Which would you chose as the key idea for ethical behavior in the accounting profession: “Protect the public interest” or “Protect the credibility of the profession”? Why?
> 1. Do you think that stock options actually motivate employees to work for the long-term good of the company? 2. Do you think that stock options inadvertently encourage manager to engage in questionable accounting activities, such as earnings management,
> a) What are the crises that Lynn faces? b) What order should the crises be considered in? (i.e., Which are the most serious?) Why? c) What solutions can they offer? d) How would they guard against and prevent such crises in the future?
> 1. Utilizing the information provided and available from web sources, use the ethical decision-making techniques discussed in the chapter to form an opinion about whether Merck’s decisions regarding Vioxx were ethical. Show your analysis. 2. In order to
> 1. Did Toyota handle its recalls ethically? Why and why not? 2. What changes would you recommend to Toyota’s crisis management approach? Why? 3. Do you think that Mr. Toyoda’s testimony on February 24, 2010 was effective? How might it be improved? 4. Toy
> 1. What aspects of the schemes described in this case were a) unethical? b) illegal? c) fraudulent? 2. When would a healthy skepticism by senior management or professional skepticism by an accounting or legal professional have been useful in combating th
> 1. Why would VW engineers think they could get away with a defeat device when the technique had been caught twice before? 2. If they thought they would be caught, why did they try the defeat device? 3. Why didn’t one of the several design engineers and
> 1. For many organizations, bankruptcy protection is just another operational and financial strategy. Discuss the ethical aspects of intentionally remaining silent, collecting money and then suddenly announcing that the company is bankrupt? 2. Do you acce
> 1. Ethics of commissions and commission caps 2. Perks to sales staff 3. Re-hiring managers
> 1. Does winning take care of everything? In golf? In life? In business? 2. Does how you play the game or run your business ever matter? 3. Is the reputational impact of unethical behavior different for a sports star than for a business, or for yoursel
> 1. Ignoring any legal issues, was Cesar ethically obligated to inform his partner, George, of his criminal past? 2. Did George have a right to know about Cesar’s criminal past?
> 1. Describe the mechanisms that WorldCom’s management used to transfer profit from other time periods to inflate the current period. 2. Why did Arthur Andersen go along with each of these mechanisms? 3. How should WorldCom’s board of directors have preve
> 1. Who was really to blame for the lax procedures found? 2. How should this situation be remedied? 3. How could the job done by the FDA be improved? 4. J & J had lived under a positive halo due to their earlier recall of tainted capsules of Tylenol. Why
> 1. How would you answer the assistant controller? 2. What advice would you give to the controller? 3. What aspects of the organization’s governance process and/or internal controls were flawed? 4. Should the directors be told about the fraud and/or any o
> 1. Was J&J’s decision to not inform its customers of the potential risks of extended use of talcum powder products acceptable? 2. If J&J knew about the potential risks of talcum powder products in 1987, should the company have withdrawn all its talcum pr
> 1. If Wanda Liczyk did not benefit financially, did she really have a conflict of interest? Should she have been disciplined by the ICAO [now CPAO]? Why or why not? 2. Should the accounting profession be allowed to police itself, or should an independent
> 1. The Strip2Clothe campaign may have been in questionable taste, but it did raise tens of thousands of pieces of clothing for the homeless. Does the end justify the means? 2. Virgin Mobile has a history of using cutting edge advertisements. It poked fun
> 1. Where were Wal-Mart’s questionable payments made, and where did this result in serious damage to the company and its executives? Why? 2. The ‘gestores’ payments were made to third parties, who then bribed local officials. How would a company ensure t
> 1. Do you think that British Airways is being hypocritical? 2. British Airways is attempting to reduce its carbon footprint by flying more fuel efficient airplanes, such as the A318. The carbon footprint per passenger is lower if 100 people occupy the A3
> 1. Are professionals bound to meet a higher standard of ethical behavior than nonprofessionals? If so, why? 2. In what respects were the actions of the lawyers involved in the Lang Michener affair not up to the ethical standard you would expect? Consider
> Should organizations that have a risk-taking culture, such as the one developed by Stan O’Neil at Merrill Lynch, enjoy the gains and suffer the losses, without recourse to government bailouts?
