Ethics and the Coronavirus
I am the author of a textbook on Accounting Ethics (see below). I prepared the case below for accounting instructors to teach students about the ethical issues surrounding the spread of the coronavirus. For additional information, including suggested answers to the questions, contact me at: firstname.lastname@example.org.
As the number of COVID-19 cases continues to grow and the death toll mounts, it’s useful, from an ethics perspective, to use our experiences to date to evaluate our personal responsibilities to each other in this crisis. Why does this matter? Our society depends on communal efforts to improve the lives of everyone. We can’t succeed unless we act responsibly, operate in the community interest and look out for each other.
By December 2019, China was acting to contain a COVID-19 outbreak as other countries watched. While the U.S. government and others knew of the situation in China, in some countries little was done to prepare citizens for the potential risk from this quick-moving virus. The result in the U.S. has been a severe lack of testing kits, insufficient number of ventilators, and concern about the number of hospital beds in intensive care units. Moreover, the rationing of medical care may eventually occur.
The slow response contributed to the need for states and local governments across the country to declare a state of emergency. Citizens were told to self-isolate, not go out except when absolutely necessary, practice social distancing, wash hands with soap and water, not touch their faces and avoid groups of more than 10 people. Many cities totally shut down for all intents and purposes.
The early failings on the government side and occasional mixed message spooked investors and stock prices fell precipitously. The U.S. Congress passed legislation to help those who were furloughed or lost their job, small businesses and industries hard hit by the outbreak.
Perhaps the most troubling occurrence is that, according to a government whistle-blower, at the outset of the pandemic federal health employees who lacked proper medical training or protective gear interacted with Americans quarantined for possible exposure to the coronavirus. These same employees then scattered into the general population. Meanwhile, lawmakers say the whistle-blower faced retaliation for reporting these concerns.
Generally speaking, most Americans have acted responsibly to the crisis by practicing social distancing and staying home. Others seem to be hoarding supplies and have bought enough toilet paper to last through 2020.
A Tennessee man bought 17,700 bottles of hand sanitizer and was being investigated for price-gouging. He was selling them on Amazon at a steep markup. He decided to donate the remaining stock only after being caught — thus illustrating that some people do the right thing only after they are caught doing the wrong thing.
There are some horror stories of fights breaking out among customers in stores like Costco, Target, Walmart and others over paper goods and hand sanitizers. In a You Tube video, shoppers in an Australian market are caught physically attacking each other (https://www.youtube.com/watch?v=GVHYTdGUAZM).
Not everyone is sitting out the crisis. Pictures of college students enjoying spring break at Florida beaches and South Padre Island in Texas were shown all over social media. The situation became so bad that access to some Florida beaches was shut down or severely limited.
The Declaration of Independence grants citizens “with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” How should we feel about the restrictions on our liberties? Telling some citizens to shelter in place and shutting down virtually all restaurants, pubs and bars may seem like an extreme measure.
Although not completely on point, the U.S. Supreme Court in Crandall v. Nevada, 73 U.S. 35 (1868) declared that freedom of movement is a fundamental right. Moreover, the freedom of peaceful assembly guaranteed by the U.S. Constitution is the individual right or ability of people to come together and collectively express, promote, pursue and defend their collective or shared ideas. Perhaps the partiers on South Padre Island beaches are talking politics — probably not.
There is an expression “Just because you have a right to do something doesn’t make it the right thing to do.” This is an apt description of the beachgoers on spring break. It also characterizes the behavior of an irresponsible passenger who got on a Jet Blue plane while awaiting the results of a coronavirus test thereby putting all 114 people on board at risk. He learned during the flight that he had tested positive. Jet Blue banned him from all future flights.
In many respects the way individuals have handled the crisis depends on whether they follow the ethical principle of egoism — allow individuals to pursue their self-interest — or adhere to a more communal ethic. This could be enlightened egoism where self-interest is pursued but only after the impact of one’s actions on others is considered. In other words, if I decide to fly to another city to meet up with a loved one, the possibility exists that I might contract the coronavirus. Should I take that chance knowing I may place others at risk?
Many businesses have been devastated by the spread of the virus. The airline industry, hotels, places of entertainment and cruise ships will lose billions of dollars. The government is working on bailout legislation to help the affected industries and their workers, who may be furloughed or fired.
The problems encountered in business due to the spread of the coronavirus creates risks and uncertainties from an accounting and auditing perspective. The overriding issues are whether to record or disclose amounts related to the loss in value of assets, possible future losses given the likely duration of the virus, and disruptions in revenue streams. Making accurate estimates is important as is having the internal controls over financial reporting to make reliable risk assessments. The underlying issue of whether a business is a going concern will be a challenge for auditors.
We are living in a time of a “new normal.” The restrictions on our activities and physical movement should be a warning that we need to look out for each other and treat each other the way we wish to be treated, the essence of The Golden Rule. If we learn that lesson, then perhaps the coronavirus will help focus our attention on personal responsibility to ourselves and communities. We will be better off on the other side of the crisis.
- Many conservatives argue that the U.S. economy can flourish only when the federal government gets out of the private sector’s way. Many progressives counter that in our free market system, there are times when the government needs to step in to protect the common good and ensure there is broad-based economic growth. How do these political issues relate to the government’s response to the coronavirus outbreak?
- Assume medical care has to be rationed as a result of the number of affected citizens. Discuss the ethical considerations in making triage decisions.
- Describe the ethical values that inform how we should deal with all aspects of the coronavirus.
- Do you personally feel it is appropriate for the government to restrict your ability to leave your home during the crisis for reasons other than emergencies, buying food, picking up prescriptions and gassing up the car? Explain why using ethical reasoning to support your view.
- Consider FASB Concepts Statement No. 8, as amended. What are the conceptual issues underlying financial reporting in determining how the coronavirus event should be reported and disclosed in the financial statements? How does it relate to the measurement of potential costs to the business including contingencies?
- Explain the accounting and auditing issues related to the coronavirus event with respect to accurately determining reportable amounts and disclosures of events.
- Which group(s) represent the public interest with respect to accounting for the events surrounding the coronavirus and what are their interests?
- Based on what you know to date, evaluate whether the crisis has been handled properly by the various stakeholders. Use ethical reasoning to support your view.
Imagine that there are two people with the same symptoms but only one testing kit. How should we determine who gets tested? Here are some possibilities. Discuss the ethics of each possible action.
- The older person is at greater risk of getting extremely sick or dying. Give the test to them first.
- The younger person is most likely to recover from the virus. Give the test to them first.
- The younger person has more years to live; protect their interests first. They are more capable of contributing to society in the future.
- The older person is a famed research scientist who is needed to conduct experiments to develop a vaccine. Give the test to them first.
Steven Mintz, Ph.D, Professor Emeritus Cal Poly San Luis Obispo. Author of Ethical Obligations and Decision Making in Accounting: Text and Case (5th ed). Published by McGraw-Hill. . Visit my website for more information.