Question: Sharon is an intern with a local

> Your best friend is from another country. One day after a particularly stimulating lecture on the meaning of ethics by your instructor, you and your friend disagree about whether culture plays a role in ethical behavior. You state that good ethics are go

> You’re struggling in your new accounting practice to tap into a potential client base. You have tried traditional advertising and marketing tools to no avail. Your friend tells you to use social media as a tool to reach potential customers. You’re not su

> Andy Simmons is a CPA with his own accounting and tax practice. He occasionally does an audit for small business clients. One day an audit client shows Andy a letter from the local Property Tax Assessor’s office. It seems the client inquired about the pr

> What is the problem with an auditor overrelying on management’s representations on the financial statements?

> Can a CPA auditor be independent without being objective? Can a CPA auditor be objective without being independent? Explain.

> What are the dangers of creeping commercialism in the accounting profession?

> In our discussion of the KPMG professional judgment framework, we pointed out that biased judgments can be made because of judgment tendencies. One such tendency that was not included in the framework is self-serving bias. Explain what you think this mea

> 9. The following questions are about corporate governance and executive compensation. (a) How does agency theory address the issue of executive compensation? (b) How might stakeholder theory argue against the current model of executive compensation in th

> Do you believe that employees who observe more occupational fraud in their organizations are more likely to engage in occupational fraud themselves?

> Explain how “group-think” might lead a person to ignore moral and ethical duty in an organization.

> It has been said that recent graduates from a business school majoring in accounting and just entering the profession are especially vulnerable to ethical missteps because they are often naive and may not see the ethical aspects of situations they confro

> Steroid use in baseball is an important societal issue. Many members of society are concerned that their young sons and daughters may be negatively influenced by what apparently has been done at the major league level to gain an advantage and the possibi

> How do employee perceptions of commitment, integrity, and transparency in the workplace contribute toward creating an ethical corporate culture?

> One way of analyzing whether NSA whistleblower Edward Snowden’s actions were justified in leaking classified materials exposing the breadth of the U.S. government’s surveillance activities is by weighing personal morality against the morality that comes

> Is business ethics an oxymoron?

> “Give me the ‘McFacts,’ ma’am, nothing but the McFacts!” 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 that

> The following relates to the Menendez – Halliburton situation described in the text. (a) How would you characterize Halliburton’s accounting for revenue from ethical and professional perspectives? (b) Once KPMG learned that Menendez had provided a compl

> On October 24, 2013, the Second Circuit Court of Appeals ruled that a tipster who provided information to the SEC about illegal payments to foreign government officials by Stryker Corporation under the Foreign Corrupt Practices Act (FCPA) was not eligibl

> Explain how internal auditors’ sensitivity to ethical dilemmas might be influenced by corporate governance mechanisms.

> Explain how we might evaluate auditors’ whistle-blowing intentions? Why would this be important to do?

> How do the concepts of cognitive dissonance and organizational/ethical dissonance relate to whether an accountant might choose to blow the whistle on corporate wrongdoing?

> Just because a person has a right to blow the whistle, does that mean she has a duty to blow the whistle? How might we make that determination?

> One explanation about rights is that “there is a difference between what we have the right to do and what is the right thing to do.” Explain what you think is meant by this statement. Do you believe that if someone is rude to you, you have a right to be

> Evaluate the ethics of the practice of whistleblowing from the perspectives of virtue, rights theory, and utilitarianism.

> It has been argued that an organization that does not support those that whistle blow because of violation of professional standards is indicative of a failure of organizational ethics. Explain what you think this statement means from the perspective of

> The Committee of Sponsoring Organizations (COSO) explains the importance of the control environment to internal controls by stating that it sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for al

> What is the link between the internal control environment and accountability?

