Ethical Obligations And Decision Making In Accounting Text And Cases 2nd Edition Steven Mintz, Roselyn Morris - Solutions

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Is there a difference between cheating on a math test, lying about your age to purchase a cheaper ticket at a movie theatre, and using someone else’s ID to get a drink at a bar?
Assume you have been hired by the head of a tobacco industry group to do a cost–benefit analysis of whether the tobacco firms should disclose that nicotine is addictive. Assume this is before the federal government required such disclosure on all packages of cigarettes. Explain how you would go
How does virtue theory apply to both the decision maker and the act under consideration by that party? Explain.
Distinguish between ethical rights and obligations from the perspective of accountants and auditors.
Assume in the Digit Print case that the venture capitalists do not provide additional financing to the company even though the accrued expense adjustments have not been made. The company hires an audit firm to conduct an audit of its financial statements to take to a local bank for a loan. The
IFAC, the global organization for the accountancy profession dedicated to serving the public interest, issued IFAC Policy Position Paper #4, titled A Public Interest Framework for the Accountancy Profession, on November 4, 2010. In that paper IFAC identifies three criteria for the accounting
The 2011 National Business Ethics Survey, Workplace Ethics in Transition, issued by the Ethics Resource Center (ERC) reports the following results:The percentage of employees who witnessed misconduct at work fell to a new low of 45 percent, compared to 49 percent in 2009 and well below the record
In the discussion of loyalty in this chapter a statement is made that “your ethical obligation is to report what you have observed to your supervisor and let her take the appropriate action.” We point out that you may want to take your concerns to others. The IMA Statement of Ethical
Assume that a corporate officer or other executive asks you, as the accountant for the company, to omit or leave out certain financial figures from the balance sheet that may paint the business in a bad light to the public and investors. Because the request does not involve a direct manipulation
Sir Walter Scott (1771–1832), the Scottish novelist and poet, wrote: “Oh what a tangled web we weave, when first we practice to deceive.” Comment on what you think Scott meant by this phrase.
1. Using Josephson’s Six Pillars of Character, which of the character traits (virtues) apply to the Harvard cheating scandal and how do they apply with respect to the actions of each of the stakeholders in this case?2. Who is at fault for the cheating scandal? Is it the students, the teaching
1. Analyze the behavior of each party from the perspective of the Six Pillars of Character. Assess the personal responsibility of Ed Giles and Sue Regas for the relationship that developed between them. Who do you think is mostly to blame?2. If Giles were a person of integrity but just happened to
1. Do you think the bystander effect was at work in the subway death incident? How might that effect translate to a situation where members of a work group observe financial improprieties committed by one of their group that threatens the organization? In general, do you think that someone would
1. Assume Jose and Emily are CPAs and members of the AICPA. What ethical standards in the Code of Professional Conduct should guide them in dealing with the manager’s inability to support travel and entertainment expenses?2. Using Josephson’s Six Pillars of Character as a guide, evaluate the
Should Billy call his friend? Provide reasons why you think he should or should not. Is there any other action you suggest Billy take prior to deciding on the offer of Tick and Check? Why do you recommend that action?
1. Do you think it is ever right to back out of a promise you gave to someone else? If so, under what circumstances? If not, why not?2. Identify the stakeholders and their interests in this case.3. Evaluate the alternative courses of action for Billy using ethical reasoning. What should Billy do?
1. What would motivate you to speak up and act or to stay silent?2. Assume you were in Gloria Hernandez’s position. What would you do and why?
1. Given the facts in the case, evaluate whether Kevin should take work home and not charge it to the job using deontological and teleological reasoning.2. What would you do if you were Kevin and why? How would you explain your position to Bo and Moe when you meet in 30 days?
1. What should an employee do when he or she discovers that there is an error in a projection? Why do you suggest that action? Would your answer change if the error was not lie kely to affect other aspects of the operation such as employment? Why or why not?2. Identify the stakeholders potentially
Cleveland Custom Cabinets is a specialty cabinet manufacturer for high-end homes in the Cleveland Heights and Shaker Heights areas. The company manufactures cabinets built to the specifications of homeowners and employs 125 custom cabinetmakers and installers. There are 30 administrative and sales
1. An important issue in conducting business overseas is whether a company should follow their home country’s ethical standards or those of the host country. The ancient world adage “When in Rome, do as the Romans do” is quite instructive on this matter. The argument in favor of behaving
Identify the stakeholders and how they were affected by Heene’s actions?
