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Loyalty to the client was clearly placed above loyalty to the overall public good and the standards of the profession. "Enron paid Andersen $25 million for its audit…and $27 million for 'consulting' and other services" which meant that Anderson had a substantial financial stake in retaining Enron as a client (Kadlec 2002). The Enron case illustrates the difficulty of self-policing within the industry. Today, providing additional services besides the audit itself is considered an ethical 'red flag' for an accounting firm (Verschoor 2012).
In retrospect, it is difficult to see how the Enron case could have had a happy ending, given that its business model was based upon fraud and deceiving investors. The best case scenario would have been for Anderson not to take the case at all. That is why effective pre-screening of clients is so important. "Practitioners must assess the ethical environment found within potential and existing clients…… [Read More]
Ethics of Accounting
There have been breaches in the ethics of accounting in recent times. With that in mind, evaluate whether or not the current trend in the regulation of business establishments is favorable to ethical behavior. Supply supportive evidence to your answers (Jeter, 2003).
The generally accepted principles of accounting and the standards of auditing in contemporary practice stipulate that the financial statements of any establishment should contain the following for the period being covered by the report: the company's financial standing (balance sheet), earnings (income), cash flows, investments by the shareholders and the distributions that have been made to them. The United States system of accounting has been criticized as rules-driven especially as the standards are determined by FASB and those who were there before them. On the other hand, the international practice in accounting is in favor of a principle-based standard of accounting, and this…… [Read More]
This could further lead to resentment and eventually to resignations. To eliminate this problem, John mith could firstly discuss the issue with the professionals involved and request ideas for the firm's new title. He could also use the previous title as a guideline, as this would provide both a starting point for the new era, as well as the idea that the previous owner and the staff that remains are honored for their contributions to date. According to Rule 505-3 of the AICPA Code of Ethics, it appears that the exact title of the firm is not as important as maintaining practices that are within the public interest. It is both in the firm's and the public interest to remain as close as possible to the previous name, while at the same time indicating that it is now under new management.
NO. 7 the CPA can avoid possible disciplinary action…… [Read More]
This article does shed light on how the Duncan Donuts organization should look at to improve the ethical responsibility of accounting practices. Making accounting practices available to the public and shareholders can then ensure a more ethical reputation for the organization itself. Additionally, implementing peer established reviews will also help strengthen the ethical image of the Duncan Donuts brand and its affiliates.
Accounting ethics is essential in financial decision making. It is clear that "Accountants have a number of ethical responsibilities, to themselves, their families, and their profession as well as to the clients and company for which they work," (Duska & Duska 2003:30). Thus, they must act in an ethical manner when making financial decisions to protect the greater good of the public, rather than empowering the greed of the elite. For ethics to truly work in an accounting context, it must bank on ethical theory stemming back to…… [Read More]
The harmless or not-so-harmless lies of Bobby Glick
From a strictly utilitarian perspective, it might be that the scenario outlined in the Glick case does not seem so morally questionable. Glick, as a new and untested employee right out of college, was naturally apprehensive about how his competency would be viewed. He studied, successfully passed his CPA exam, and acquitted himself admirably 'on the job.' No one was harmed by his concealment: indeed, his firm benefited from having a highly competent employee concerned about his reputation working for them.
However, viewing professional ethics from a purely utilitarian perspective is extremely problematic. Professional ethics by its nature assumes certain 'standards' which professionals must uphold, even if the consequences are not bad -- in fact, even if the consequences of the unethical action are 'good' (Driver 2009). For example, someone with no CPA license could lie, get employment with a…… [Read More]
A Sad Tale: The Demise of Arthur Andersen
Arthur Anderson was once a major accounting firm. The failure of the firm in 2002 may be attributed to bad ethical decisions which ultimately came to a head with the Enron scandal,. This scandal resulted not only in the loss of many clients prior to the SEC talking action against the firm, but the firm facing and being convicted of a felony. This was the end of the firm; even if the firm was able to survive, it is unlikely any companies would want to be associated with an accounting firm that demonstrated such significant failures.
When examining the failures at Arthur Andersen it may be argued the problems were well established and embedded in the culture, a failure which can ultimately be attributed to the organization's leadership. A major ethical issue for any auditing company is the requirement for…… [Read More]
The dilemma that Dan faces juxtaposes his loyalty to what are portrayed as his company's interests and to what are his own interests. Dan knows that the company is overstating the value of the property and that Oliver has acted against the long-run best interests of the company, but in favor of the short-run best interests of the company. That Oliver has already issued the negative opinion about Dan's performance has made the issue a personal one. Resolving the dilemma is complicated in that Dan has no direct evidence of his conversations with Oliver; he does have, however, his report and the version that Oliver submitted. Dan is unsure about the degree to which his interests and the interests of the company are aligned -- if Oliver is right then Dan has a dilemma but if Oliver is wrong then Dan does not have a dilemma.…… [Read More]
The purpose of requiring the application of professional standards rather than personal ethical values in professional accounting and auditing is precisely, to ensure that all entities are regulated and evaluated impartially and without regard to any subjective beliefs or philosophical perspectives of the individual rendering professional accounting services or conducting audits. Whereas the AICPA Code of esponsibility actually incorporates the word objectivity (in addition to the word independence), the GAS GAGAS uses only the latter, but, in fact, either denotes the same concept, that objectivity is an essential professional obligation of accounting and auditing
The mechanical or computational aspects of accounting are, by nature, purely objective and not inherently susceptible to subjective interpretation or application, in general principle. However, the actual practice of accounting and auditing leaves considerable room for subjective belief, such as where the professional must make an independent determination of what degree of truth may be presumed…… [Read More]
The concepts in this article relate and apply to my former organization because the organization did strive to maintain the highest ethical standards, and did treat their clients professionally and ethically. It was a good model for a young accountant to follow, and I do not believe they could improve on the organization's ethics, unless they held their accountants to even higher standards of excellence. Ethics is primary in accounting and financial decision-making, because it is not only the reputation of the firm that comes into question. When firms forget who they are representing and use questionable ethical practices, they are not only harming their reputations. They are harming the reputation and integrity of their clients, and this is inexcusable. It will only harm the firm in the end, because their clients will lose faith in them, and they will turn to other, more ethically sound organizations.