> Brief and Motowidlo define prosocial 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 o

> 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. According to the results of the survey, active social networkers air company lin

> 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.” Days later, another Japanese exe

> The issue of the size of executive compensation packages is explored in the text. The highest paid CEO in 2014 was David Zaslav, the CEO of Discovery Communications, whose total executive compensation package was $156.1, the vast majority of which was fr

> In her book The 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 w

> In teaching about moral development, instructors often point out the threefold nature of morality: It depends on emotional development (in the form of the ability to feel guilt or shame), social development (manifested by the recognition of the group and

> In this chapter, we have discussed the Joe Paterno matter at Penn State. Another situation where a respected individual’s reputation was tarnished by personal decisions is the resignation of David Petraeus, former U.S. military general and head of the Ce

> 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

> In his research into the components of ethical decision making, Rest raised the following issue: Assuming someone possesses sound moral reasoning skills, “Why would they ever chose the moral alternative, especially if it involves sacrificing some persona

> Using the child abuse scandal at Penn State discussed in Chapter 1, 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.

> One reason otherwise good people may do bad things is what psychologists call scripts. This term refers to the procedures that experience tells us to use in specific situations. Unlike other forms of experience, scripts are stored in memory in a mechanic

> In the debate over why good people do bad things, Tenbrunsel suggests that people are often blind to the ethical dimensions of a situation, a concept he refers to as “bounded ethicality.” Craig Johnson addresses moral disengagement by saying: When others

> 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 Lam

> 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 that we would

> The nature of accountants’ work puts them in a special position of trust in relation to their clients, employers, and the general public, who rely on their professional judgment and guidance in making decisions. Explain the link between professional judg

> Windsor and Kavanagh propose in a research study that client management economic pressure is a situation of high moral intensity that sensitizes auditors’ emotions and thus motivates their moral reasoning to make deliberative decisions either to resist o

> Emotional self-awareness refers to understanding your own feelings, what causes them, and how they impact your thoughts and actions. It is widely known that ethical dilemmas involving other employees/managers are inherently emotional. Researchers have fo

> 1. Do you think it is the same to act in your own self-interest as it is to act in a selfish way? Why or why not? 2. Do you think “enlightened self-interest” is a contradiction in terms, or is it a valid basis for all actions? Evaluate whether our laisse

> Explain why the process of ethical decision making depends on a number of moral, social, psychological, and organizational factors.

> On October 15, 2009, in Fort Collins, Colorado, the parents of a six-year-old boy, Falcon Heene, claimed that he had floated away in a homemade helium balloon that was shaped to resemble a silver flying saucer. Some in the media referred to the incident

> 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 bet

> Identify the ethical issues in each of the following situations and what your ethical obligations are, assuming you are faced with the dilemma. a. A consultant for a CPA firm is ordered by her superior to downgrade the ratings of one company's software p

> According to a survey reported by the Daily Mail in the United Kingdom, one in eight women has bought expensive clothes, worn them on a night out, and then returned them the next day. Nearly half of those who did confess said they were motivated by money

> 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

> In this chapter, we discuss the study by Libby and Thorne of the association between auditors’ virtue and professional judgment, done by asking members of the Canadian Institute of Chartered Accountants to rate the importance of a variety of virtues. The

> Michael just graduated with a degree in Accounting from State University. He worked hard in school but could only achieve a 2.95 GPA because he worked 40 hours a week to pay his own way through college. Unfortunately, Michael was unable to get a job beca

> Explain why moral problems may be of greater intensity than nonmoral problems.

> The following two statements about virtue were made by noted philosophers/writers: 1. MacIntyre, in his account of Aristotelian virtue, states that integrity is the one trait of character that encompasses all the others. How does integrity relate to, as

> Do you believe that a person’s stage of moral development and personal moral philosophy play a role in how values and actions are shaped in the workplace? Explain.

> Do you believe that our beliefs trigger our actions, or do we act and then justify our actions by changing our beliefs? Explain.