What stage of moral reasoning is exhibited by Richard Heene’s actions? Do you believe the punishment fit the crime? Why or why not?
How do you assess at what stage of moral development in Kohlberg’s model you reason at in making decisions? Are you satisfied with that stage? Do you believe there are factors or forces preventing you from reasoning at a higher level? If so, what are they?
Using the child abuse scandal at Penn State discussed in Chapter1, explain the actions that would have been taken by Joe Paterno if he had been reasoning at each stage in Kohlberg’s model and why.
Aristotle believed that there was a definite relationship between having practical wisdom (i.e., knowledge or understanding that enables one to do the right thing) and having moral virtue, but these were not the same thing. Explain why. How do these virtues interact in Rest’s Four Component Model
In the text, we point out that Rest’s model is not linear in nature. An individual who demonstrates adequacy in one component may not necessarily be adequate in another, and moral failure can occur when there is a deficiency in any one component. Give an example in accounting when ethical intent
In teaching about moral development, instructors often point out the threefold nature of morality: It depends on emotional development (in the form of ability to feel guilt or shame), social development (manifested by the recognition of the group and the importance of moral behavior for the
Some empirical research suggests that accountants and auditors may not achieve their higher levels of ethical reasoning. Why do you think this statement may be correct?
Do you agree with Carol Gilligan’s criticism of Kohlberg’s model that women reason differently than men and rely more on a care-and-response orientation? Why or why not? Do you believe Kohlberg’s model is culturally biased? Why or why not?
Arthur Andersen LLP was the auditor for Enron, WorldCom, Waste Management and other companies that committed fraud. Andersen was forced to shut its doors forever after a U.S. Department of Justice lawsuit against the firm that it had obstructed justice and lied to the government in the Enron case.
In this chapter we discuss the role of Sherron Watkins in the Enron fraud. Evaluate Watkins’ thought process and actions from the perspective of Kohlberg’s model. Do you think she went far enough in bringing her concerns out in the open? Why or why not?
You are in charge of the checking account for a small business. One morning, your accounting supervisor enters your office and asks you for a check for $150 for expenses that he tells you he incurred entertaining a client last night. He submits receipts from a restaurant and lounge. Later, your
Do you believe that our beliefs trigger our actions, or do we act and then justify our actions by changing our beliefs? Explain.
Do you think Betty Vinson was a victim of “moral blindness”? Why or why not?
In her case against the Defense Contract Audit Agency (DCAA) that resulted from actions against her for blowing the whistle on improper agency practices, Diem-Thi Le sought to provide DCAA documents to the Office of Special Counsel (OSC) to back up her claims of retaliation. DCAA provided Le with a
In this chapter, we discuss the study by Libby and Thorne of the association between auditors’ virtue and professional judgment by asking members of the Canadian Institute of Chartered Accountants to rate the importance of a variety of virtues. The most important virtues identified were truthful,
Interpretation 102-4 of the AICPA Code of Professional Conduct that was discussed in Chapter 1 provides that a CPA should not knowingly misrepresent facts or subordinate her judgment when performing professional services. Explain how Rest’s model of moral development influences the steps a CPA
Explain what you think each of the following statements means in the context of moral development.a. How far are you willing to go to do the right thing?b. How much are you willing to give up to do what you believe is right?c. We may say we would do the right thing, but when it requires sacrifice,
In a June 1997 paper published in the Journal of Business Ethics, Sharon Green and James Weber reported the results of a study of moral reasoning of accounting students prior to and after taking an auditing course. The study also compared the results between accounting and non-accounting students
A major theme of this chapter is that our cognitive processes influence ethical decision making.Use the theme to comment on the following statement, which various religions claim as their own and has been attributed to Lao Tzu and some say the Dalai Lama: “Watch your thoughts; they become your
1. What is the difference between accrual earnings and cash earnings? In addition to the effect on accrual earnings of capitalizing the line costs, how might the treatment mask the true nature of operating cash flows?2. Identify the stake holders in the World Comcase and how their interests were
