What is your advice?
> How would you respond when someone makes a decision that adversely affects you while saying, “it’s nothing personal, it’s just business”? Is business impersonal?
> It seems likely that the top executives of the major banks involved in the manipulation of the LIBOR rate were aware of the manipulations, and of the massive profits and losses caused by those manipulations. Why did they think that such manipulations co
> The lack of corporate accountability, and an increased awareness of inequities and other questionable practices by corporations, led to the Occupy Movement. Identify and comment upon additional recent instances which have led to concerns over the legitim
> In each case discussed at some length in this chapter – Enron, Arthur Andersen, WorldCom, and Bernie Madoff – the problems were known to whistleblowers. Should those whistleblowers each have made more effort to be heard? How?
> Rank the three worst villains in the film Wall Street: Money Never Sleeps (2010). Explain your ranking.
> Use the Jennings “Seven Signs” framework to analyze the Enron and WorldCom cases in this chapter.
> Many cases of financial malfeasance involve misrepresentation to mislead boards of directors and/or investors. Identify the instances of misrepresentation in the Enron, Arthur Andersen, and WorldCom cases discussed in this chapter. Who was to benefit, an
> What are the reactions and outcomes that can be attributed to the leaked Panama Papers?
> The CEOs of Valeant Pharmaceuticals and Turing Pharmaceuticals took the view that they could jack up the price of their drugs by huge percentages because they could, and they failed to consider seriously enough whether they should. Whose fault was this?
> At GM and Takata, whose improper actions finally came to light, a whistleblower raised objections to the actions before or very early in the production process. Why were their concerns ignored and risks taken? In VW’s case, why didn’t a whistleblower com
> The new anti-bribery prosecution regime involves serious charges and penalties for bribery in foreign countries during past times when many people were bribing in the normal course of international business, and penalties were not levied. Is it unreason
> Do you think that the events recorded in this chapter are isolated instances of business malfeasance, or are they systemic through the business world?
> Why is an ethical corporate culture important?
> Why should a professional accountant be aware of the Ethics Code of the International Federation of Accountants (IFAC)?
> Why is it important for a professional accountant to understand the ethical trends discussed in this chapter?
> Is a professional accountant a businessperson pursuing profit or a fiduciary that is to act in the public interest?
> What are the common elements of the three approaches to ethical decision making that are briefly outlined in the chapter?
> Why are philosophical approaches to ethical decision making relevant to modern corporations and professional accountants?
> How can conflicts between the interests of stakeholders be resolved by a corporation’s management?
> How can a corporation show respect for its stakeholders?
> Why are the expectations of a corporation’s stakeholders important to the reputation of the corporation and to its profitability?
> Should executives and directors be sent to jail for the acts of their corporation's employees?
> How can corporations ensure that their employees behave ethically?
> Why is it important for the clients of professional accountants to be ethical?
> Why might ethical corporate behavior lead to higher profitability?
> Is there anything else that can be done to curtail this sort of egregious business behavior other than legislation?
> The events recorded in this chapter have given rise to legislative reforms concerning how business executives, directors, and accountants are to behave. There is a recurring pattern of questionable action followed by more stringent legislation, regulatio
> Why have concerns over pollution become so important for management and directors?
> 1. Why do you think that the doughnut chain continued to sell only sugary soft drinks even though it was under pressure to sell diet soft drinks as well? 2. Was selling only sugary soft drinks ethical? 3. Should the university campus officials have force
> 1. Should the chair of the board of directors be allowed to initiate investigations into weaknesses in a company’s internal control systems? 2. Is the strategy of pretexting an acceptable means in order to obtain critical information that will strengthen
> 1. Was this an ethically correct sales pitch? Were the lenders taking advantage of financially naive customers? 2. Should the investors now be upset that, as a result of the subprime mortgage meltdown, Merrill’s stock price fell by about 30 percent in 20
> 1. Describe the fraud that allegedly occurred through Sino-Forest Corporation Inc.? Who benefited and how? 2. Why did regulators not prevent this fraud from occurring? What were they relying on? 3. Why did the directors of Sino-Forest not prevent this fr
> 1. If selling pornography is legal, profitable, and readily available elsewhere, should Telus shut down its adult service? Why or why not? 2. Telus said that it wanted to be Canada’s premier corporate citizen. Should companies such as Telus feel obligate
> 1. The senior executives at Siemens’ spent most of their working environment that condoned bribery outside Germany but not inside. However, they failed to take notice of the changes that Transparency International – championed by a German who was embarra
> 1. Football is big business, raising millions and millions of dollars for American universities. Numerous administrators and officials at Pennsylvania State University put a higher value on college football than on the welfare of children. How would an o
> 1. Why would Nortel Networks, a Canadian company, hire a U.S. law firm to undertake an independent review of factors that led to restatement of accounting reports? 2. Why did the independent review focus on the “establishment and release of contractual
> 1. If the laws are strict in one country, but lax in another country, do cruise ship companies have an ethical obligation to follow the stricter laws even when they are temporarily sailing through the waters of a country with more lax regulations? 2. Man
> Answer the questions put to John in the case.