> Should the CEOs who refused to have their firms invest in mortgage-backed securities in the early years because the risks were too great receive bonuses in the latter years because their firms did not incur any mortgage-backed security losses? How would
> Should CEOs who made large bonuses by having their firms invest in mortgage-backed securities in the early years have to repay those bonuses in the later years when the firm records losses on those same securities?
> The government bailout of the financial community included taking an equity interest in publicly traded companies such as American International Group (AIG). Is it right for the government to become an investor in publicly traded companies?
> How much should the exiting CEOs of Fannie Mae and Freddie Mac have received when they were replaced in September 2008?
> Identify and explain five examples where executives or directors faced moral hazards and did not deal with them ethically.
> How could ethical considerations improve unbridled self-interest in ethical decision making?
> How could increased regulation improve the exercise of unbridled self-interest in decision making?
> What were the three most important ethical failures that contributed to the subprime lending fiasco?
> Does the Dodd-Frank Act go far enough, or are some important issues not addressed?
> Should members and executives in investment firms be forced to be members of a profession with entrance exams and with adherence to a professional code such as is the case for professional accountants or lawyers?
> Given that the marketplace for securities is global, and that the risks involved can affect people worldwide, should there be a global regulatory regime to protect investors? If so, should it be based on the regulations of one country? Should enforcement
> The global economic crisis was caused by the meltdown in the U.S. housing market. Should the U.S. government bear some of the responsibility of bailing out the economies of all countries that were harmed by this crisis?
> How much and in which ways did unbridled self-interest contribute to the subprime lending crisis?
> Is trust really important – can’t employees work effectively for someone they are afraid of, or at least where there is some “creative tension”?
> What would you list as the five most important ethical guidelines for dealing with North American employees?
> Do professional accountants have the expertise to audit corporate social performance reports?
> Why should a corporation make use of a comprehensive framework for considering, managing and reporting corporate social performance? How should they do so?
> Descriptive commentary about corporate social performance is sometimes included in annual reports. Is this indicative of good performance, or is it just window dressing? How can the credibility of such commentary be enhanced?
> How could a corporation utilize stakeholder analysis to formulate strategies?
> How will the U.S. external auditor’s mindset change in order to discharge the duties contemplated by SAS 99 on finding fraud?
> If a corporation’s governance process does not involve ethics risk management, what unfortunate consequences might befall a corporation?
> Why should ethical decision making be incorporated into crisis management?
> How would you advise your company’s personnel to act with regard to expectations of guanxi in China?
> What should a North American company do in a foreign country where women are regarded as secondary to men, and are not allowed to negotiate contracts or undertake senior corporate positions?
> Should a North American corporation operating abroad respect each foreign culture encountered, or insist that all employees and agents follow only one corporate culture?
> In what ways do ethics risk and opportunity management as described in this chapter go beyond the scope of traditional risk management?
> Why did the SEC ban certain nonaudit services from being offered to SEC-registrant audit clients even though it has been possible to effectively manage such conflict of interest situations?
> What is the difference between exercising “due care” and “exercising professional skepticism”?
> Why is maintaining the confidentiality of client or employer matters essential to the effectiveness of the audit or accountant relationship?
> When should an accountant place his or her duty to the public ahead of his or her duty to a client or employer?
> Why do codes of conduct or existing jurisprudence not provide sufficient guidance for accountants in ethical matters?
> Why are most of the ethical decisions accountants face complex rather than straightforward?
> Many professional accountants know of questionable transactions but fail to speak out against them. Can this lack of moral courage be corrected? How?
> Transfer pricing can be used to shift profits to jurisdictions with low or no tax to reduce the taxes payable for multinational companies. If such profit shifting is legal, is it ethical? Was Apple well-advised to shift $30 billion in profits to its Iris
> An engineer employed by a large multidisciplinary accounting firm has spotted a condition in a client’s plant that is seriously jeopardizing the safety of the client’s workers. The engineer believes that the professional engineering code requires that t
> Are the governing partners of accounting firms subject to a “due diligence” requirement similar to that for corporation executives in building an ethical culture? Can a firm and/or its governors be sanctioned for the misdeeds of its members?
> What should an auditor do if he or she believes that the ethical culture of a client is unsatisfactory?