> We are citizens of the world. The tragedy of our times is that we do not know this. Woodrow T. Wilson (1856–1924), 28th president of the United States At five past midnight on December 3, 1984, 40 tons of the chemical methyl isocynate (MIC), a toxic gas,

> In 2005, Tony Menendez, a former Ernst & Young LLP auditor and Director of Technical Accounting and Research Training for Halliburton, blew the whistle on Halliburton’s accounting practices. The fight cost him nine years of his life. Just a few months la

> On September 25, 2012, Japanese camera and medical equipment maker Olympus Corporation and three of its former executives pleaded guilty to charges related to an accounting scheme and cover-up in one of Japan’s biggest corporate scandals. Olympus admitte

> Bennie Gordon graduated with a Masters in Accounting two years ago and now works as an accounting manager at the division level at Jet Energy Company, a company headquartered in Winston-Salem, North Carolina. Jet Energy is a regulated utility company by

> The facts of this case are from the Walmart shrinkage fraud discussed in an article in Nation on June 11, 2014. “Literary license” has been exercised for the purpose of emphasizing important issues related to organizational ethics at Walmart. Any resembl

> On October 15, 2009, in Fort Collins, Colorado, the parents of a six-year-old boy, Falcon Heene, claimed that he had floated away in a homemade helium balloon that was shaped to resemble a silver flying saucer. Some in the media referred to the incident

> Natalie got the call she had been waiting for over six long months. Her complaint to the human resources department of Franklin Industries had been dismissed. It was HR’s conclusion that she was not retaliated against for reporting an alleged embezzlemen

> United Thermostatic Controls is a publicly owned company that engages in the manufacturing and marketing of residential and commercial thermostats. The thermostats are used to regulate temperature in furnaces and refrigerators. United sells its product p

> Occupational fraud comes in many shapes and sizes. The fraud at Rite-Aid is one such case. On February 10, 2015, the U.S. Attorney’s Office for the Middle District of Pennsylvania announced that a former Rite Aid Vice President, Jay Findling, pleaded gui

> How could a CEO and chairperson of the board of directors of a major company resign in disgrace over a personal relationship with a contractor that led to a sexual harassment charge and involved a conflict of interests, a violation of the code of ethics?

> Reprinted with permission from “The Parable of the Sadhu,” by Bowen H. McCoy, Harvard Business Review. Copyright © Harvard Business Publishing. Last year, as the first participant in the new six-month sabbatical program that Morgan Stanley has adopted, I

> The story of Phar-Mor shows how quickly a company that built its earnings on fraudulent transactions can dissolve like an Alka-Seltzer. One day, Stan Cherelstein, the controller of Phar-Mor, discovered cabinets stuffed with held checks totaling $10 milli

> “I’m sorry, Lucy. That’s the way it is,” Ricardo said. The client wants it that way. “I just don’t know if I can go along with it, Ricardo,” Lucy replied. “I know. I agree with you. But, Juggyfroot is our biggest client, Lucy. They’ve warned us that they

> Milton Manufacturing Company produces a variety of textiles for distribution to wholesale manufacturers of clothing products. The company’s primary operations are located in Long Island City, New York, with branch factories and warehouses in several surr

> The facts of this case are fictional. Any resemblance to real persons, living or dead, is purely coincidental. Kenny is always looking to make contacts in the business world and enhance his networking experiences. He knows how important it is to drive c

> Troy just returned from a business trip for health-care administrators in Orlando. Kristen, a relatively new employee who reports to him, also attended the conference. They both work for Gateway Hospital, a for-profit hospital in the St. Louis area. The

> Assume you are interviewing for a position with an accounting firm and the recruiter asks you the following questions. Craft a response that you would feel comfortable giving for each one. • Describe an experience in the workplace when your attitudes an

> Jackson Daniels graduated from Lynchberg State College two years ago. Since graduating from college, he has worked in the accounting department of Lynchberg Manufacturing. Daniels was recently asked to prepare a sales budget for the year 2016. He conduct

> Brenda Sells sent the tax return that she prepared for the president of Purple Industries, Inc., Harry Kohn, to Vincent Dim, the manager of the tax department at her accounting firm. Dim asked Sells to come to his office at 9 a.m. on Friday, April 12, 20

> Gregory and Alex started a small business based on a secret-recipe salad dressing that got rave reviews. Gregory runs the business end and makes all final operational decisions. Alex runs the creative side of the business. Alex’s salad dressing was a jal

> The WorldCom fraud was the largest in U.S. history, surpassing even that of Enron. Beginning modestly during mid-year 1999 and continuing at an accelerated pace through May 2002, the company—under the direction of Bernie Ebbers, the CEO; Scott Sullivan,