Passed in 2002,…… [Read More]
They will also examine the importane of ethis lasses in ollege. They will pave the way for future researh into ations that an be taken to address the problems that urrently exist within the aounting profession. They will play an important role the improvement of ollege urriulums so that they an be better prepared to meet ethial and moral hallenges of their hosen profession. This study represents the first step to understanding the onnetion between ollege urriulum and the ability to maintain ethial standards in the aounting profession.
CHAPTER 2 - LITERATURE REVIEW
In order to further establish a solid theoretial basis for the researh at hand, we will examine the body of literature that exists on the topi at hand. The literature review will examine literature from many different, but losely related areas in order to examine many sides of the issues. For the most part, researh will be…… [Read More]
"The Commission" refers to the Securities Exchange Commission, which is the primary governing body for financial markets.
"The Board" is the Public Companies Accounting Oversight Board. The SEC oversees the Board. The SEC therefore approves the rules that the Board writes and implements, the SEC appoints the people who run the PCAOB and the PCAOB is accountable to the SEC.
The PCAOB is a board, of people, appointed by the SEC.
The PCAOB is charged with four main duties in relation to the capital markets. These are to "register the public accounting firms that prepare audit forms for issuers," to "establish or adopt…standards relating to the preparation of audit reports," to conduct inspections of registered public accounting firms" and to "conduct investigations and disciplinary proceedings" against public accounting firms. In essence, the PCAOB provides oversight over the accounting and in particular the auditing profession.
e. As noted above,…… [Read More]
Education on ethics must be wider compared to "moral development" in that it must tackle the broader consideration of a wide-ranging vocation, and constricted in that it must tackle problems particularly to the accounting vocation. (esearch on Accounting Ethics)
Definite duties of the accounting profession are put forth in the different code of ethics circulated by important establishments like the AICPA. The AICPA's foremost rule of professional conduct declares: In discharging their duties as professionals, associates must implement responsive professional and moral views in all their works. (Business and Accounting Ethics) the failure of auditor sovereignty infringing ule 101 of the AICPA Code of Professional Conduct was the topic of a research project using 2,000 arbitrarily chosen AICPA members in public accounting profession as a staff auditor, senior, or manager. These executives were offered with 15 roles that are an infringement of ule 101 and were directed to give their…… [Read More]
.....ethical for an employer to use social media information as a factor when considering whether to hire an employee? What about monitoring social networking activities of employees while on the job? Use ethical reasoning in answering these questions.
The wide-ranging use of social media in the workplace gives rise to serious moral and ethical concerns. Kantian ethics lays emphasis on the form of an action in ascertaining its morality. Kant insists on the Categorical Imperative. Kant implies that this ethical principle is the superlative and outright and proper test to morality, whereas imperative implies that from time to time one must command oneself to be moral and undertake the right thing, even and particularly when one's self-centeredness may be infringed by acting ethically (Mintz, 2015). As an overall moral rule, for an employer to impose into an employee's private life on social media devoid of consent or in a clandestine…… [Read More]
Ethics and Independence in the Accounting Profession
There are according to the text, two primary reasons that people act unethically. A person will act unethically if there standards differ substantially from those of society "as a whole" or if the person chooses consciously to act in a selfish manner.
There is no profession more profoundly impacted by the effects of ethical standards that the accounting profession. The effects of ethical and unethical behavior on independence and daily functioning are implicit in everything an individual in the accounting profession does.
ecently there have been many public 'scandals' within the accounting profession, re-establishing the need for attention to ethical standards and training within the field of accounting. Public cases such as Enron have resulted in a diminished sense of trust among the public with regard to the accounting profession.
In times of old individuals pursuing the accounting profession as a career might…… [Read More]
Accounting has been nothing if not a dynamic, global discipline over the last two decades. The role of the accountant has changed dramatically during that time and will continue to do so -- as will the nature of the challenges that the accounting profession faces"
Over the past twenty years, the modern business community has been faced with the challenges of globalization, the new predominance of technology in business affairs, and the creation of a service-based 'knowledge economy' versus a manufacturing-based one. The profession of accounting has had to adapt to this new environment. "Business internationalization and globalization has facilitated the transfer of capital and information across national borders, with economic power residing in holders of particular knowledge sets. Business and management location is becoming increasingly irrelevant and management and accounting work is becoming multidisciplinary" (Parker 2002).
