Business and Professional Ethics for Accountants

by Brooks, Leonard J.

• ISBN13: 9780324013160
• ISBN10: 0324013167
• Format: Paperback
• Copyright: 2001-12-20
• Publisher: Dame Publishing

Summary

This text focuses on practical development of the skills needed to deal with ethical issues specific to accounting. Interesting, real-world situations provide readers with an understanding of appropriate values, ethical pitfalls, applicable codes of conduct, and sound ethical reasons where codes do not apply. The text can be used alone or with any traditional accounting text as each chapter stands alone.

Table of Contents

Preface	ix
Overview of the Book	xv
PART I Developing an Awareness of the Issues	1	(98)
The Ethics Environment	2	(50)
The Ethics Environment for Business: The Battle for Credibility	2	(6)
Environmental Concerns	3	(1)
Moral Sensitivity	4	(1)
Financial Scandals: The Expectations Gap and the Credibility Gap	5	(1)
Economic and Competitive Pressures	5	(1)
Bad Judgments and Activist Stakeholders	6	(1)
Synergy Among Factors and Institutional Reinforcement	7	(1)
Outcomes	7	(1)
A New Mandate for Business	8	(1)
The Response by Business	9	(3)
Developments in Business Ethics	12	(2)
Concepts and Terms	12	(1)
Approaches to Ethical Decision Making Through Stakeholder Impact Analysis	13	(1)
The Ethics Environment for Professional Accountants: The Expectations Gap	14	(1)
Questions for Discussion	15	(1)
Cases	15	(2)
Bhopal---The Union Carbide	17	(2)
The Betaseron Decision (A)	19	(2)
Texaco: The Equador Issue	21	(3)
Where Were the Accountants?	24	(1)
To Resign or Serve?	25	(1)
Readings
The Social Responsibility of Business Is to Increase Its Profits	26	(4)
Milton Friedman
A Critique of Milton Friedman's Essay ``The Social Responsibility of Business Is to Increase Its Profits''	30	(4)
Thomas Mulligan
Domini 400 Social Index Gains 7.50% In December, S&P 500 Gains 5.82%: Press Release	34	(3)
The Whistle-Blower: Patriot or Bounty Hunter?	37	(5)
Andrew Singer
Managing for Organizational Integrity	42	(9)
Lynn Sharp Paine
Law Case Summary: Caremark National Inc.	51	(1)
L. J. Brooks
The Role of the Professional Accountant	52	(47)
Understanding the Role of a Professional Accountant Is Critical	52	(1)
Public Expectations of All Professionals	53	(2)
Public Expectations of a Professional Accountant	55	(1)
Dominance of Ethical Values Rather than Accounting or Audit Techniques	55	(2)
Priority of Duty, Loyalty, and Trust in a Fiduciary	57	(3)
Confidentiality: Strict or Assisted	60	(1)
Implications for Services Offered	60	(2)
Assurance and Other Services	60	(1)
Critical Value-Added by a Professional Accountant	61	(1)
Standards Expected for Behavior	62	(1)
Judgment and Values	62	(2)
Importance to Value-Added	62	(1)
Development of Judgment and Values	62	(2)
Sources of Ethical Guidance	64	(2)
Codes of Conduct	64	(1)
Laws and Jurisprudence	64	(2)
When Codes and Laws Don't Help	66	(1)
Questions for Discussion	66	(1)
Cases	66	(2)
The Eagle Has Landed	68	(2)
Allan Eagleson
The Lang Michener Affair	70	(3)
Dilemma of an Accountant	73	(3)
Societal Concerns	76	(1)
Management Choice	77	(1)
Maple Leaf Gardens Shenanigans	77	(2)
To Qualify or Not?	79	(3)
Readings
The AICPA At 100: Public Trust and Professional Pride	82	(6)
Liability Crisis in the United States: Impact on the Accounting Profession:	88	(4)
