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Organizational Leadership and Ethical Climate in Utah’s Certified Public Accounting Profession (90-minute Presentation Slides). by Jeffrey N. Barnes, CPA, MAcc Oral Defense Slides in Partial Fulfillment of Requirements for the Degree Doctor of Business Administration
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Jeffrey N. Barnes, CPA, MAcc
Oral Defense Slides in Partial Fulfillment
of Requirements for the Degree
Doctor of Business Administration
UNIVERSITY OF PHOENIX
Sample Size Formula
Minimum Desired Sample Size
Calculation of desired sample size is, n = [((1.96)2 * (1.25)2)/(.25)2]= 96.04 or rounding up, 97 respondents
. . . the data collection need not be reperformed; to address the scale error in the ‘Methods’ section of the dissertation; to state that the existing data means, variances, and correlations are meaningful and reportable; to suggest that the scale errors do not cause a systemic or universal disqualifying error, because the recorded survey respondents’ impressions about the perceived ethical climate types are still valid; to not transform the data, thus, to use the existing data as is; and to check for similar intercorrelations and reliability.
Victor & Cullen, 1988,
Respondents’ Personal Information
Transformation Leadership to
Caring Ethical Climate
Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Service Function/Transformational Leadership to Lawcode Ethical Climate
Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Service Function/Transformational Leadership to Rules Ethical Climate
Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Licensed CPA?/Transformational Leadership to Rules Ethical Climate
Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Years with Firm/Lassiez-faire Leadership to Lawcode Ethical Climate
Post Hoc Power and Effect Size Analysis
MLQ Frequency Key: 0.0 = Not at all, 1.0 – Once in a while,
2.0 = Sometimes, 3.0 = Fairly often, and 4.0 = Frequently, if not always
Professionals working in a recognized caring ethical climate are concerned with being considerate toward others, focus on team play, and considerate of constituents outside the organization. Accounting professionals operating in a caring ethical climate are concerned about social responsibilities.
The AICPA principles of professional conduct mandate that the “public interest” subordinate all personal and firm interest. Complying with social responsibilities and expectations of ethical conduct is very beneficial to the ethical, as well as, legal sustainability of the accounting firm.
Transformational leadership had the only statistically significant relationship with the caring ethical climate. Transactional and laissez-faire leadership style does not engender a loyalty derived from leader caring and support or does not encourage concern for the public interest.
Transformational leadership has the highest positive correlative effect on subordinates recognizing the lawcode ethical climate. Accounting firms would prefer their leaders to demonstrate transformation leadership, more often than not, simply to encourage firm-wide compliance with laws, regulations, and professional practice standards.
While performing univariate analysis of variances between the demographic subject factors of who practice assurance services and tax service, an interesting phenomenon arose. Those firm personnel not only are influenced by transformational leadership and practicing tax services but also experience a stronger perception of the lawcode ethical climate than those in the firm practicing assurance services. Perhaps the tax personnel are more sensitive to the lawcode ethical climate because of their required understanding of voluminous tax law’s authoritative sources (i.e., legislative tax law, administrative tax law, and judicial tax law). Also, tax professionals must also be aware of the generally accepted accounting principles (GAAP)
From Table 64, it can be seen that transformational leadership has the only variable that shows statistically significant and highest correlative relationship to the rules ethical climate.
Also, Utah CPA firms should be aware that CPA licensed personnel, while influenced by transformational leadership, recognize a higher level of rules ethical climate type than those not having earned their CPA licensure.
Perhaps this phenomenon arises from the stronger appreciation of quality control compliance requirements with firm rules, policies, and procedures protocol for maintaining licensure and practice permission from peer quality reviews.Additionally, personnel from larger CPA firms, while influenced by transformational leadership perceived a higher level of the rules ethical climate, than those personnel from smaller CPA firms. This phenomenon may exist because larger CPA firms are perhaps performing more high-level assurance and tax services engagements, requiring greater understanding and compliance with in-firm policies, procedures, and practices, such as, for those collaborative intra-office procedures for multi-city client engagements. Personnel from larger CPA firms would necessarily be more sensitive to complying with intra-company policies, procedures, and practices.