Globalization has lead to more uniform regulations in accounting. Until recently, U.S. accountants…… [Read More]
Ethical Issues Affecting Accountants
The need for ethical standards within the corporate accounting field is urgent, and this paper delves into ethical issues. Given the fact that rules can be bent and manipulated, this paper also points to potential ways in which ethics can become as important as rules.
hile there has apparently been a "shift in the ethical behavior of management" -- which is related to the corruption and convictions of accountant-related individuals with Enron and Author Anderson -- the literature indicates that there are still ethical issues to be addressed within the industry (Bolt-Lee, et al., 2010, p. 38). Research presented in the peer-reviewed Journal of Accountancy shows that subsequent to the Enron and other scandals, there is a movement toward a "…more heightened state of ethical awareness" that is apparently due to "…the greater likelihood of punitive consequences" (Bolt-Lee, 38).
In the Bolt-Lee article, the authors allude…… [Read More]
Ethics and egulatory Issues
elated party transactions reported on by Arthur Andersen & Co.
Flaw in the accounting firm's logic
Checklist for special projects performed by external auditors
Proposed rules or laws to prevent similar occurrences
Enron was one of the Wall Street's favorite blue chip stocks before an accounting scandal of the firm surfaced in 2000. The revelation that company has been misreporting its profits and losses during 1990s crashed the company's stock. The earnings and debt statements were not representative of the actual accounting transactions. Thus, a serious issue of bankruptcy ensued after this revelation. There were several ethical aspects of this issue as well. Following the details of accounting malpractices that the company through its accounting firm Arthur Andersen (Benston, 2003).
elated party transactions reported on by Arthur Andersen & Co.
Chewco Investments, L.P. ("Chewco"): Chewco was also a related party of Enron and it was…… [Read More]
Cable provider Adelphia was one of the major accounting scandals of the early 2000s that led to the creation of the Sarbanes-Oxley Act. A key provision of the Act was to create a stronger ethical climate in the auditing profession, a consequence of the apparent role that auditors played in some of the scandals. SOX mandated that auditors cannot audit the same companies for which they provide consulting services, as this link was perceived to result in audit teams being pressured to perform lax audits in order to secure more consulting business from the clients. There were other provisions in SOX that increased the regulatory burden on the auditing profession in response to lax auditing practices in scandals like Adelphia (McConnell & Banks, 2003). This paper will address the Adelphia scandal as it relates to the auditors, and the deontological ethics of the situation.
Adelphia was once a…… [Read More]
The controller's objectives in this situation are to accurately reflect the state of the business; the president's request runs directly counter to this objective.
c) The controller should not be concerned with Ruiz Co.'s growth rate. The duty of the controller is to record as accurately as possible the company's financial condition. Accuracy is the most important consideration for the controller. The firm's growth rate is the responsibility of other managers.
The controller's duty of care is owed to the shareholders, regulators and other parties who are affected by the accuracy level of the financial statements. The duty, however, is not to provide the shareholders with a level of growth or to manage their expectations. The duty of the controller is to accurately reflect the firm's financial state.
As such, the controller in this situation should refuse the president's request. The request is made in bad faith, and does not…… [Read More]
Ethics and the Internet
As the computer has evolved in the modern world, so the potential for communication has also increased. The computer, and the development of the Internet, has meant that human society has become more connected than ever before and the barriers between nations and people around the globe have been broken down. While this is a positive development in many ways, the growth of the Internet has also meant that there has been an increase in a wide range of new problems. One of these is the issue of ethics. "Just as ethics evolve as human societies grow and change, so similar ethical questions are raised during the evolution of this global electronic community." (Ethics on the Web)
The more that technology for communication and open publication of information advances, the more questions are raised about issues relating to moral codes of behavior and problems about what…… [Read More]
The CPA firm is under pressure to adapt to an ever-changing marketplace. The global environment affects not only large corporations, but smaller entities as well. Additionally, the customer(s) are constantly being wooed by the competition, lower prices, and online convenience that was not available only a few short years ago. In order to maintain and grow the firm, action must be taken to keep clientele from leaving, while enticing new clients to move their business to the firm. It seems as if globalization has brought added pressure to small firms, yet opportunities still abound. This is not the 'normal' business environment that one might expect. As one recent study found however; "the management of abnormal situations becomes more important every day" (Aguilar, Prato, Bravo, ivas, 2009, p. 406).
