Integrating Catholic Social Teaching into Undergraduate Accounting Courses

By Jason Haen

How a Catholic business school (CBS) responds to the call to strengthen its ethics curriculum is a defining moment for a mission-driven institution. A mission-driven CBS can do more than use secular ethics discussions in its classrooms. It must be willing to embrace its Catholic identity. “If a CBS is to take ethics and values seriously in regards to its mission, it seems that a logical place for it to explore would be its own Catholic moral, intellectual, and social tradition.”[1]

All faculty at Catholic colleges have the unique opportunity to use Catholic social teaching (CST) to integrate ethical discussions into their courses. Faculty can embrace this opportunity even in traditionally technically demanding courses such as accounting. While an understanding of debits and credits is the necessary foundation laid by accounting faculty members, this foundation has limited utility beyond the simple bookkeeping aspects of accounting. Accounting faculty must encourage students to consider the usefulness (and shortcomings) of accounting information when making business decisions. Students may be more comfortable making decisions strictly based on the numbers, but they must learn that dollars and cents cannot be the only consideration. CST can guide these discussions.

One aspect of current accounting standards within the United States is its flexibility. While this flexibility or “wiggle room” is important in today’s ever-changing business environment, it also has been part of some of the most noteworthy financial scandals (e.g., the establishment of special purpose entities by Enron). Catholic educators have a responsibility to discuss with students that even though something may be technically correct, this does not mean that it is morally correct. CST can help students gauge the ethical nature of alternatives. These ethical discussions are an essential part of the education provided by a CSB…

Previous articles have suggested ways to integrate CST into accounting courses.[2] This article tries to expand on these ideas by giving specific examples of how CST can guide traditionally numbers-oriented discussion by using CST to analyze the concepts of fixed asset valuation/depreciation, inventory valuation, and the establishment of an amount for the allowance for doubtful accounts…

Discussion Point Example CST Components to Integrate into Discussion
Should a company purchase machinery that requires fewer workers? The Dignity of Work and the Rights of Workers

Workers have basic rights such as productive work, decent wages, and fair treatment. “(W)ork is not the by-product of production but part of the reason why we create firms in the first place.[3]

Solidarity

We are all one human family.

A company’s decision to downsize workers can detrimentally affect its reputation. This reputation may have taken years to build, but can be quickly tarnished by a rash decision that ignores The Dignity of Work and the Rights of Workers. A damaged reputation may lower the bottom line by decreasing customer loyalty, making it difficult to recruit new workers when needed, creating animosity during future labor negotiations, and perhaps making the community hesitant to offer concessions (tax breaks) when sought for expansion.

This type of decision can also be made very personal for students and perhaps will help them understand the concepts of The Dignity of Work and the Rights of Workers and Solidarity. The situation can be introduced in a very numbers-oriented way—the purchase of a piece of machinery for $1,000,000 will allow the company to lay off twenty workers for an overall cost savings of $400,000 annually. Students’ thought processes will immediately turn to how to record the new machinery in the accounting records, so it should be illustrated on the board. When asked about other considerations related to this decision, students may identify issues, such as the need to record depreciation expense in the future; that overall, the payroll expense of the business will go down; or other issues related to the new machinery they have just recorded.

Should (or can) this decision to buy the machinery be reevaluated if the student knows some of the twenty workers being laid off? What if the student’s mother or father is one of the employees that will be laid off? What if one of the laid off workers is the student’s best friend from high school? What if the student is the godparent of this friend’s disabled child? While the example may seem a bit extreme and even evoke laughter from the students at first, it does serve its purpose. Students need to learn how to stop and consider how business decisions affect others, instead of just focusing on the economic ramifications of decisions. The CST component of The Dignity of Work and the Rights of Workers teaches us that workers have the right to fair treatment, while the component of Solidarity teaches us that we are all one family. When CST is incorporated into these discussions, “justifying downsizing on economic grounds often becomes difficult.”[4]

After students have considered the technically appropriate way to value a fixed asset, the methods available to allocate at least part of these costs to the income statement are discussed. Depreciation is a systematic and rational way to allocate the cost of a fixed asset to the periods that it is expected to benefit the business. Numerous methods are available, but the one most predominantly used is the straight-line method. The calculation is simply total cost, less expected salvage value, divided by total expected useful life of the asset. Students can easily master the calculation, but by emphasizing the various decision points, faculty can help students understand how the CST components can fit into the calculation…

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[1] Michael Naughton et al., “Business Education at Catholic Universities: An Exploration of the Role of Mission-Driven Business Schools,” Background Paper for the Seventh International Conference on Catholic Social Thought and Management Education (2008): 8, accessed June 27, 2011, http://www.stthomas.edu/cathstudies/cst/conferences/becu/becu/POSITION%20PAPER%20Bus%20E.pdf.

[2] Two good examples are Joan Van Hise and John P. Koeplin, “Integrating Mission-based Values into Accounting Curriculum: Catholic Social Teaching and Introductory Accounting,” Journal of Catholic Higher Education 29, no. 2 (2010): 155-171, and Anthony Zordan, “Integrating Catholic Social Teaching in the Accounting Curriculum,” accessed June 27, 2011, http://franciscancollegesuniversities.org/images/stories/journal/zordan.pdf.

[3] Andrew V. Abela, “Profit and More: Catholic Social Teaching and the Purpose of the Firm,” Journal of Business Ethics 31, (2001): 112.

[4] Van Hise and Koeplin, “Integrating Mission-based Values,” 163.

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Jason Haen is Instructor of Accounting in the Business Administration Department at St. Norbert College.

 This piece is an excerpt of an article originally published in the Journal of Catholic Higher Education vol. 32, no. 1.  To read the full article, please visit the JCHE site.

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