> 1. Did Jérôme Kerviel perpetrate a fraud? Why or why not? When such mammoth unauthorized trades occur, and the bank is bankrupted or severely damaged financially, should the board of directors, who have the ultimate responsibility for the bank’s activit
> 1. A vendor may offer a customer a rebate of a specified amount of cash or other consideration that is payable only if the customer completes a specified cumulative level of purchases or remains a customer for a specified period of time. When should the
> 1. Do you find it interesting that most of the critics were women and the media, but those who considered the app to be funny were young men? 2. The target market of AMP Energy is males between the ages of 18 and 24. If this group of consumers found the
> 1. What is your responsibility in each of these situations?
> 1. Do you think that it is ethical or unethical for Nestlé to drain the groundwater in the Millard Canyon spring during a drought? 2. Does Nestlé have an ethical obligation to disclose proprietary information, such as the amount of groundwater extracted
> 1. Should short selling be outlawed? 2. Should naked short selling be outlawed? 3. How would you describe the ethical cultures at Goldman Sachs and Merrill Lynch with respect to failed trades? 4. Short of wholesale firings, fines and jail terms, can you
> 1. Will the Satyam fraud damage India’s reputation as a reliable provider of information technology outsourcing? 2. How long will it take to restore Satyam Computer’s reputation, and how would you recommend that the restoration be facilitated? 3. Mr. Raj
> 1. Responsibility to the public 2. Credibility 3. Information Inductance 4. Basic and relative expertise of accountants
> The pressure for profit and for good client relations is very strong, but the temptation for short-term gain must be considered against the longer-term potential for loss.
> 1. What are the responsibilities of employees who become aware of unethical behavior by their superiors? 2. What actions should be taken by corporate leaders when they receive reports of sexual abuse? Why? 3. If unethical or illegal behavior occurs withi
> 1. What conditions appear to have allowed the Parmalat situation to get out of control? 2. What specific audit procedures could have uncovered the fraud earlier? 3. What audit steps should Deloitte have taken with regard to the seventeen off-shore subsid
> 1. The culture of giving and receiving payments is ingrained in China. On the other hand accepting and paying bribes is a violation of Rio Tinto’s code of conduct. When does a payment stop being a gift and turn into a bribe? 2. The smaller Chinese steel
> 1. Is it right that a CEO can direct the charitable donations of his company to the charity of his choice? 2. Comment on the ethical aspects of Pierre’s stock option/stock donation strategy. 3. If you were Gloria, what should you do? Would you change if
> 1. From a governance perspective, what can the Board of Directors do to make sure that the company’s policies and procedure are adequate to ensure ethical and legal conduct by its employees? 2. Mr. Aissa and Mr. Duhaime were not demonstrating strong ethi
> 1. Was the verdict fair? 2. Will this verdict cause other companies to review for and remedy any systematic discrimination uncovered? 3. How should systemic discrimination be prevented? 4. Were the lawyer’s fees fair? 5. Could this case have been success
> 1. Do you think that Dan Price’s decision to raise the minimum salary to $70,000 represented ethical leadership? 2. Do you think that Price should have arbitrarily increased the minimum salary to $70,000? 3. Should he have increased everyone’s salary, e
> 1. Should Ecuadorians be able to sue Texaco in U.S. courts? 2. If an oil spill was caused by an act of God, an earthquake, should Texaco be held responsible? 3. Do you find Texaco’s arguments against the lawsuits convincing? Why or why not?