There are certain aspects of accounting that customers expect from their accountant and the firm that he/she works for. One of…… [Read More]
Ethics and Accounting - Financial Decision-Making
Ethics in Accounting and Financial Decision Making
The article Ethical guidance and constraints under the Sarbanes-Oxley Act of 2002 by .M. Orin (2008), espouses the belief that the Sarbanes-Oxley Act did not go far enough in its desire to stop unethical financial practices by businesses. The article addresses what the Act actually does, which is to help companies practice more due diligence and lessen the chances of getting involved in unethical financial practices. The Sarbanes-Oxley Act involves important legal issues. The due diligence is one of those issues, but another is the need for accountants and lawyers to report the corporations they work with for wrongdoing if they see or suspect a serious financial issue (Coffee, 2002). This has been a concern for some because it technically compromises the attorney-client privilege. This was necessary, though, in the face of all of the corporate scandals…… [Read More]
Ethics and elated Issues
Brief eview of the Case from the Auditors Point-of-View
Beaudean who has just become a senior partner at Cardinal and Coyote Audit firm has been tasked with doing a background check on a new client Jost Furniture International by Yancy Corliss a new partner at the firm where he works. Jost Furniture International is upbeat that Cardinal and Coyote stand to get the audit as long as they submit a reasonable bid. Background checks were to be conducted to ascertain whether Jost had potential risk as a future client to Cardinal and Coyote. Beaudean has other two staff members Vinnie Gabelli and Jackie Oloff with whom he will carry out Jost Furniture International Assessment. It is very risky to take on Jost Furniture International as a client because of the concerns that the predecessor audit firms had raised. An audit firm that had helped Jost Furniture…… [Read More]
With respect to the ethics audit, the company shouldn't change anything other than to institute it. Where we left off, the ethics audit was external, and this is critical, because many of the current ethical issues arise because of the relationships within the company and the way that the different interests within the company are represented in the current ethics program. So the ethics audit has to be external.
The other issue with the ethics audit is that too many people within the company did not seem to want the external audit to take place. This is a major problem, so the delays in the timing of the external audit should be eliminated. The external audit needs to take place as soon as possible, which is the major change that should occur. Let the external auditors determine how and what to investigate -- their ability to ask questions that…… [Read More]
(5) Auditors and CPAs should consider several ways that the Sarbanes-Oxley Act and SEC implementation rules as a whole impact accountants and work closely with regulators to address these effects. (6) Public accounting firms need to reconsider external auditors' participation with their client's internal audit function and control structure. This reporting on the internal controls can be very useful and add value to the integrity and quality of the financial reporting process. However, management accepts full responsibility for the design and maintenance of the adequate and effective internal control system. (7) Auditors should advise their clients and make recommendations for the appropriate disclosures of financial information. A more timely, relevant, objective, and transparent financial reporting process should improve the quality, integrity, and reliability. (8) it is necessary to use more effective and objective audit procedures and related standards to improve audit efficiency. The role of independent auditors on financial statements…… [Read More]
Training is part of this process, so that people explicitly understand the ethical culture of the company. Ethical cultures tend to be self-perpetuating because the people within the organization will hold themselves and their co-workers accountable. When you look at a company like Enron, large parts of that company were devoid of ethical standards, so it was much easier for the frauds to occur. Enron also highlights the need for ethical leadership in order to develop a highly-ethical culture. The organization looks to its leaders for ethical guidance and will likely adopt as part of the culture the ethical standards of the leaders. This is the point of the provisions in SOX holding the CEO and CFO accountable for accounting fraud and raises a lot of red flags about companies that would go private to dodge this requirement.
Lastly, there needs to be a compliance mechanism as well. Culture, training,…… [Read More]
Priority of values should be identified so as to aid the organization avoid breaking laws by following the stipulated requirements of operation.
The top three of four values should be reviewed to help the organization determine which values currently help it fulfill its mandate. For example, in the accounting department, the organization should identify accuracy and confidentiality as the key values to the success of the department. Values needed to identify current issues should be brought to fore. This should be done by selecting a few people to interview the members of the organization in identifying key areas that require attention in the organization. Out of the issues identified, determine which ones are ethical and device ways in which the organization can solve them.
It should be noted that not all remedies can be obtained for any ethical dilemma that might arise. Emphasis should be made on dilemmas that don't…… [Read More]
Therefore, the best way to help employees act ethically is to view the workplace and daily operations as a training ground.
In your estimation why is there a growing need for organizational ethics programs? What are the factors contributing to ethical problems in the global corporate world? What are possible solutions?
The need for organizational ethics program is growing for several reasons. First, organizational ethics have become crucial for companies to avoid legal and financial distress. Second, ethics help businesses run smoothly and well, attracting the best caliber of employee. Ethics programs are important especially in large organizations with a diverse staff. Global and multinational companies will be working with people from around the world, who operate in unique ethical environments. Ethics programs help multinational companies create standards for employees that will help avoid conundrums and miscommunication. Ethics programs bring all employees together on the same page and therefore become…… [Read More]
Consider the three purposes of morality treated in Chapter 1. Which of these would it be easier for utilitarianism to fulfill and which could well be more difficult for that system to fully meet?
Of the three purposes of morality treated in Chapter One, perhaps the easiest purpose for the ethical system of utilitarianism, as developed by the Englishman Jeremy Bentham, to meet would be to create a functional system of social ethics, or the ethical schema that holds a society together by its ethical 'glue.' Utilitarianism suggests that society, when pressed on many sides by the competition of different ethical claims, or even simply by different but equally valid claims for personal happiness, should choose the truth claim that allows for the greatest good for the greatest number of individuals within that particular society. For instance, the happiness of the many in my neighborhood to sleep late at…… [Read More]
Ethics in Decision-Making
Clegg, Stewart Martin Kornberger & Carl Rhodes. (2007). Organizational ethics, decision making, undecidability, ethical decision-making. he Sociological Review, 55:2.