Appendix: Trends in the Legal Liability of Accountants and Auditors and Legal Defenses Available	92	(7)
PART II Ethical Governance and Decision Making	99	(122)
Ethical Governance---Codes and Beyond	100	(80)
Introduction	100	(1)
Governance Systems Come of Age	101	(2)
Ethics Programs	103	(11)
Developing and Managing an Ethical Culture	103	(5)
Corporate Codes of Conduct	108	(1)
Purpose, Focus, and Orientation	108	(2)
Code Content	110	(1)
Effective Implementation	111	(3)
Professional Accounting Guidance Environment	114	(2)
Professional Codes of Conduct	116	(11)
Purpose and Framework	116	(1)
Fundamental Principles and Standards	116	(2)
Rules: General and Specific	118	(1)
Discipline	118	(3)
Interpretations of Rules	121	(1)
Motivations for Changes in Professional Codes	121	(1)
Current Codes of Professional Conduct	122	(1)
International Comparison of Professional Codes	122	(1)
Shortfalls With and In Professional Codes	123	(4)
Issues Not Usually Resolved in Corporate Codes of Conduct	127	(1)
Conclusion	128	(1)
Questions for Discussion	129	(1)
Cases	129	(2)
Bankers Trust: Learning from Derivatives	131	(3)
Barings Bank: Rogue Trader	134	(3)
Philip Services Corp....Into the Dumper	137	(5)
Dow Corning Silicone Breast Implants	142	(2)
Playing God	144	(1)
Economic Reality or GAAP	144	(1)
Multidisciplinary Practices---Ethical Challenges	145	(1)
Team Player Problems	145	(1)
Locker Room Talk (see Chapter 5)	146	(1)
Readings
Appendix A: International Comparison of Main Aspects of Professional Codes of Conduct	147	(13)
The Anderson Committee: Restructuring Professional Standards	160	(1)
G. D. Anderson
Applying the Stakeholder Management Model to the Analysis and Evaluation of Corporate Codes	161	(12)
M. Clarkson
M. Deck
Creating Ethical Corporate Structures	173	(7)
P. E. Murphy
Approaches to Ethical Decision Making	180	(41)
Introduction	180	(1)
Stakeholder Impact Analysis	180	(2)
Overview	180	(1)
Fundamental Interests of Stakeholders	181	(1)
Measurement of Quantifiable Impacts	182	(4)
Profit	182	(1)
Items Not Included in Profit: Measurable Directly	183	(1)
Items Not Included in Profit: Not Measurable Directly	183	(1)
Bringing the Future to the Present	183	(1)
Dealing with Uncertain Outcomes	184	(1)
Identifying Stakeholders and Ranking Their Interests	185	(1)
Summary	186	(1)
Assessment of Nonquantifiable Impacts of Proposed Decisions:	186	(1)
Fairness Among Stakeholders	186	(1)
Rights of Stakeholders	187	(1)
Comprehensive Decision-Making Approaches	187	(4)
5-Question Approach	187	(1)
Moral Standards Approach	188	(1)
Pastin's Approach	189	(2)
Extending and Blending the Approaches	191	(1)
Commons Problems	191	(1)
Developing a More Ethical Action	191	(1)
Common Ethical Decision-Making Pitfalls	192	(1)
Summary of Steps for an Ethical Decision	193	(1)
Conclusion	193	(1)
Questions for Discussion	194	(2)
Illustrative Applications of Stakeholder Impact Analysis
When Does An ``Aggressive Accounting'' Choice Become Fraudulent?	196	(1)
Bribery or Opportunity in China	197	(3)
Proposed Audit Adjustment Case	200	(4)
Cases
Smokers are Good for the Economy---Really	204	(2)
Ford Pinto	206	(2)
The Kardell Paper Co.	208	(2)
Readings
Cost Benefit Analysis	210	(7)
L. J. Brooks, Jr.
Ethical Analysis for Environmental Problem Solving	217	(4)
Graham Tucker
