The American Accounting Association Assignment 2022
Added on 2022-10-12
4 Pages1460 Words23 Views
1
The American Accounting
Association (AAA) seven-step model
The AAA seven-step model provides a framework through which an ethical dilemma can be analyzed to reach
an ethical conclusion or decision. The seven question in the model are:
1. Establish the facts of the case
a) This step means that when the decision-making process starts, there is no ambiguity about what is
under consideration.
b) The leading questions about the facts will revolved around What? Who? Where? When? How?
c) Essentially, efforts are made to identify what we know or need to know, if possible, to clearly define
the problem.
Example
A Chartered Accountant in business is being associated with a misleading statement.
Facts that are important to know and are already known to reasonably conclude that the statement is
misleading. Parties involved in preparing, discriminating, using and making decision based on such
misleading statement. Maximum time available to conclude about the statement.
2. Identify the ethical issues in the case
a) This involves listing the significant stakeholders of the case and defining the ethical issues.
b) A complete account of key ethical issues and dilemmas is developed that helps in resolving the
problem comprehensively.
c) All threats to compliance with fundamental principles are identified and explained.
Example
A Chartered Accountant in business is being associated with a misleading statement.
Who will directly benefit or lose due to such misleading statement. Chartered Accountant’s responsibility
towards employing organization versus truthful representation of facts. Self-interest and advocacy
threats faced by the Chartered Accountant.
3. Identify the principles, rules and values related to the
case
a) This involves placing the decision in its social, ethical, and, in some cases, professional behavior
context.
The American Accounting
Association (AAA) seven-step model
The AAA seven-step model provides a framework through which an ethical dilemma can be analyzed to reach
an ethical conclusion or decision. The seven question in the model are:
1. Establish the facts of the case
a) This step means that when the decision-making process starts, there is no ambiguity about what is
under consideration.
b) The leading questions about the facts will revolved around What? Who? Where? When? How?
c) Essentially, efforts are made to identify what we know or need to know, if possible, to clearly define
the problem.
Example
A Chartered Accountant in business is being associated with a misleading statement.
Facts that are important to know and are already known to reasonably conclude that the statement is
misleading. Parties involved in preparing, discriminating, using and making decision based on such
misleading statement. Maximum time available to conclude about the statement.
2. Identify the ethical issues in the case
a) This involves listing the significant stakeholders of the case and defining the ethical issues.
b) A complete account of key ethical issues and dilemmas is developed that helps in resolving the
problem comprehensively.
c) All threats to compliance with fundamental principles are identified and explained.
Example
A Chartered Accountant in business is being associated with a misleading statement.
Who will directly benefit or lose due to such misleading statement. Chartered Accountant’s responsibility
towards employing organization versus truthful representation of facts. Self-interest and advocacy
threats faced by the Chartered Accountant.
3. Identify the principles, rules and values related to the
case
a) This involves placing the decision in its social, ethical, and, in some cases, professional behavior
context.
2
b) As professional accountants, the Chartered Accountants are bound by the Code of Ethics prescribed
by the professional body. They are also required to fulfil social expectations. Therefore, prescribed
Codes and social expectations of the profession are taken to be the principles, rules and values.
Example
A Chartered Accountant in business is being associated with a misleading statement.
The major principles involved in this case are: Integrity, professional competence and due care,
confidentiality and morality.
4. Identify each alternative course of action
a) This involves compiling a complete set of major practical alternatives or likely decisions one can
make in a given situation. These alternatives should not consider the norms, principles, and values
identified in Step 3.
b) It is expected that in these alternatives one may feel or see some form of compromise or point
between simply doing or not doing something.
Example
A Chartered Accountant in business is being associated with a misleading statement.
The course of actions Chartered Accountant has, are: (a) let the misleading statement go to the intended
users, (b) only inform his/her supervisors about the misleading statement (c) only allow his/her name to
be associated once the statement is corrected to his/her satisfaction, (d) inform the relevant regulator
about the misleading statement being associated with him/her, and (d) publicly disclose the fact that
the he/she is associated with a misleading statement.
5. Compare principles, rules and values to alternatives
a) The principles, rules and values identified in Step 3 are overlaid on the alternatives identified in Step
4.
b) All alternatives are assessed (initially made without any consideration of principles and values) on
the basis of principles and values.
c) It gives an idea as to how compelling any one or combination of principles and values are against
each alternative.
Example
A Chartered Accountant in business is being associated with a misleading statement.
The course of actions Chartered Accountant has, are: (a) let the misleading statement go to the intended
users, (b) only inform his/her supervisors about the misleading statement (c) only allow his/her name to
be associated once the statement is corrected to his/her satisfaction, (d) inform the relevant regulator
about the misleading statement being associated with him/her, and (e) publicly disclose the fact that the
he/she is associated with a misleading statement.
Integrity appears to be the most compelling principle against each course of action available in this case.
b) As professional accountants, the Chartered Accountants are bound by the Code of Ethics prescribed
by the professional body. They are also required to fulfil social expectations. Therefore, prescribed
Codes and social expectations of the profession are taken to be the principles, rules and values.
Example
A Chartered Accountant in business is being associated with a misleading statement.
The major principles involved in this case are: Integrity, professional competence and due care,
confidentiality and morality.
4. Identify each alternative course of action
a) This involves compiling a complete set of major practical alternatives or likely decisions one can
make in a given situation. These alternatives should not consider the norms, principles, and values
identified in Step 3.
b) It is expected that in these alternatives one may feel or see some form of compromise or point
between simply doing or not doing something.
Example
A Chartered Accountant in business is being associated with a misleading statement.
The course of actions Chartered Accountant has, are: (a) let the misleading statement go to the intended
users, (b) only inform his/her supervisors about the misleading statement (c) only allow his/her name to
be associated once the statement is corrected to his/her satisfaction, (d) inform the relevant regulator
about the misleading statement being associated with him/her, and (d) publicly disclose the fact that
the he/she is associated with a misleading statement.
5. Compare principles, rules and values to alternatives
a) The principles, rules and values identified in Step 3 are overlaid on the alternatives identified in Step
4.
b) All alternatives are assessed (initially made without any consideration of principles and values) on
the basis of principles and values.
c) It gives an idea as to how compelling any one or combination of principles and values are against
each alternative.
Example
A Chartered Accountant in business is being associated with a misleading statement.
The course of actions Chartered Accountant has, are: (a) let the misleading statement go to the intended
users, (b) only inform his/her supervisors about the misleading statement (c) only allow his/her name to
be associated once the statement is corrected to his/her satisfaction, (d) inform the relevant regulator
about the misleading statement being associated with him/her, and (e) publicly disclose the fact that the
he/she is associated with a misleading statement.
Integrity appears to be the most compelling principle against each course of action available in this case.
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