> 1. Should Alex join the board of directors of Consolidated Mines International Inc.? 2. If Alex joins the board, should he vote in favour of continuing to make the payments to the United People’s Liberation Front? 3. What other options are available to A
> 1. How could the culture described be changed? 2. Who will need to cause this culture to change? 3. What will have to happen to cause this change? 4. Is it likely that Goldman Sachs will be able to hire the best and brightest recruits unless they change
> 1. What does an ethical analysis add to Viscusi`s actuarial analysis? 2. Would an ethical analysis change the conclusion reached? Why?
> 1. Is there a basic conflict of interest between upholding the public interest and providing tax advice that reduces the amount of money taxpayers pay to the government? Why or why not? 2. How can professional accountants maintain the support of the pub
> 1. What were the major flaws in HealthSouth’s corporate governance? 2 & 5. What should HealthSouth’s auditors, Ernst & Young, have done if they had perceived these flaws? What is the auditor’s responsibility in case of fraud? 3. How – in accounting terms
> 1. Is the NFL’s stance on controlling the harm of concussions ethical? 2. Should the NFL have moved earlier on the concussion problem? If so, when and how? 3. If the concussion problem had been analysed using virtue ethics, what would the analysis have i
> 1. How would you deal with a star trader who would be extremely sensitive to additional controls that implied he or she wasn’t trusted or would generate more time on paperwork and explanations? 2. What ethical and accounting controls would you advise IN
> 1. Given strong profit growth, has there been any damage to Baidu.com’s reputation? 2. What would future reputational damage affect, and how could it be measured? 3. What steps could Baidu.com take to restore its reputation, and what challenges will it h
> 1. General acceptance of accounting principles 2. Fairness in presentation 3. Economic realities 4. Credibility and trust in auditors
> 1. Why didn’t GM act effectively on suspicions that their ignition switches were faulty? 2. Who was at fault for the deaths and injuries involved, and why? 3. Should a company be able to escape liability for harming individuals by declaring bankruptcy? 4
> 1. Is it unethical to pay donors for making blood donations? 2. Is blood a commodity that can be bought and sold like any other commodity? 3. Is there a difference between selling blood that can be used in transfusions and selling blood that will be used
> What should Arthur do? Why?
> 1. What did Arthur Andersen contribute to the Enron disaster? 2. What Arthur Andersen decisions were faulty? 3. What was the prime motivation behind the decisions of Arthur Andersen’s audit partners on the Enron, WorldCom, Waste Management, and Sunbeam a
> 1. What are the costs to other stakeholders in society beyond those that Reuters included? How would these costs be estimated? 2. Has the cost of lost reputation been included by Reuters? If not, how could it be estimated? 3. Since there are so many un
> 1. If the cost of printing Harry Potter books on recycled paper added 3% to the cost, was the publishing company really serving the interest of its shareholders, given that the demand for Potter books was so high that all copies would probably have been
> 1. Discuss the pros and cons of altering the catalogue using: (a) deontology, (b) utilitarianism, and (c) virtue ethics. 2. Should a company alter its marketing campaign to reflect biases that might be prevalent in various countries in which the compan
> 1. Is it ethically acceptable to sell forgeries to art experts who should be able to differentiate a fake from an authentic work of art? 2. Comment on Hebborn’s personal moral code. 3. Was anyone harmed when Landis donated his forged paintings to various
> 1. Why didn’t the Dow Corning ethics audit program reveal any concerns about the silicone-gel breast implant line? 2. What are the critical factors necessary to make such an ethics audit program work effectively? 3. Was the March 20th announcement well-
> What advice would you give?
> 1. What factors contribute to a firm engaging in sexual discrimination? 2. What factors should the board of directors consider if there is an internal complaint of sex discrimination on the basis of pay and promotion? 3. What other costs might Dell incur
> 1. Is it legal, moral or ethical for South Africa to override aids medication patents? 2. Is it legal, moral or ethical for drug patent holders to resist? 3. If you were a senior executive in an affected drug patent holder, what solution would you sugge
> 1. What should the CFO do? 2. Beyond resigning, how can the CFO protect him or herself?
