1]. Allen, K. (1991): In Pursuit o Proessional Dominance: Australia Accounting , Accounting, Auditing and Accountability Journal, 4(1), []. Brecher, B. (14): What is Proessional Ethics?, Nursing Ethics, (), [3]. Brien, A (1998). Proessional ethics and the culture o trust, Journal o Business Ethics, 17, pp [4]. Bu, L. C., and Yonkers, V (5). Using student generated codes o conduct in the classroom to reinorce Business Ethics Education, Journal o Business Ethics, 61, pp [5]. Cahon, R. J., and Martinov-Bennie, N (6). The Applicability o a Contingent Factors Model to Accounting Ethics Research, 68, pp [6]. Callahan, J. C (1988). Ethical Issues in Proessional lie. New York: University Press. [7]. Cohen, R. J., Pant, W. L., and Sharp, J. D (199). Cultural and Socio economic Constraints on International Codes o Ethics: Lessons rom Accounting, Journal o Business Ethics, 11, pp [8]. Coughlan, R. (1): An Analysis o Proessional Codes o Ethics in the Hospitality Industry, Hospitality Management,, [9]. Espinosa-Pike, M. and Barrainkua-Aroztegi, I. (14): A Universal Code o Ethics or Proessional Accountants: Religious Restriction, Procedia-Social and Behavioural Sciences, 143, [1]. Frankel, S. M (1989). Proessional codes: why, how and with what impact? Journal o Business Ethics, 8, pp [11]. Hoivik, V. H (). Proessional Ethics a Managerial Opportunity in Emerging Organizations, Journal o Business Ethics, 39, pp [1]. Jamal, K., and Bowie, E. N (1995). Theoretical Considerations or a Meaningul code o Proessional Ethics, Journal o Business Ethics, 14, pp [13]. Kaptein, M., and Schwartz, M. S. (8). The eectiveness o Business Codes: A critical examination o existing studies and the development o an integrated Research Model, Journal o Business Ethics, 77, pp [14]. Keim, T. M., and Grant, C. T (3). To tell or not to tell: An Auditing Case in Ethical Decision Making and Conlict Resolution, Issues in Accounting Education, 18(), pp [15]. Martinov Bennie, N and Mladenovic, R. (15). Investigation o the Impact o an Ethical ramework and an Integrated Ethics Education on Accounting Students Ethical Sensitivity and Judgement, Journal o Business Ethics, 17, pp [16]. Messikomer, M. C., and Cirka, C. C (1). Constructing a Code o Ethics: An experimental case o a Natural Proessional Organisation, Journal o Business Ethics, 95, pp [17]. Neu, D. (1991): Trust, Impression Management and the Public Accounting Proession, Critical Perspective on Accounting, [18]. Peterson, L. E., and Krings, E (9). Are ethical codes o conduct toothless Tigers or dealing with employment discrimination, Journal o Business Ethics, 85, pp [19]. Russ-Et, D. (4): Ethics in a Global World: An Okymoron, Evaluation and Planning Programme, 7, []. Tucker, L.R.; Stathakopolous, V. and Patti, C.H. (1999): A Multidimensional Assessment o Ethical Codes: The Proessional Business Association Perspective, Journal o Business Ethics, 19, [1]. Velayutham, S. (3): The Accounting Proessions Code o Ethics: It is a Code o Ethics or a Code o Quality Assurance, Critical Perspectives, 14, APPENDIX QUESTIONNAIRE ON PROFESSIONAL CODE OF ETHICS AND PROFESSIONAL ACCOUNTING PRACTICE IN RIVERS STATE Instruction: Please ill the vacant spaces provided and tick as appropriate Sex: Male ( ) Female ( ) In proessional practice ( ) In partnership with other irms ( ) Years o membership: -5yrs ( ) 6-1yrs ( ) 11-15yrs ( ) 16-yrs ( ) Above ( ) Question 1:Do proessional codes o ethics positively inluence the activities o your proession? Strongly agree ( ) Agree ( ) Indierence ( ) Disagree ( ) Strongly disagree ( ) Question :Do personal value / culture positively inluence your adherence to proessional codes o ethics? Strongly agree ( ) Agree ( ) Indierence ( ) Disagree ( ) Strongly disagree ( ) Question 3:Do punitive measures (including loss o membership) positively inluence your adherence to proessional codes o ethics? Strongly agree ( ) Agree ( ) Indierence ( ) Disagree ( ) Strongly disagree ( ) General Remark 1 Page