1. Consider Kohlberg’s six stages of moral development. What would Cindie do and why if she re as one date ach of the six stages?2. Assume that Cindie approached Lyndell about her concerns. Lyndell tells Cindie that he has an alcohol problem. Lately, it’s got ten to him real bad. That’s why
1. Assume Brenda has no reason to doubt Vincent’s veracity with respect to the statement that it is “a one-time request.” Should that make a difference in what Brenda decides to do? Why or why not?2. Analyze the alternatives available to Brenda using Kohlberg’s six stages of moral
Shifty Industries is a small business that sells home beauty products in the San Luis Obispo, California, area. The company has experienced a cash crunch and is unable to pay its bills on a timely basis. A great deal of pressure exists to minimize cash outflows such as income tax payments to the
1. What is the proper way to account for the revenue in this case? Why?2. How might you go about convincing your supervisor of the proper accounting? That is, what factors might enable you to get your point across and what are disablers that might prevent you from achieving that result? Under what
1. Do you think Greenberg did the “right” thing by opening the April bank statement and reconciling it to the general ledger? Why or why not? What about the previous bank statements?2. Explain what Greenberg should do if he reasons at each of the six stages of Kohlberg’s model of moral
1. Identify the ethical and professional issues of concern to Beverly Wald in this case.2. Identify and evaluate the alternative courses of action for Wald, Ann Plotkin, and Ira Sugofsky to present in their meeting with Milton.3. How do virtue considerations influence the alternatives presented?4.
1. Explain the rules in accounting to determine whether an investment in a marketable security should be accounted for as trading, available-for-sale, or held-to-maturity. Include in your discussion how such classification affects the financial statements.2. Who are the stakeholders in this case?
1. How do you assess blame for the fraud? That is, to what extent was it caused by Finn’s willingness to go along with the actions of Monus? What about Shapira’s lax oversight. Should the blame all go to Monus? What role did Coopers & Lybrand play with respect to its professional judgment?2.
1. What is at stake for the key parties? What is at stake for you (Kristen)? 2. What are the main arguments that you [Kristen] are trying to counter assuming you know Troy’s position on the matter and what are the reasons and rationalizations you need to address?3. What should Kristen do and what
In her book ‘Seven Signs of Ethical Collapse,’ Jennings explains: “When an organization collapses ethically, it means that those in the organization have drifted into rationalizations and legalisms, and all for the purpose of getting the results they want and need at almost any cost." Discuss
Five months before the new 2002 Lexus ES hit showroom floors, the company's U.S. engineers sent a test report to Toyota City in Japan: The luxury sedan shifted gears so roughly that it was "not acceptable for production." The warning was sent to Toyota Executive Vice President Katsuaki Watanabe on
The following questions deal with issues related to executive compensation: a. What is the business judgment rule and how does it relate to executive compensation?b. On August 9, 2005, Chancellor William B. Chandler III of the Delaware Chancery Court ruled that the directors of the Walt Disney
Explain the “say on pay rule” and whether you believe it is likely to have an effect on large compensation packages of CEOs.
Distinguish between agency theory, stakeholder theory, and stewardship theory with respect to controlling the actions of managers.
Do you believe a member of the audit engagement team servicing a client should also serve on the audit committee of the board of directors of the client entity? Why or why not?
COSO explains the importance of the control environment to internal controls by stating it sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all aspects of internal control, providing discipline and structure. Explain what is meant by
According to the IIA Code of Ethics, internal auditors should make a balanced assessment of all the relevant circumstances and should not be unduly influenced by their own interests or by others in forming judgments. Which interests are being referred to in that statement and how might they
In the accounting fraud at the cable company Adelphia, top management had established a “cash management” system that enabled the founder of Adelphia and former CEO and chair of the board of directors, John Rigas, to dip into the fund for personal expenses whenever he wanted. The final approval
The 2011 National Business Ethics Survey defines “active social networkers” as people who spend more than 30 percent of the workday participating on social networking sites. Such employees are much more likely to view their current jobs as temporary; 72 percent of active social networkers
How do the concepts of cognitive dissonance, organizational dissonance, and ethical dissonance relate to whether an accountant might choose to blow the whistle on corporate wrong doing?
