Business and Professional Ethics for Directors, Executives and Accountants

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ISBN: 9780324200669 | 0324200668
Cover: Paperback
Copyright: 9/3/2003

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Business and Professional Ethics for Accountants points students in the right direction! This text focuses on practical development of the skills needed to deal with ethical issues specific to accounting. Interesting, real-world situations provide students with an understanding of appropriate values, ethical pitfalls, applicable codes of conduct, and sound ethical reasons where codes do not apply.

Overview of the Book

Preface

PART I The Ethics Environment

(126)

CHAPTER 1 Ethics Expectations

(53)

Purpose of the Chapter

(1)

The Ethics Environment for Business: The Battle for Credibility, Reputation, and Competitive Advantage

(8)

Environmental Concerns

(1)

Moral Sensitivity

(1)

Bad Judgments and Activist Stakeholders

(2)

Economic and Competitive Pressures

(1)

Financial Scandals: the Expectations Gap and the Credibility Gap

(1)

Governance Failures and Risk Assessment

(1)

Increased Accountability Desired

(1)

Synergy Among Factors and Institutional Reinforcement

(1)

Outcomes

(1)

New Expectations for Business

(3)

New Mandate for Business

(2)

New Governance and Accountability Frameworks

(1)

Reinforced Fiduciary Role for Professional Accountants

(1)

Responses and Developments

(9)

Emerging Governance and Stakeholder Accountability Models

(3)

Management Based on Values, Reputation, and Risks

(3)

Accountability

(1)

Developments in Business Ethics

(2)

Concepts and Terms

(1)

Approaches to Ethical Decision Making Through Stakeholder Impact Analysis

(1)

The Ethics Environment for Professional Accountants

(2)

Role and Conduct

(1)

Governance

(1)

Services Offered

(1)

Questions for Discussion

(1)

Cases

(1)

References

(14)

Martha Stewart's Lost Reputation

(4)

Bhopal-Union Carbide

(2)

The Betaseron® Decision (A)

(2)

Texaco: The Ecuador Issue

(3)

Where Were the Accountants?

(1)

To Resign or Serve?

(1)

Readings

LYNN SHARP PAINS: Managing for Organizational Integrity

(9)

ANDREW SINGER: Whistle-Blower: Patriot or Bounty Hunter?

(6)

L.J. BROOKS: Law Case Summary: Caremark National Inc.

(1)

CHAPTER 2 Governance, Accounting, and Auditing, Post-Enron

(72)

Purpose of the Chapter

(1)

Governance and Accountability Reform

(1)

Overview and Timeline of Events and Developments

(1)

The Enron Debacle: A Discussion Covering the Powers Report Summary, Senate Subcommittee Summary, and Key Subcommittee Submissions

(30)

Background

(2)

What Happened? Who Was to Blame?

(3)

The Powers Report

(2)

The Senate Subcommittee Report

(1)

Failure of the Directors to Oversee or Govern Enron Adequately

(5)

What are Directors Expected to Do?

(2)

How Was Enron's Board Organized, and How Did It Function?

(3)

Enron's Questionable Transactions

(12)

Chewco Transactions

(2)

LJM Partnerships and the Raptors: LJM1

(3)

LJM Partnerships and the Raptors: LJM2

(1)

LJM2 and the Raptors

(6)

Enron Culture, Conflicts of Interest, and Whistle-Blowers

(3)

Arthur Andersen s Role

(1)

Enron's Governance and Control System Was Short-Circuited

(1)

Banks Who Were Willing Accomplices in Enron "Prepays"

(1)

Enron's Tax Avoidance

(1)

The Aftermath

(1)

Downloadable Enron Case Source Document Files

(1)

Arthur Andersen's Troubles: A Review and Analysis

(9)

Changing Personalities and Culture

(3)

Arthur Andersen's Internal Control Flaw

(1)

Arthur Andersen's Apparent Enron Mistakes

(1)

Why Did Arthur Andersen Make These Apparent Mistakes?