> 1. Should inside traders, who are non-violent, white collar criminals, be subject to Mafia-style investigation tools? 2. How can a stock trader know when she or he is receiving inside information that would be illegal to act upon? 3. How can a stock trad
> 1. When it began operations in China in 2006, Google had agreed to have the search engine Google.cn censor information. Did Google have an ethical right to renege on its agreement in 2010 by directing its Chinese users to the uncensored search engine Goo
> 1. Analyze whether BP`s corporate culture was ethical. 2. Why has BP`s culture developed as it has? 3. How would you suggest changing its culture? 4. What roles should the CEO and the Board of Directors play in making this change? 5. How could this chang
> What advice would you give to the Professional Accountant?
> 1. Was the decision not to install the rubber bladder appropriate? Use the 5 question/box framework to support your analysis. 2. What faults can you identify in Ford's cost-benefit analysis? 3. Should Ford have given its Pinto customers the option to ha
> 1. What should the individuals involved have done? 2. How can the Hermann Hospital ensure that individuals do what they should? 3. Should the doctor, residents, pharmacist and nurses involved in this tragedy be fired? If not, should they be sanctioned,
> 1. Keeping in mind that no compensation, nor accounting services, were ever received or provided, has Sam stepped “out of bounds”? 2. What is your advice for Sam? 3. What is your advice for Ruby? 4. Given the alleged disclosures by Jimmy’s accountant, ha
> 1. What breaches of fiduciary duty does the Adelphia case raise? 2. Why do you think the Rigas family though they could get away with using Adelphia as their own piggy bank? 3. What allowed the Rigas family to get away with their fraudulent behaviour for
> 1. What does our professional code say about this? 2. If this issue is uncovered by the government regulatory authorities, will I be implicated? 3. Should I quit my job and then go and report this situation to the regulatory authorities?
> 1. Based on the conflicts of interest raised in the case, has Goldman Sachs, in effect, shorted itself? Explain why and why not. 2. How should Goldman Sachs have handled each conflict of interest? 3. If Goldman Sachs really is innocent of all conflicts,
> 1. From a utilitarian point of view, who do you think should be in the priority group? 2. From a justice as fairness perspective, who should be in the priority group? 3. Should people who make society flourish through their economic productivity, such as
> 1. Do you think that Apple’s new accounting policy, that is consistent with the 2009 FASB statement, results in fair financial reporting? 2. Do you think that Apple’s share price should have gone up as a result of increased revenue due to a change in an
> 1. Why did BP fail its oversight and decision capabilities? 2. Describe your vision of a good risk management process that BP should have been following. 3. What aspects of a good risk management process appear does BP not appear to have been using? 4. H
> 1. Which segment of its operations got Enron into difficulties? 2. How were profits made in that segment of operations (i.e. what was the business model)? 3. Did Enron’s directors understand how profits were being made in this segment? Why not? 4. Enron
> 1. Apparently Daimler executives were not concerned enough with personal sanctions to change the company’s bribery practices to comply with German and U.S. statutes. How can these attitudes be changed? 2. What internal controls could have been usefully
> 1. Is Madoff’s sentence too long? 2. Some SEC personnel were derelict in their duty. What should happen to them? 3. Are the reforms undertaken by the SEC (“The Securities and Exchange Commission Post-Madoff Reforms” (last update October 16, 2014), http
> 1. Did Goldman Sachs do anything wrong legally or ethically? Explain your answer. 2. Would it make a difference if other investment bankers were also providing such services? 3. What subsequent impacts could the transactions described above have on Gold
> 1. What are the ethical issues? 2. What should Albert Gable do?
> 1. Did the bank have a moral responsibility to assist in the restructuring of the commercial paper market? 2. How would you explain to the board of directors that you were having a bank exit a market in which your competitors were making a lot of money?
> 1. Who are the stakeholders involved and what are their interests? 2. Which stakeholders and interests are the most important? Why? 3. What was wrong with the quality of the board of directors’ debate? 4. What is the downside if the right decision is not
> What should Ron consider in making his decision?
> 1. What differentiates very aggressive tax shelters from reasonable tax shelters? 2. As a result of the E&Y and KPMG tax fiascos, the large accounting firms have become wary of marketing very aggressive tax shelters. Now, most shelters are being sold by
> 1. Balancing personal self-interest against the interests of others 2. Profitability is too narrowly defined 3. Are there occasions when lowballing is appropriate? 4. What control strategies may be advisable?