According to Stewart Clegg, Martin Kornberger and Carl Rhodes' article, "Organizational ethics, decision making, undecidability, ethical decision-making" from the Sociological Review, ethical decision-making is not optimized with either an outcome-driven consequentialist approach nor a rule-bound deontological approach. "We suggest that rules for ethical decision making, rather than ensuring ethical outcomes, can work to insulate organizations from moral responsibility" (Clegg, Kornberger, Rhodes 2007: 393). Because of recent ethical scandals, there has been a drive to seek a heavily prescriptive and rule-bound approach to ethics, but the authors believe that "ethics is best considered in terms of the way that organizations are sites for ethical difficulties, dilemmas and deliberations (Clegg, Kornberger, Rhodes 2007: 394). heorizing ambivalence in ethical decision-making is the ambitious goal of the article. he article uses the…… [Read More]
.." And "The probability that my peers would undertake the same action is...." It is the difference in the responses given to these two questions, as captured on a seven point Likert scale, that is the measure of the social desirability response bias. (Tyson: 1992; Cohen et al.: 1995, 1996, 2001).
Many studies have been done on the role and correlation between moral development and ethical decision making as it applies to various professionals. A majority of these research studies have found that such things as gender, education, age and taking ethics courses in school have some affect on one's moral reasoning developments (Armstrong: 1993; Elm, Kennedy & Lawton: 2001; Jones & Hiltebeitel: 1995; Ponemon & Glazer: 1990; Shaub: 1994). However, many studies have also found exactly the opposite, in that no significant relationship exists. (Ma & Chan: 1987; Rogers & Smith: 2001; Thorne, Massey & Magnan: 2003).
Studies have…… [Read More]
Then again, even the sites that allow for such commentary often don't receive any. PwC IFS hasn't received any comments in the past month on any of its articles, for instance, though it does provide accurate and fairly up-to-date information. Part of the reason for this could be the fact that this blog, like many others in the accounting world, are run by large firms -- Price Waterhouse Coopers, in this case. Though this does not mean there is necessarily a bias at work in the blog, and indeed certain differing opinions are allowed, the fact that the information on such blogs is so directly under the control of a single for-profit entity means it must be regarded as at least slightly suspect. As these resources are also free, however, there is no harm in regularly browsing them.
Accounting and Business esearch. Accessed via EBSCO 8 October 2009.
Accounting…… [Read More]
Ethics in a Long-Term Healthcare Business
Ethics in the health care industry spans a wide spectrum of activities and most of the obligations are cast by law on the professionals and the second by the common practice and morals of the profession. Both are important to the progress of the institution and also the health care industry. Compliance of statutes is of primary importance.
There are many rules and statutes that must be complied with by all organizations and one such recent legislation is the hospital information access system. The HIPAA rules apply to all personnel in the system and extend to laboratory technicians, and lawyers and insurers. The culpability comes if the information was disclosed to a third party who did not have an association with the entity -- the clinic and was permitted to access the information. In such cases where the physician discloses information to another…… [Read More]
Ethics and Corporate esponsibility
The following will be an assessment of firm referred to as PharmaCAE. The assessment will concentrate on the idea of companies that have encountered negative outcomes as a result of company business activities. CECLA (Comprehensive Environmental esponse, Compensation, and Liability Act) will be brought up in this assessment in addition to other environmental safeguarding proposals and human social theories in regards to environmental and work ethics.
A new initiative, We CAE about YOU world, was recently initiated by PharmaCAE, declaring its dedication to the environment via modifications in packaging, recycling, and other green programs. This was possible in spite of the fact that the firm's lobbying attempts and PAC have effectively conquered environmental policies, such as the broadening of the Superfund tax that was established by Comprehensive Environmental esponse, Compensation, and Liability Act (CECLA). Situated in New Jersey, PharmaCAE sustains a huge production facility in the…… [Read More]
The employee is faced with ethical requirements throughout their workday that must be met with knowledge and a trained attitude. Workplace ethics is one of the most crucial elements whether the person involved in an ethical dilemma is a high-level manager or an entry-level employee. An ethical stance is important because it is what guides the interactions that the employees will have with each other, their management, and the customers that patronize their products. It is also important that the business leaders follow an internal and external ethical stance so that the culture generated within the company is one that promotes positive ethical practices. This paper begins by talking about the way that the business leaders view the external world of ethics through accounting practices and how they deal with other companies. The discussion then moves inside the company and how the management treats its employees. Employee to employee…… [Read More]
Ethics, Gross National Products
Gross National Product
Ethics is a branch of Philosophy and deals with the basics questions about right and wrong, virtue and vice, as well as good or bad nature of things human beings do in their daily lives. Thus, ethics is essentially related to the moral aspect of things. A thing, act, or idea of practice might be legally correct but may not be morally sound in given conditions. For instance, the pursuit of profit by firms is legally correct but ignorance to the well being of society in which that firm operates is morally incorrect. Essentials of ethics: The essential elements of ethics are related to the character of actions being taken by the human beings. The topic essentially deals with the behavior and its outcomes with respect to the impact created on fellow human beings and society as a collective…… [Read More]
Ethics primarily acts as a check to ensure that the corporate strategy is enacted effectively. arely do firms take ethics into account as a key element of strategy, though it does happen once in a while. Generally, the role that ethics plays is tangential to strategy aside from its role as a check. obin and eidenbach (1988) elaborate further on this idea, noting that "without the integration of ethics at the very beginning of the planning process… the organizational culture may not provide the checks and balances needed…" Their argument is that while corporations tend to put the profit motive forward first, a lack of ethics can undermine the objective of maximizing shareholder wealth. Having a strong program of ethics built into the organizational culture reduces the risk of major ethical lapse.