PART III Significant Ethics Issues Facing Business and the Profession	221	(93)
Significant Ethics Issues Facing Business and the Profession	223	(91)
Conflicts of Interest---a Significant Ethical Problem Area	223	(13)
Common Conflicts of Interest Situations in Business	224	(1)
Management to Avoid and Minimize Consequences	225	(1)
Forensics Suspicions: The 20/60/20 Rule	225	(1)
The Gone Theory: Identification of Potentially Harmful Situations and Likely Perpetrators	226	(1)
Agency Theory, Ethics, and Sears	226	(1)
Conflicts of Interest and the Professional Accountant	226	(1)
A Professional Accountant's Fiduciary Relationship	227	(1)
Types of Conflicts of Interest for Professional Accountants	228	(1)
Spheres of Activity Affected	229	(1)
Conflicts of Interest Affecting Services Offered	229	(3)
Conflicts of Interest Involving Improper Use of Influence	232	(1)
Conflicts of Interest Involving Use or Misuse of Information (Confidentiality)	232	(3)
Managing Conflicts of Interest: Awareness and Management	235	(1)
Conclusion	236	(1)
Workplace Ethics---A Significant Ethical Problem Area	236	(4)
Employee Rights	236	(1)
Privacy and Dignity	236	(2)
Fair Treatment	238	(1)
Healthy and Safe Work Environment	239	(1)
Ability to Exercise Conscience	239	(1)
Trust and Its Importance	240	(1)
Conclusion	240	(1)
International Operations---A Significant Ethical Problem Area	240	(4)
Impacts on Local Economies and their Cultures	241	(1)
Conflicts Between Domestic and Foreign Cultures	241	(1)
Bribery, Facilitating Payments	242	(1)
Apparent Cultural Conflicts with Banning Gifts, Bribes, and Facilitating Payments	243	(1)
Moral Imagination	243	(1)
Guidelines for Ethical Practice	244	(1)
Conclusion	244	(1)
Social Accountability and Audit---A Significant Ethical Problem Area	244	(3)
Organizational Objectives for Corporate Ethical Performance (CEP)	245	(1)
Measurement of Corporate Ethical Performance	245	(1)
Reporting of CEP	246	(1)
Audit or Verification of CEP Reports	247	(1)
Conclusion	247	(1)
Crisis Management---A Significant Ethical Problem Area	247	(4)
Conclusion	251	(1)
Questions for Discussion	251	(1)
Appendix A: Corporate Ethical Performance Indicators Used in the Corporate Ethics Monitor	254	(3)
Appendix B: Ethics Audit Program Annual Audit Question	257
Cases	251	(8)
Cases on Conflicts of Interest
Tax Return Complications	259	(1)
Minimal Disclosure	260	(1)
Opinion Shopping	260	(1)
Lowballing a Fee Quotation	261	(1)
Risk Management of Taxes Payable---Is It Ethical?	262	(1)
Cases on Workplace Ethics
Texaco's Jelly Beans	262	(5)
Downsize or Bonus Allocation Decisions	267	(1)
Cases on International Operations
Jail and a German Sub-Contractor	267	(1)
Cases on Crisis Management
The Exxon Valdez	268	(3)
The Brent Spar Decommissioning Disaster	271	(2)
Interesting Times	273	(2)
Readings
``Can't We all Just Get Along: Cultural Variables in Codes of Ethics''	275	(6)
Nancy Roth
Todd Hunt
Maria Stavropoulos
Karen Babik
``Values in Tension: Ethics Away from Home''	281	(8)
Tom Donaldson
``Effective Crisis Management''	289	(8)
Ian Mitroff
Paul Shrivastava
Firdaus Udwadia
``Ethical Problems in Public Accounting: The View from the Top''	297	(10)
Don Finn
Lawrence Chonko
Shelby Hunt
``Some Unresolved Ethical Issues in Auditing''	307	(7)
Sally Gunz
John Mccutcheon
``Ethics in Taxation Practice''	314
Tom Lynch