Introduction to Financial Accounting: Ethical Principles and Decision Making Models

Running head: INTRODUCTION TO FINANCIAL ACCOUNTING
Introduction to Financial Accounting
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INTRODUCTION TO FINANCIAL ACCOUNTING
Overview of Ethical Principles
Ethics is the branch of knowledge that concerns with moral principles that control
how a person behaves or acts towards activities. Ethics helps to govern our societies in a way
since it outlines the expected behaviors and activities which people should or should not
engage in for the benefits of his/her life and the whole society in general. Ethics discipline is
guided by four moral principles which are autonomy, beneficence, non-maleficence, and
justice. Autonomy principle is a term in the Greek words, meaning self-rule or self-
governance. The principle insists that the human dignity should be respected by letting
people make their own decisions and considering their rights (Holmes, 2016). It is ensured
through the aspects of informed consent and confidentiality. Beneficence is the other
principle which insists that people should focus on doing well to others (Lewis, 2017). For
example, where an intervention is being implemented, it should not pose risks to the people
involved.
Non-maleficence, on the other hand, refers to preventing harm to other people (Sher,
2018). The benefits of an intervention, for example, should not compromise the health or
well-being of a person. The last ethical principle is justice, which insists that actions taken
should be fair to people where every person is given their due (Vaughn, 2015). For example,
while offering resources that are scarce, the people who need them most should be
prioritized.
Overview of Ethical Decision Making Models
Several ethical decision-making models have been developed, but the most commonly
used is the PLUS and the character based decision-making models (Ferrell & Fraedrich,
2015). PLUS model insists that to establish a clear and a cohesive approach to finding a
solution to an ethical problem, the leader has to be guided by several ethical filters to make an

INTRODUCTION TO FINANCIAL ACCOUNTING
appropriate decision. The filters are discussed in the PLUS word, where P stands for policies
and procedures, indicating that the solution derived must be in line with the policies outlined
in the place. L stands for legality, where the decision made should not violate laws. U means
universal, insisting that values and principles of the organization involved should be
considered while developing solutions. Lastly, S is standing for self in that the direction
selected should meet the expectations of fairness and justice to the people concerned (Xie &
Lee 2015, p. 220).
The character-based decision-making model, on the other hand, is based on three
components. One is that the decisions made should consider the wellbeing of all stakeholders
involved, by considering the effects (Snyder & Diesing, 2015). Also, the solutions developed
should consider the ethics of the place and thus avoid making decisions that depict non-
ethical values. Thirdly, is that it is allowed to violate an ethical principle if it contributes to a
better ethical climate for other people (Pettigrew, 2014).
Stakeholders in the Situation and How They Are Affected By the Ethical Issues
The stakeholders in the scenario are several, one being Tuscan Choco and Churos Ltd.
The other one is the customer who claims that chocolate from the company broke a tooth.
Also, there is the court where the lawsuit has been presented as well as the chief financial
officer of the company who is rejecting the disclosure of the incident to the financial report.
The stakeholders are affected by ethical issues differently. For the Tuscan and Churos
Company, the ethical issue of selling harmful chocolates faces them, requiring an explanation
for the case. The customer, on the other hand, has to prove that the chocolate bought from the
company is the one that broke the tooth and that the company was informed about the issue.
The court, on the other hand, has to make a judgment which should be based on ethical
principles. The chief financial officer has to explain the reason as to why the non-ethical