(1)

Shredding Enron Audit Documents: Obstruction of Justice

(2)

Lingering Questions

(1)

Emerging Research

(1)

Governance and Accounting Changes up to WorldCom

(7)

WorldCom: The Catalyst

(1)

WorldCom Lights the Fire

(1)

WorldCom's Accounting Manipulations

(3)

WorldCom's Other Revelations

100

(1)

Why Did They Do It?

100

(1)

An Expert's Insights

101

(1)

The Continuing Saga

101

(1)

The Catalyzed Outcome-The Sarbanes-Oxley Act of 2002

102

(5)

Sarbanes-Oxley Act (SOX): Future Governance for Corporations and the Accounting Profession

102

(1)

New SOX Corporate Governance Framework

103

(2)

New SOX Framework for the US. Accounting Profession

105

(1)

New SOX Frameworks for Other Matters

106

(1)

Implementation by the SEC

106

(1)

Impact on Governance, Accountability and Reporting, and Management Practice

107

(1)

Impact on the Accounting Profession and Auditing Practice

107

(1)

Impact on Business Ethics Trends

108

(1)

Questions for Discussion

109

(1)

Cases

109

(1)

Principal References

110

(18)

The Enron Debacle

110

(1)

Arthur Andersen's Troubles

111

(1)

WorldCom: The Catalyst

111

(1)

Sunbeam Corporation and Chainsaw Al

112

(7)

Waste Management, Inc.

119

(8)

PART II Ethical Governance and Accountability

127

(182)

CHAPTER 3 Corporate Ethical Governance and Accountability

128

(75)

Purpose of the Chapter

128

(1)

The Emerging, Governance and Accountability Framework

129

(7)

New Expectations New Framework

129

(1)

Accountability to Shareholders or Stakeholders?

130

(1)

Governance for Broad Stakeholder Accountability

131

(4)

Governance Process Based on Stakeholder Interests

131

(2)

Identifying Organizational Values--The Foundation of Behavior

133

(2)

Guidance Mechanisms-Code of Conduct and Ethical Culture

135

(1)

Threats to Good Governance and Accountability

136

(9)

Misunderstanding Objectives and Fiduciary Duty

136

(1)

Failure to Identify and Manage Ethics Risks

137

(2)

Conflict of Interests

139

(6)

Management to Avoid and Minimize Consequences

141

(2)

Agency Theory, Ethics, and Sears

143

(1)

Chinese Walls/Firewalls

143

(1)

Forensic Experts and Evidence: The 20/60/20 Rule

144

(1)

The GONE Theory: Identifying Potentially Harmful Situations and Likely Perpetrators

144

(1)

Duty Depends Upon a Person's Role

145

(1)

Corporate Governance and Accountability

145

(15)

Developing, Implementing, and Managing an Ethics Culture

145

(5)

Corporate Codes of Conduct

150

(10)

Purpose, Focus, and Orientation

150

(4)

Code Content and Scope

154

(3)

Effective Implementation

157

(3)

Public Accountability Benchmarks

160

(1)

Conclusion

160

(2)

Questions for Discussion

162

(1)

Cases

162

(1)

References

163

(32)

Ford/Firestone Tire Recall

164

(10)

Conflicts of Interest on Wall Street

174

(3)

RT Capital

177

(4)

Bankers Trust: Learning from Derivatives

181

(3)

Barings Bank: Rogue Trader

184

(3)

Philip Services Corp...Into the Dumper

187

(5)

Dow Corning Silicone Breast Implants

192

(2)

Playing God

194

(1)

Readings

E.E. MURPHY. Creating Ethical Corporate Cultures

195

(8)

CHAPTER 4 Professional Accounting in the Public Interest, Post-Enron Purpose of the Chapter

203

(106)

Stakeholder Expectations Accountability and Governance Framework Rededication of the Role of a Professional Accountant

204

(8)

Public Expectations of All Professionals

205

(2)

Public Expectations of a Professional Accountant

207

(1)