A couple of recent issues highlight the importance of building an ethical culture to maximizing shareholder wealth. Enron…… [Read More]
Corporate Governance & Business Ethics
It is quite interesting to note that, academic research in business ethics was a totally distinct discipline from research in corporate governance, and the application of the word 'ethics' was uncommon in available research on corporate governance. The chief responsibility of corporate governance was understood to be safeguarding the benefits of the shareholders. Because of the severance between ownership and management, and the incapability of the independent owners to supervise the performances of those managers, a possibility was available for vital strategic decisions to be taken which would advantageous for the managers to a more larger extent compared to the owners. For example, takeovers not related to the organization's core competence outcome in a bigger corporation, however, it does not result in a more profitable company all the time. Certainly, research has proved that extremely increased extent of isolated diversification normally resulted in lower…… [Read More]
ETHICS plays an important role in many areas of our business world. Take direct selling, for instance. How can you tell the difference between a legitimate business and a disguised pyramid scheme? To answer this question, we need to back up and look at what "ethics" are all about and, why they are important. Then we will look at the legitimacy of the two direct selling methods.
What are ethics? Here is the most recent textbook definition from a college MA (Masters in usiness Administration) updated required reading selection, "Ethics are the moral principles that govern the actions and decision of an individual or group," Marketing 7th Edition (Kerin, 2003, 100). In other words, to choose a course of action in moral situations, we use ethics, our cornerstones or guidelines to follow.
Why are ethics important in the business arena? ecause every person is a part of the whole and…… [Read More]
Accounting and Ethics
The stakeholder model should be implemented in combination with Friedman's shareholder model
In his article, "The Social esponsibility of Business is to Increase its Profits" published in 1970's reputed "The New York Times" Magazine, Friedman debates in favor of precisely what the article's title states. He alleged that corporate social responsibility (CS) was a diversion from the economic rudiments of business that helps in capitalization of profits and yields to shareholders. In his article, when he raised the description of advocates of CS he stated, "The businessmen believe that they are defending free enterprise when they declaim that business is not concerned 'merely' with profit but also with promoting desirable 'social' ends; that business has a 'social conscience' and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers (Kristin, 2009; pg 7)."…… [Read More]
Core-Tex is facing a number of problems that could result in negative publicity. At present, the company is facing multiple challenges but has escaped major headlines. Thus, its stock price has not been hit too hard as the result of the accounting accusations. For the CEO, there are a few key things that need to be done. The first move, the muzzling of the C-suite, is essential. From a public relations perspective, the company needs to speak with a unified voice. From a legal perspective, there may be limits to how much the company can say anyway.
The first step, then, is information gathering. The CEO in particular is liable under the Sarbanes-Oxley Act for anything accounting misstatements (Sarbanes-Oxley, 2014). The CEO must take personal responsibility for verifying the accounting allegations. This is necessary because there seems little doubt that the SEC will send investigators over the company, given…… [Read More]
However, there were too many issues with the company and with one of Andersen's lawyers -- Nancy Temple -- to say that the company was not aware of what was taking place. Accountants are trained to handle facts and figures, and they know when something is incorrect.
In the Arthur Andersen/Enron case it was believed that Temple and others knew that the figures were wrong but wanted to show the profits for the company so that the stock prices would continue to grow (Thomas, 2002). What was making investors rich was slowly killing a large accounting firm and a company that was previously good to work for -- a company on which many people depended. Pensions and other perks of working for Enron vanished seemingly overnight, making it very difficult for many of the employees (a large number of them older) to be hired anywhere else. These were people who…… [Read More]
(Ferrel, Fraedrich, & Farrel, 2009)
How will the implementation of the Sarbanes-Oxley Act of 2002 prevent future dilemmas in Tyco?
Sarbanes-Oxley increases: the penalties for such actions, limits the role that the board of directors will have with managers, it creates an accounting oversight board and it requires the CEO / CFO to certify under oath that all financial information is correct. This will severe as a deterrent and help to provide mechanisms, to the prevent ways that the fraud was able to be perpetuated at Tyco. (Ferrel, Fraedrich, & Farrel, 2009)
Can the SEC trust Tyco's new board?
