1

CHAPTER 1

INTRODUCTION

1.1 Background

The need for ethics in society is considered important enough to warrant life

to run with regularly. As a member of a profession, accountants have an obligation to

maintain the highest standards of ethical conduct them to the organization where they

take shelter, their professions, communities, and themselves. Accountants have a

responsibility to be competent and to maintain their integrity and objectivity. Today

the accountant has become one of the key professions in the field of business.

Therefore, the various dimensions of ethics in business should also be a serious

concern of the accountant. Related to the need for ethics, then the professionals are

expected to act on a higher level than most members of the public. The reasons

underlying the need for high professional conduct of every profession is the need for

public confidence in the quality of professional services rendered, regardless of who

carried out individually.

Today, the issue of accounting ethics in Indonesia is growing in line with the

occurrence of several ethical violations, whether conducted by public accountants,

internal accountants, and government accountants. For the case of public accountants,

some of these ethics violations can be traced from the report of the Honorary Board

IAI period 1990-1994 which mentions the existence of 211 cases involving 53 pieces

KAP (Husana in Adib & Riyanto, 2002).

Violations by the accountants should not happen if every accountant has a

good knowledge and understanding of professional ethics and the willingness to

implement the code properly. Moreover, the accountant in performing the work

should always give priority to measures that reflect the attitude and professionalism,

where it has been introduced in the guidelines or standards of work. In addition, in

carrying out his professional work, the accountant should be completely bases on

certain moral and ethical standards.

Accountants as a profession have had its own set of codes of ethics. With the

code of professional conduct, the accountant is expected to face various pressures that

can arise from itself or from outside parties.

Another important thing to understand is that the ability of a professional to

be able to understand and be sensitive to ethical issues are also strongly influenced by

the environment where it is located. In this case, Sudibyo (in Yulianto, 2004) says

that the ethical behavior of accountants is also strongly influenced by the world of

accounting education. The world of education has a great influence for the growth of

one's ethical awareness (Ludigdo, 1999).

The world of education or academic environment has a big hand in shaping an

ethical person with the inclusion of ethics in the curriculum content coverage. In the

context of higher education accounting, implementation of ethics education is

expected to foster understanding of ethics to accounting students as prospective

graduate and accountant. Thus the future if they pursue their profession in the fields
 3

of accounting, they can develop ethical behaviors in order to maintain personal

integrity and profession.

In the field of accounting, research on ethics have been carried out. Studies

conducted by Glenn and Loo (1993), Fischer & Rosenzweig (1995), and Stevens et

al. (1993) found that accounting students tend to indicate the level of ethical

awareness is lower than the practitioners. Research and Okleshen O'Clock (1993)

found that accounting students have a lower level of awareness than non-accounting

students (Adib & Riyanto, 2002). The findings were quite alarming because the

profession of public accountant who will carry by the students of accounting is

closely related to ethical issues. The findings reinforce the reasons to integrate ethical

issues into the accounting curriculum.

Students are future leaders in the future. They also will work in an

organization's future. The behavior of the leaders in the future can be learned from

current student behavior (Reiss and Mitra, 1998). The behavior of the students need

to be examined to determine the extent to which they will act ethically or unethically

in the future (Nature, 1995; Winalasiri et al, 1996). Research into the possibility of

ethical and unethical behavior from students can help company management to

develop ways of reducing the problems that will arise in the future as they have

worked (Reiss and Mitra, 1998).

Research on ethical behavior of accounting students as candidates for

accounting in the future become important in order to develop and increase the role of
 4

the accounting profession. Research on ethical behavior of accounting students will

also be useful for academics as a consideration to teach ethical values in the

accounting program (Borkowski and Ugras, 1992). In the field of accounting

education in universities, the problem of ethics is a crucial issue. This is because the

educational environment helped shape student behavior to become a professional.

Kerr and Smith (1995) states that education and ethical behavior are of great

importance in modern society, the business world, and the accounting profession.

Treadway Commission Report has recommended that an emphasis on the importance

of ethical values in the accounting curriculum in addition to knowledge and skill to

prevent the occurrence of violations in the financial statements (Fisher and

Rosenzweight, 1995).