> Barbara is working on the audit of a client with a group of five other staff-level employees. During the audit, Diane, a member of the group, points out that she identified a deficiency in the client’s inventory system that she did not discover during th

> Better Boston Beans is a coffee shop located in the Faneuil Hall Marketplace near the waterfront and Government Center in Boston. It specializes in exotic blends of coffee, including Sumatra Dark Roast Black, India Mysore “Gold Nuggets,” and Guatemala An

> 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 insta

> 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 o

> Kevin Lowe is depressed. He has been with the CPA firm Stooges LLP for only three months. Yet the partners in charge of the firm—Bo Chambers and his brother, Moe—have asked for a “sit-down.” Here’s how it goes: “Kevin, we asked to see you because your ti

> Gloria Hernandez is the controller of a public company. She just completed a meeting with her superior, John Harrison, who is the CFO of the company. Harrison tried to convince Hernandez to go along with his proposal to combine 12 expenditures for repair

> 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.

> Part A Billy Tushoes recently received an offer to join the accounting firm of Tick and Check LLP. Billy would prefer to work for Foot and Balance LLP but has not received an offer from the firm the day before he must decide whether to accept the positio

> Jose and Emily work as auditors for the state of Texas. They have been assigned to the audit of the Lone Star School District. There have been some problems with audit documentation for the travel and entertainment reimbursement claims of the manager of

> On December 3, 2012, a terrible incident occurred in the New York City subway when Ki-Suck Han was pushed off a subway platform by Naeem Davis. Han was hit and killed by the train, while observers did nothing other than snap photos on their cell phones a

> Ed Giles and Susan Regas have never been happier than during the past four months since they have been seeing each other. Giles is a 35-year-old CPA and a partner in the medium-sized accounting firm of Saduga & Mihca. Regas is a 25-year-old senior accoun

> Yes. Cheating occurs at the prestigious Harvard University. In 2012, Harvard forced dozens of students to leave in its largest cheating scandal in memory, but the institution would not address assertions that the blame rested partly with a professor and

> This case focuses on improper accounting and management decision making at Waste Management, Inc., during the period of its accounting fraud from 1992 to 1997, and the role and responsibilities of Arthur Andersen LLP (Andersen), the Waste Management audi

> Some of my management decisions turned wrong, but fraud? Never, never, never.” This statement was made by the former CEO of Vivendi Universal, Jean-Marie Messier, as he took the stand in November 20, 2009, for a civil class action lawsuit brought against

> HFS Incorporated (HFS) was principally a controller of franchise brand names in the hotel, real estate brokerage, and car rental businesses, including Avis, Ramada Inn, Days Inn, and Century 21. Comp-U-Card (CUC) was principally engaged in membership-bas

> South City Electronics is involved in printed circuit board assembly (PCBA) dealing with the assembly of complex electronic system processes. The electronics company, based in the city of South San Francisco, is publicly owned with three other locations

> The U.S. Court of Appeals for the Fourth Circuit affirmed the lower court ruling in the case Public Employees’ Retirement Association of Colorado; Generic Trading of Philadelphia, LLC v. Deloitte & Touche, LLP that Deloitte defendants lacked the necessar

> 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 requ

> On July 24, 2009, the U.S. Court of Appeals for the District of Columbia upheld the finding of the SEC that Gregory M. Dearlove, a certified public accountant and formerly a partner with the accounting firm Deloitte & Touche LLP, engaged in improper prof

> Denise Norris is a manager at Fitch & Jones, LLP, a regional audit firm in Providence, Rhode Island. Norris is preparing for a meeting with Alan Morse, the controller of Rhody Electronics, a publicly held company in Providence. The meeting concerns a var

> On March 4, 2009, the SEC reached an agreement with Krispy Kreme Doughnuts, Inc., and issued a cease-and-desist order to settle charges that the company fraudulently inflated or otherwise misrepresented its earnings for the fourth quarter of its FY2003 a

> The artificial tax shelter arrangements developed by KPMG LLP for wealthy clients that led to the settlement of a legal action with the Department of Treasury and the Internal Revenue Service. On August 29, 2005, KPMG admitted to criminal wrongdoing and