Yes. This is because those members who were involved with Kozlowski were purged and none of the current members have committed any acts of wrong doing. These facts along with the Sarbanes-Oxley in place, means, that there is no reason for the SEC not to trust the board. (Ferrel, Fraedrich, &…… [Read More]
Ethics and Firm's Goals
Agency Problems: The shareholders of a corporation are its owners, and these oweners control management by electing a board (with most smaller shareholders voting "by proxy" or not really voting at all) that oversees the executive positions in the corporation, who in turn oversee the operations and management of the firm. An agency relationship exists to separate the personal liabilities of the shareholders/owners and the actions/resources of the corporation, which can create significant problems of accountability -- namely, the lack of people that can be held accountable for the corporation.
Goal of the Firm: It is true that managers of a corporation should not focus solely on stock price, as current prices reflect only short-term assessments and do not adequately take into account long-term goals and potentials, but stock price is also an important consideration. The current stock price of a firm affects its long-term capabilities…… [Read More]
Accounting Theories and usiness Decisions: The usiness World
Application of theories
Other cases of stakeholder theory application
Accounting theories and business decisions: The business world
There are many theories that explain the complexity of relationship between different groups of people directly and indirectly related to an organization. Two of the most comprehensive and most discussed theories are stakeholder theory and agency theory. oth the theories describe what the main purpose of each group is and how these groups ought to manage these relationships. In agency theory, it identified that agency relationship takes place when one or more than one principal, acting as owners, delegate their power to make decisions, to a person acting as their agent or steward. Thus, agency theory principally revolves around the relationship of principal and agent. While the principal delegates the authority or decision making power to agent (managers) to act in the best…… [Read More]
Accounting Information for Decision Making
Corporate Confirming on Water isk (Feb 2010) indicates that the Global Confirming Initiative (GI) G3 Guidelines' five water-related indications (total withdrawal volume by source, ponds considerably impacted by distributions, percentage and total amount of water recycled and used again, total water discharge by quality and destination, and identification water physiques and related habitats impacted by discharges) make the perfect beginning point for assessing and confirming water risks. Within this section, we'll briefly discuss the relevance of all these standards (Power, 2010).
Total water withdrawal by source
Confirming the entire amount of water withdrawn by source adds for knowledge of the general scale of possible influences and threats connected using the company's water use. The entire volume withdrawn offers an indication from the organization's proper size and significance as a user of water and offers to set up a baseline figure for other information relevant to…… [Read More]
Before making a decision I would want to review any disclosure statement I signed before leaving my old firm. Presumably, that disclosure statement would bar me from making any attempt to bring old clients to the new firm, and presumably, it would bar my using confidential information about clients.
However, there are limits to what disclosure statements can cover. It is likely that I don't know anything about this company my new company couldn't find out in other ways. Each company has to position itself in the marketplace, and most companies will try to have something that makes them special and unique, as it increases their competitive edge.
So, while I know these things, they aren't corporate secrets. Telling my new employer what I know about my old employer does not seem unethical to me. The real problem is that Jack McDougal may ask me to cross that…… [Read More]
(Southwest Airlines Corporation)
The employees are always put first at Southwest Airlines, and according to the CEO Herb Kelleher, who was responsible for founding the company Southwest Airlines, the philosophy that employees come first is deeply embedded in the psyche of the company, and if the employees of the company are happy and contented and fully satisfied with their work, then they will most definitely take better care of the customers of the company, and this is exactly what happens at Southwest Airlines. When the customers are happy at the treatment that they receive at Southwest Airlines, they, quite naturally keep coming back for more, and this in turn makes the shareholders extremely happy and satisfied. The employees at Southwest Airlines are some of the best and most highly paid employees of any airline, and in general, all the walls of the company are always filled with several pictures of…… [Read More]
For example, mergers and acquisitions are perceived as the latest fashionable trend to grow the company market share and profitability due to synergies affect. But as the practise has shown, out of the latest mergers, about 75% did not perform as they were expected by the top management.
The Sarbanes-Oxley Act was aimed to facilitate and solve some of these very difficult problems in the accounting and management of the companies. The companies now are restricted to the amount of intangible assets they can show in their balance sheets, which reduces the moral opportunism problems in the company. The company has also currently to hire the auditors which are completely independent from the management of the company and cannot carry out any other than audit services for the company. This solves the problems of insider trading, where the management take advantage of their internal knowledge of the real company situation.…… [Read More]
149-150). When the inmate failed to deliver on the guards' demands, the guards then planted drugs in the inmate's bunk (p. 150). The inmate was subsequently prosecuted, and received an extended sentence (p. 150).
Often people will doubt these kinds of stories, because, after all, the inmates are already imprisoned for offenses like drugs, and often much worse kinds of crimes. This puts the inmates at risk of guards and other prison employees who might not embrace a high set of ethics or personal morals. Everyone wants to see crime punished, but when the crimes are being committed within the prison environment, people seem to be less concerned about them, even if they are crimes being committed by the guards or prison officials. People should, in fact, be very concerned about these kinds of crimes, because it is the prison officials and those employees, including guards, who are willing to…… [Read More]
Ethics and Morality -- Ethics and Development
The problem of "development" (or, perhaps "progress" and "advancement" also fits in this context) is that while many millions of citizens of the world have been blessed by dramatic progress (technological, industrial, and communications) over the past few decades, many millions are being left behind. Indeed, while millions are living better, living more comfortable lives, countless millions are not benefiting in the least from this social and economic development. In fact, the gap between the "haves" and "have-nots" is said to be widening, and this is a cause for great concern.