Because transformational leadership suppresses the recognition of this individual- and company-egoistic position, as evidence by the negative correlative relationship, transformational leadership is important in lifting the subordinates’ conduct to higher levels of ethical preferences.
Laissez-fair leadership also had a statistically significant and positively correlated relationship with this deleterious instrumental leadership style. Accounting firms have strong reporting, review, and follow-up policies. These procedures help ensure that auditing and tax engagement procedures are performed, evidence is properly assessed, and that the conclusion by the subordinate accounting professional are reasonable under the circumstances. Utah’s public accounting leaders demonstrate very low level of the laissez-faire leadership style. Utah’s public accounting leaders leadership practices support that which has been found in other nation-wide accounting leadership research, that transformational and transactional leadership is widely prevalent (Early and Davenport, 2010).
Professional accounting subordinates working in an independence ethical climate type are left to their own personal and moral beliefs driving their ethical behavior. Leaving the accounting professional to their own beliefs of right and wrong and demonstrating their own personal ethics, regardless of rules, laws, regulations, and firm policies and procedures is problematic.
If the subordinates’ personal beliefs of right and wrong differ from the principles of the AICPA Code of Professional Conduct’s regard for the public interest, deviate from promulgated professional standards, dismiss firm policies and procedures, injurious ramifications are more likely to result from engagement activities. When subordinate accounting professionals are left alone to exercise professional judgment, the independence climate type is not sufficient to protect the accounting firm, if the personal philosophy, moral compass, and regard for established standards and conduct are different with the accounting subordinate. Next, the interpretations, conclusions, and recommendations for transactional leadership follow.
In Utah’s local-small, local-large, and regionally sized CPA firms, transactional leadership does not lend itself to having subordinates recognize any particular ethical climate type. Transactional leadership is not necessarily bad; however, in Utah public accounting, too much transactional leadership could retard subordinates to not be more fully aware of preferred ethical climate types. Ethical behavior is better remembered when reminded through perceiving a preferred ethical climate (i.e., caring, lawcode, or rules). In Utah’s public accounting profession, higher-level leadership (i.e., inclining toward transformational leadership) helps keep professional accounting subordinates compliant with Code of Conduct expectations, quality control policies and procedures, firm-wide ethical policies and procedures, and professional practice standards. The preferred ethical perceptions also help the professional accountant remember and be sensitive toward the overarching mandated philosophy that the public’s interest fundamentally guides our ethical actions.
While Utah accounting leaders, in local-small, local-large, and regionally-sized CPA firms, exhibit laissez-faire leadership, subordinates’ perceive less of the rules ethical climate type. Too much laissez-faire leadership could lead subordinates to be reckless regarding compliance with rules, standards, and or ethical expectations. Additionally, laissez-faire leadership moves in the same direction as instrumental ethical climate perception. The more a focal leader exhibits laissez-faire leadership, the higher the probability of observing more instrumental ethical climate is recognized. The subordinate may well believe that self-interests and company-interests are more important factors in making ethical decisions. Utah CPA firms would do well to avoid subordinates’ from moving away from caring about the public’s interests in ethical decision-making, by avoiding laissez-faire leadership style.
One would anticipate that high religiosity and compassionate service activity would positively correlate with the caring ethical, and perhaps the lawcode and independence ethical climate types. This assumption was based on the notion that philosophy and religion are closely aligned with ethic’s theories and models of ethical behavior.
Because the survey respondents virtually all answered weekly church activity and weekly to monthly compassionate service activity, there could exists a “ceiling effect” that makes correlation analyses more difficult to associate among the differing ethical climate type perceptions and leadership styles.
There could be a serious range restriction found in the religiosity scale or the properties of the sample respondents (i.e., all highly religious) spoiled the desired variability of responses over the possible scale responses (Schmidt 2012).
This correlation analysis perhaps required larger and more distributed religiosity response samples over the possible responses to show correlative association with multiple dependent variables. The distribution statistics for the religiosity scale is shown to the left.
Provided in the separate chapter PowerPoint presentations