> Is having an ethical culture important to having an effective system of internal control? Why or why not?
> Why should codes focus on principles rather than specific detailed rules?
> Was the "expectations gap" that triggered the Treadway and Macdonald Commissions, the fault of the users of financial statements, the management who prepared them, the auditors, or the standard setters who decided what the disclosure standards should be?
> Are one or more of the fundamental principles found in codes of conduct more important than the rest? Why?
> What is the most important contribution of a professional code of conduct or corporate code of conduct?
> What is meant by the term "fiduciary relationship"?
> If an auditor’s fee is paid from the client company, isn’t there a conflict of interests that may lead to a lack of objectivity? Why doesn’t it?
> Can a professional accountant serve two clients whose interest’s conflict? Explain.
> If you were a professional accountant, and you discovered your superior was inflating his or her expense reports, what would you do?
> If you were a management accountant, would you buy a product from a supplier for personal use at 25% off list?
> If you were an auditor, would you buy a new car at a dealership you audited for 17% off list price?
> If the provision of management advisory services can create conflicts of interest, why are audit firms still offering them?
> An auditor naturally wishes his or her activity to be as profitable as possible, but when, if ever, should the drive for profit be tempered?
> Which type of conflict of interest should be of greater concern to a professional accountant: actual or apparent?
> Why do more professional accountants not report ethical wrongdoing? Consider their awareness and understanding of ethical issues as well as their motivation and courage for doing so.
> 1. Answer the seven questions in the opening section of this chapter. [See Chapter 6, page 385.] • Who really is my client—the company, the management, current shareholders, future shareholders, the public? • In the event I have to make a decision with e
> What is the role of an ethical culture and who is responsible for it?
> How can a company control and manage conflicts of interest?
> Can an apparent conflict of interest where there are adequate safeguards to prevent harm be as important to an executive or a company as one where safeguards are not adequate?
> When should an employee satisfy his or her self-interest rather than the interest of his or her employer?
> What should an employee consider when considering whether to give or receive a gift?
> Explain why corporations are legally responsible to shareholders but are strategically responsible to other stakeholders as well.
> What is the role of a board of directors from an ethical governance standpoint?
> Do professional accountants have the expertise to audit corporate social performance reports?
> Should professional accountants push for the development of a comprehensive framework for the reporting of corporate social performance? Why?
> Descriptive commentary about corporate social performance is sometimes included in annual reports. Is this indicative of good performance, or is it just window dressing? How can the credibility of such commentary be enhanced?
> If Lynn Stout is correct, that the drive for shareholder value is a myth, why do so many companies continue to use it as a goal?
> Why is it suspected that corporate psychopaths gravitate to certain industries, and what should corporations within those industries do about it?
> If you were asked to evaluate the quality of an organization’s ethical leadership, what would the five most important aspects be that you would wish to evaluate, and how would you do so?
> Why should an effective whistle-blower mechanism be considered a “failsafe mechanism” in SOX Section 404 compliance programs?
> Is the SOX-driven effort being made to check on the effectiveness of internal control systems worth the cost? Why and why not?
> How can a corporation integrate ethical behavior into their reward and remuneration schemes?
> How could you monitor compliance with a code of conduct in a corporation?
> Why should codes focus on principles rather than specific detailed rules?
> Are one or more of the fundamental principles found in codes of conduct more important than the rest? Why?
> What is the most important contribution of a corporate code of conduct?
> Must a company be incorporated as a benefit corporation in order to legally consider actions other than those in pursuit of profit?
> From a virtue ethics perspective, why would it be logical to put in place a manufacturing process beyond legal requirements?
> How can a decision to down-size be made as ethically as possible by treating everyone equally?
> How would you convince a CEO not to treat the environment as a cost-free commons?
> Under what circumstances would it be best to use each of the following frameworks: the philosophical set of consequentialism, deontology, and virtue ethics; the modified 5-question; the modified moral standards; and the modified Pastin approach?
> Is the modified 5-question approach to ethical decision making superior to the modified moral standards or modified Pastin approach?
> If a framework for ethical decision making is to be employed, why is it essential to incorporate all four considerations of well-offness, fairness, individual rights and duties, and virtues expected?