Dominance of Ethical Values Rather than Accounting or Audit Techniques

207

(2)

Priority of Duty, Loyalty, and Trust in a Fiduciary

209

(3)

Confidentiality: Strict or Assisted

212

(1)

Implications for Services Offered

212

(4)

Assurance and Other Services

212

(1)

New SEC Independence Rules

213

(2)

Critical Value Added by a Professional Accountant

215

(1)

Standards Expected for Behavior

215

(1)

Judgment and Values

216

(2)

Importance To Value Added

216

(1)

Development of Judgment and Values

216

(2)

Sources of Ethical Guidance

218

(1)

Professional Codes of Conduct

219

(14)

Purpose and Framework

219

(1)

Fundamental Principles and Standards

219

(3)

Rules: General and Specific

222

(1)

Discipline

222

(2)

Interpretations of Rules

224

(1)

Motivation for Changes in Professional Codes

224

(2)

Current Codes of Professional Conduct

226

(4)

International Comparison of Professional Codes

230

(1)

Shortfalls with and in Professional Codes

231

(1)

Issues Not Usually Resolved in Corporate Codes of Conduct

232

(1)

Conflicts of Interest and Global Independence Standards

233

(13)

A Global Perspective from the IFAC Code

234

(4)

Types of Conflicts of Interest

238

(1)

Spheres of Activity Affected

238

(1)

Conflicts of Interest Affecting Services Offered

239

(4)

Conflicts of Interest Involving Improper Use of Influence

243

(1)

Conflicts of Interest Involving Use or Misuse of Information (Confidentiality)

244

(2)

Laws and Jurisprudence

246

(2)

When Codes and Laws Don't Help

248

(1)

Broadening Role for Professional Accountants

248

(1)

Conclusion

249

(1)

Questions for Discussion

250

(1)

Cases

251

(2)

References

253

(21)

Allan Eagleson: The Eagle Has Landed

254

(2)

The Lang Michener Affair

256

(3)

Dilemma of an Accountant

259

(3)

Societal Concerns

262

(1)

Management Choice

263

(1)

Maple Leaf Gardens Shenanigans

263

(2)

To Qualify or Not?

265

(3)

Economic Realities or GAAP

268

(1)

Multidisciplinary Practice-Ethical Challenges

268

(1)

Team Player Problems

269

(1)

Locker Room Talk

270

(1)

Minimal Disclosure

270

(1)

Opinion Shopping

271

(1)

Lowballing a Fee Quotation

272

(1)

Tax Return Complications

273

(1)

Risk Management of Taxes Payable-Is it Ethical?

274

(1)

Readings

THE AICPA AT 100: Public Trust and Professional Pride

274

(7)

APPENDIX A: international Comparison of Main Aspects of Professional Codes of Conduct

281

(13)

G.D. ANDERSON: The Anderson Committee: Restructuring Professional Standards

294

(1)

THE LIABILITY CRISIS IN THE UNITED STATES: Impact on the Accounting Profession, a Statement of Position

295

(4)

TOM LYNCH: Ethics in Taxation Practice

299

(3)

APPENDIX B: Trends in the Legal Liability of Accountants and Auditors and Legal Defenses Available

302

(7)

PART III Significant Issues Facing Business and the Accounting Profession

309

CHAPTER 5 Approaches to Ethical Decision Making

310

(42)

Purpose of the Chapter

310

(1)

Introduction

310

(1)

Stakeholder Impact Analysis

310

(3)

Overview

310

(2)

Fundamental Interests of Stakeholders

312

(1)

Measurement of Quantifiable Impacts:

313

(4)

Profit

313

(1)

Items not included in Profit:

313

(1)

Measurable Directly

Not Measurable Directly

Bringing the Future to the Present

314

(1)

Dealing with Uncertain Outcomes

314

(1)

Identifying Stakeholders and Ranking Their Interests

315

(2)

Summary

317

(1)

Assessment of Non-quantifiable Impacts:

317

(1)

Fairness among Stakeholders

317

(1)