According to the Business Roundtable, “Effective corporate governance requires a clear understanding of the respective roles of the board and senior management and their relationships with others in the corporate structure. The relationships of the board and management with stockholders should be
Explain the components of Burchard’s Ethical Dissonance Model and how it describes the ethical person-organization fit at various stages of the contractual relationship in each potential fit scenario. Assume a Low Organizational Ethics, High Individual Ethics (Low-High) fit. How might this
Brief and Motowidlo define pro social behavior within the organizational setting as: Behavior which is (a) performed by a member of an organization, (b) directed toward an individual, group, or organization with whom she interacts while carrying out her organizational role, and (c) performed with
Compare the role of Sherron Watkins as a whistle-blower in the Enron case to that of Leyla Wydler in the Allen Stanford Ponzi scheme in terms of the nature of the whistle-blowing and the motivation to blow the whistle.
In October 2010 it was reported that Cheryl Eckard, a quality-assurance manager at the pharmaceutical company Glaxo-SmithKline who had blown the whistle on the safety of products made in its Puerto Rico plant, had been fired as a result of what the company called a “redundancy” related to the
It is a distinguishing mark of actions labeled whistle-blowing that the agent intends to force attention to a serious moral problem. How does this statement relate to whistle-blowers who come forward under provisions of the Dodd-Frank Financial Reform Act? Respond to the question by considering the
Do you believe that the Dodd-Frank whistle-blower program that incentivizes reporting fraud and other wrongdoings in return for a monetary reward is ethical? Use the ethical reasoning methods discussed in Chapter 1 to answer the question
Because of their access and knowledge, accountants are in an ideal position to provide their clients and the SEC with early and invaluable assistance in identifying the scope, participants, victims and ill-gotten gains associated with corporate wrongdoing. Historically, when CPAs discovered
“Give me the ‘Mc Facts,’ ma’am, nothing but the Mc Facts!” So argued the defense attorney for McDonald’s Corporation as she questioned Stella Liebeck, an 81-year-old retired sales clerk, two years after her initial lawsuit against McDonald’s claiming it served dangerously hot coffee.
1. According to the Ethical Dissonance Model, the ethical person-organization fit helps to define the ethical culture of an organization and one’s role in it. The ethics of an individual influences the values one brings to the workplace and decision-making, while the ethics (through culture) of
1. The following is from Amgen’s values statement: “Our Values form a deeply held belief system that guides our behavior, helps us make the right decisions and builds the framework for our daily interactions with each other. We value people, integrity and results. This combination is essential
1. Identify the stakeholders in this case. Identify their interests and United’s obligations to satisfy those interests from an ethical perspective.2. Describe the ethical responsibilities of Tony Cupertino as a CPA and CIA. How do these responsibilities effect whom Cupertino should approach in
1. The original lawsuit filed in the HP case claimed that the executives breached their fiduciary responsibilities. What are the fiduciary responsibilities of executives and members of the board of directors to shareholders? How were these obligations violated in the HP case?2. Describe how
1. Should we regard Mr. ABC has a new “caped crusader” or an opportunist? Explain the reasons for your response.2. Is it ethical for a Wall Street insider to purposefully analyze financial data of an unrelated company in order to identify corporate wrongdoing, report it to the appropriate
1. What steps should Bennie Gordon take to ensure that the accounting matter is adequately addressed by the company? Why do you suggest those steps be taken? What are the ethical obligations of Bennie Gordon, Sarah Higgins, and Sam Thornton?2. Assume Gordon made a strong case that the accounting
1. The lawsuit filed by the Shareholders Foundation alleged that the board of directors of XTO breached its fiduciary duties. What are the fiduciary duties of the board? Identify the duties allegedly violated in the XTO case. Do you think the board acted in accordance with a shareholder or
1. Were the shareholders of Apple entitled to receive information about the health of Jobs? What about the general public? Of what value is such information? How might the company benefit from the disclosure of such information and how might it suffer? How might the shareholders benefit and how
1. Evaluate the actions of the workers and management of Union Carbide in this case from the perspectives of System 1 and System 2 thinking that was discussed earlier?2. The document uncovered by the Environmental Working Group Report refers to the acceptable “business risk” in the Bhopal
1. What is the role of trust in business? How does trust relate to stakeholder interests? How does trust engender ethical leadership? Evaluate Mark Hurd’s actions in this case from a trust perspective.2. Define conflict of interests in a business sense. How does Hurd’s actions and relationship
It has been said that independence is the cornerstone of the accounting profession. Explain what this means. How do auditors protect against impairments of independence?