The seeds of unethical behavior among professionals actually has grown even

since before becoming a student (since high school down). Such behavior,

consciously or unconsciously, nurtured by the daily activities in college. One of

unethical behavior in the daily activities of students is the behavior of cheating /

copying. Citing Putka (1992), Kerr and Smith (1995) mentions that the behavior of

copying / cheating by high school pupils / students increased from 40% in the 40s to

75% today. Furthermore Putka (1992), as cited by Kerr and Smith (1992), argued

copying / cheating among high school students and college students, copying /

cheating in high school to find high value, while copying / cheating in the world of

college to seek a career.

Ameen et al. (Adib & Riyanto, 2002) conducted a survey that aims to

determine the possible relationship between the gender factor with academic

seriousness to tolerate unethical behavior, the behavior of cheating / copying. Ameen

et al The results showed that female accounting students are more sensitive to ethical

issues and less tolerant than male accounting students against unethical behavior.

Gilligan (Gani, 2000) argues that moral development and ways of thinking are

fundamentally different from women to men. Gender effects arise when the

differences of men and women occurred in the process of ethical decision making.

Studies on gender to ethics so far has shown inconsistent results. Ruegger & King

(1992), Galbraith and Stephenson (1993), and Khazanchi (1995) states that between

the ethics of gender have a significant relationship. Conversely, Sikula and Costa

(1994), and Schoderbek and Deshpande (1996) stated no significant relationship

between gender with ethics (Adib & Riyanto, 2002).

Research in Indonesia on gender to ethics has been done by Gani (2000) who

tested the effect of different public accounting firms and gender on ethical

evaluations, ethical intentions and ethical orientation of the auditor. Research results

show that there are significant differences between ethical evaluations, ethical

intentions and ethical orientation of male and female auditors. Ludigdo (1999)

examine the influence of gender on business ethics. Research results show that gender

has no influence on business ethics. Similar research results obtained by Adib &

Riyanto (2002) by adding the variables of academic discipline differences therein.

The big difference in the results of this research has inspired researchers to conduct

similar research.

In this study, researchers tried to re-examine whether gender differences affect

the ethical sensitivity of using the respondent college accounting students in the

Faculty of Economic and Business UB. In addition, researchers also want to include

the variables different levels of student semester or level of seniority as a variable

affecting students' ethical sensitivity. Variable levels of seniority is important because

it is related to the acquisition of courses a student will include the charge of ethics,

such as auditing and accounting behavior that is usually given to students over three

semesters.

Based on the above description, the researcher interested in this opportunity to

conduct research with the title: THE INFLUENCE OF GENDER

DIFFERENCES AND SENSITIVITY to SENIORITY ETHICAL

ACCOUNTING STUDENTS (a case study in the accounting department of

economics and business faculty UB).

1.2 Research Question

Research on business ethics and ethics of this accounting profession

done because the activity accounting profession can not be separated from business

activities which requires them to work in a professional manner so that in addition to

understand and apply professional ethics, they must understand and

applying ethics in business. This research was conducted on candidate

accountant (students) because they are prospective accountants should

provided advance knowledge of ethics, so after graduation

they can work in a professional manner based on professional ethics and to

apply ethics in a business environment.

Based on the above description, the problem to be investigated in this study

can be formulated as follows:

1. Do gender differences affect the ethical sensitivity of accounting students?

2. What is the difference in level of seniority effect on accounting students'

ethical sensitivity?

1.3 The Objective of Research

According the above problems, the objectives being pursued by researchers in this

study are:

1. Provide empirical evidence about the effect of gender differences between

male accounting students and accounting students' ethical sensitivity women.

2. Provide empirical evidence about the effect of seniority among students of

accounting seniors and juniors accounting students to ethical sensitivity.

1.4 Contributions

A study conducted in the hope that the research could provide benefits, both

for researchers and for others. The result is expected to provide benefits in various

ways, among others:

1. For Academics

The result is expected to complement the results of previous research and to

provide an empirical evidence regarding the ethical sensitivity of accounting

students male, female accounting students, senior accounting students and

accounting students juniors against unethical activity that occurred in the

academic environment. Also expected to be a means to share knowledge and

as a reference for the next researcher who conducted further studies on the

same topic.

2. For Educators

The result is expected to give an idea about the importance of the acquisition

of the material scope of ethics in the curriculum by students.