Rights of Stakeholders

317

(1)

Comprehensive Decision Making Approaches

318

(4)

5-question Approach

318

(1)

Moral Standards Approach

319

(1)

Pastin's Approach

320

(2)

Extending and Blending the Approaches

322

(1)

Commons Problems

322

(1)

Developing a More Ethical Action

322

(1)

Common Ethical Decision Making Pitfalls

323

(1)

Summary of Steps for an Ethical Decision

324

(1)

Conclusion

324

(1)

Illustrative Applications of Stakeholder Impact Analysis

325

(1)

Bribery or Opportunity in China Case

327

(3)

Proposed Audit Adjustment Case

330

(5)

When Does an "Aggressive Accounting" Choice Become Fraudulent?

335

Questions for Discussion

325

(1)

Cases

326

(1)

References

326

(16)

Smokers are Good for the Economy-Really

336

(1)

Ford Pinto

337

(2)

Kardell Paper Co.

339

(3)

Readings

L.J. BROOKS: Cost-Benefit Analysis

342

(6)

GRAHAM TUCKER: Ethical Analysis for Environmental Problem Solving

348

(4)

CHAPTER 6 Managing Ethics Risks and Opportunities

352

Purpose of the Chapter

352

(1)

Ethics Risk and Opportunity Management

352

(6)

Limited Perspectives

352

(3)

Over-reliance on External Auditors - New Fraud Standards

355

(1)

Ethics Risks

356

(1)

Ethics Risk and Opportunity Identification and Assessment

356

(2)

Reporting and Action

358

(1)

Ethics Strategies and Tactics for Effective Stakeholder Relations

358

(1)

Workplace Ethics - A Significant Ethical Problem Area

359

(5)

Employee Rights

360

(1)

Privacy and Dignity

360

(2)

Fair Treatment

362

(1)

Healthy and Safe Work Environment

362

(1)

Ability to Exercise One's Conscience

363

(1)

Trust and Its Importance

363

(1)

Conclusion

364

(1)

International Operations - A Significant Ethical Problem Area

364

(3)

Impacts on Local Economies and Their Cultures

364

(1)

Conflicts Between Domestic and Foreign Cultures

364

(2)

Bribery, Facilitating Payments

366

(1)

Apparent Cultural Conflicts with Banning Gifts, Bribes, or Facilitating Payments

366

(1)

Moral Imagination

367

(1)

Guidelines for Ethical Practice

367

(1)

Conclusion

367

(1)

Social Accountability and Audit

367

(4)

Organizational Objectives for CSR

368

(1)

Measurement of Corporate Ethical Performance

368

(1)

Reporting of CSR

369

(1)

Audit or Verification of CSR Reports

370

(1)

Conclusion

371

(1)

Crisis Management - A Significant Ethical Problem Area

371

(3)

Conclusion

374

(1)

Questions for Discussion

375

(1)

Cases

375

(1)

References

376

(15)

Cases on Workplace Ethics

377

(5)

Texaco's Jelly Beans

377

(4)

Downsize or Bonus Allocation Decisions

381

(1)

Cases on International Operations

382

(1)

Jail and a German Sub-contractor

382

(1)

AIDS Medication in South Africa

383

(1)

Cases on Crisis Management

383

(8)

The Exxon Valdez

383

(4)

The Brent Spar Decommissioning Disaster

387

(2)

Crises at Wind River Energy Inc.

389

Readings

ROTH, NL. ET AL: Can't We All Just Get Along: Cultural Variables in Codes of Ethics

391

(5)

DONALDSON, T.: Values in Tension: Ethics Away from Home

396

(8)

MITROFF, I.I. ET AL: Effective Crisis Management

404

(9)

Appendices:

A. Corporate Ethical Performance Indicators Used in the Corporate Ethics Monitor

413

(3)

B. Ethics Audit Program Annual Audit Questions

416

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Business and Professional Ethics for Directors, Executives and Accountants

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Table of Contents

Supplemental Materials