Do you think independence with respect to a client would be impaired if a partner leaves a CPA firm and is subsequently employed by a client of the firm that the partner audited? Why or why not? Are there any procedures that might be put into place to deal with any identified threat to
Comment on the statement, “Independence is not easily achieved where an auditor is hired, paid, and fired by the same corporate managers whose activities are the subject of the audit.” How might financial incentives in the form of client services unconsciously introduce auditor bias into the
Assume a CPA serves as an audit client’s business consultant and performs each of the following services for the client. Discuss whether independence would be impaired in each instance and why.a) Advising on how to structure its business transactions to obtain specific accounting treatment under
States require accounting students, CPA candidates, and licensed CPAs to complete different forms of ethics education. Go to the Internet and look up the rules and regulations of the state board of accountancy in your state. Does your state have a requirement to complete a specified number of hours
Assume you complete tax returns for clients. You were engaged to file the 2013 individual and corporate tax returns for a client. The client provided her records and other tax information to you on February 1, 2014, to help prepare the 2013 tax return. Your client had paid you $12,000 to prepare
In the fall of 2012, KPMG’s Columbus, Ohio office was auditing Jobs Ohio’s books while, at the same time, an out-of-state office of the firm was seeking $1 million in taxpayer money from Jobs Ohio for unnamed client. As the state’s lead economic-development agency, Jobs Ohio is charged with
It has been said that ethical people try to observe both the form and spirit of ethical standards in making professional judgments. What does this mean? How does this relate to the “realistic possibility of success standards in tax practice?
In the course of researching whether a particular tax position of your tax client satisfies the realistic possibility of success standard, you discover that another taxpayer took the same position on a tax return several years ago and that the return was audited by the IRS. You discover that the
Assume that the CPA firm of Giants & Jets LLP audits Knickerbocker Systems Inc. The controller of “the Knicks” happens to be a tax expert. During the current tax season, Giants & Jets gets far behind in processing tax returns for wealthy clients. It does not want to approach them and ask
The managing partner of a CPA firm is approached by the CEO of a major client in the firm’s headquarters office in New York City. The CEO can’t use two tickets to the Super Bowl between the Denver Broncos and the New York Giants. The CEO knows the partner is a huge New York Giants football fan
Can a CPA be independent without being objective? Why or why not? Can a CPA be objective without being independent? Why or why not? Does your answer matter assuming you only provide only non auditing services to the client? What if you provide both audit and non auditing services?
With respect to the Armadillo Foods case in this chapter, let’s assume that the controller is instructed by the CFO that to “make the numbers” the company must increase EPS by $.02 per share. This sounds innocent enough and it is only a five percent increase. Does the relative size of the
What is the danger from an ethical perspective of having a CPA firm that conducts the audit of a public company also engaged in consulting with the company on the installation of a new financial information system? What about giving tax advice to an audit client? What are the possible ethical
In 2004, the Government Accountability Office (GAO) conducted an investigation of tax shelters of 61 Fortune 500 users of tax shelters provided by accounting firms that were their external auditors covering more than one year between 1998-2003. In each case the company received benefits from the
The IRS contacted your client as part of an examination of its tax return and proposed that the client owes an extra $100,000. As the client’s tax accountant and a CPA, can you agree to handle the matter for 40 percent of what you save the client? Under what circumstances might this be an
A large, national accounting firm decides it is time to outsource the preparation of income tax returns to an organization in India that has performed outsource services for other U.S. CPA firms. The firm will transmit income tax information necessary to prepare the returns electronically and staff
In August 2008, Ernst & Young LLP agreed to pay more than $2.9 million to the SEC to settle charges that it violated ethics rules by coproducing a series of audio CDs with a man who was also a director at three of EY’s audit clients. According to the SEC, EY collaborated with Mark C. Thompson
On January 16, 2008, the SEC charged two former employees of PricewaterhouseCoopers LLP with insider trading. According to the SEC’s complaint, Gregory B. Raben, a former PwC auditor, and William Patrick Borchard, a former senior associate in PwC’s Transaction Services Group, used their access

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Ethical Obligations And Decision Making In Accounting Text And Cases 2nd Edition Steven Mintz, Roselyn Morris - Solutions

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