CPAs' MORAL REASONING AND SUPPORT FOR EXPANDING SARBANES-OXLEY TO NONPUBLIC ENTITES

This paper views the Sarbanes-Oxley Act of 2002 (SOX) as governmental intervention intended to strengthen the corporate governance of publicly traded companies. As such, SOX is seen as an intrusive government attempt at assisting the CPA profession in fulfilling its moral responsibility to protect the public interest from unscrupulous financial reporting by corporate management. Since CPAs are instructed via their professional code of conduct(s) to act in the public interest, this paper examined whether CPAs' moral reasoning relates to support for expanding SOX to nonpublic entities. Using a well-established scale for measuring moral reasoning, the findings reveal that the moral reasoning of CPAs is negatively related (albeit marginally significant) to their support for expanding SOX to nonpublic entities. The findings suggest that, from a moral perspective, CPAs view an expansion of SOX to nonpublic entities as unnecessary to helping the profession meet its moral responsibility to serve the public interest. [PUBLICATION ABSTRACT]