Millions of African children are AIDS and HIV victims, simply because they were born to mothers who suffered from AIDS and HIV; millions of other African people are suffering malnutrition, starvation, and live in hopelessness and dread. Millions of people in Third World countries do not have clean reliable drinking water or…… [Read More]
Education should come from non-profit international scientific, health and environmental organizations. They would be most widely respected and would have more access to both the TNCs and the host and origin country governmental bodies. They can educate the corporations on the practicality of policing their own people and actions. They can educate government bodies on how to include these considerations in political decisions. They can be resources for The United Nations and the TO to help them decide on their programs. Finally they can help the educate the global populace via global media, especially independent educational media.
The last suggestion is one way to approach using public relations. Another is to incite the press and various other media to report the good and the bad actions of TNCs. His makes for interesting news for their audiences, and good public service for the media. In essence, Fowler has said much of…… [Read More]
production/income and so on. Some companies also include quality assessments as part of their analysis of department efficiencies.
5.Explain the role of the budget in the business control cycle.
Budgets can be used to help a firm meet goals and objectives. The business control cycle consists of four steps. The first is setting the standard, that is, creating the budget. The next is recording the performance of the company's departments. Third, variances from the budget are identified and analyzed to understand why they occurred. Finally, action can be planned to either correct problems identified this way, or to put preventive measure in place to enhance future performance.
6.Analyze internal and external control mechanisms that can be put in place to monitor and evaluate the budget.
Internal control mechanism could include consistent follow-up on internal and external audit findings and reporting findings of internal audits to the head of the organization…… [Read More]
Ethics, Corporate Governance and Company Social esponsibility
Information that is essential to share includes financial performance, business strategy and overall company actions (Pfeffer, 1998). Sharing this information gives the employees the power to evaluate their performance and help them make the right decisions on how they can improve it. This is a simple and very straightforward practice but most companies are still apprehensive about this practice. One cause for this is that information is power and by sharing essential information like financial performance the management is scattering that power. Another reason is that the management is concern about information escaping to competitors. This will put the organization in an unfavourable position. But what companies do not realize that the competition most probably already know this information. Thus if a company withheld information they are only leaving their own employees in the dark. Because of this, employees will reply on speculation…… [Read More]
Ethics, Corporate Governance and Company Social esponsibility
OCED state-owned enterprises and Privatized companies
In the past few decades, emerging economies have launched ambitious plans to privatize their state owned enterprises (SOEs). The volume of privatization in emerging economies has increased from $8 billion in 1990 to about $65 billion in 1997 (Dharwadkar, George, & Brandes, 2000). In privatization, ownership is transferred from the state to new private and public owners, which may include management, employees, local individuals, institutions, and foreign investors, with the state also retaining a certain percentage of ownership after privatization. The new diversified ownership structure after privatization makes corporate governance an important issue in emerging economies (ajagopalan and Zhang, 2008).
On the one hand, the new ownership structure creates the traditional principal agency problem whereby self-interested executives aim to maximize their private interests rather than the owners' interests. To address this problem, it is necessary to design…… [Read More]
Strategic Perspectives in Management Accounting and Finance
The main reason for differentiation in the accounting studies seemed to occur due to the functionalist perceptions in the expertise of social studies. According to Dellaportas and Davenport (2008) professions are being separated by occupation on the basis of the level of distinctiveness one occupation has from another; a model first designed by Greenwood in 1975.
Abercrombie et al. (1994, p. 335) in their study explained that such distinctiveness is surrounded by the concept which results in more beneficiary outcomes for the public than for an individual's professional interest in providing services. This simply means that it was an original human demand that gave birth to all professions. There's an equality on profession's social compulsion i.e. there is a balance between a professional's job and his obligation to serve the public. In this regard Carey (1965, p. 376) asserted that it was in…… [Read More]
FASB ASC (360-10-35-21), a long-lived asset that undergoes a change can be tested for recoverability. A decrease in market price could trigger this event. An adverse change could trigger it, and so on. For the case described by Persellin et al. (2014), either of these two events could be used to test the land's recoverability. An impairment event has more than likely occurred.
According to 360-10-35-31, a "primary asset of an asset group cannot be land" -- which means that guidelines are going to be different for this process. Moreover, impairment guidelines for assets held for sale versus assets held for use will have to follow the dictate in 360-10 that stipulates that impairment charges must reverse if there is a change in the use of the asset. Thus, if the asset is being used or sold will make a difference.
Fair value can be determined by ASC 820, which…… [Read More]
In terms of the employees, a system should be made available to provide them with the confidence to report any suspected fraud within the company. This should occur on a confidential basis to prevent situations such as those of Employee 1 above. The employee was fully aware of the fraud and felt that it was unethical, but was reluctant to report it because of the lack of adequate systems by means of which to do so. Managers and employees alike should be aware of this reporting system, and therefore encouraged to report any suspected misconduct.
This is not to say that company loyalty should not be an important part of the company's operations. Employees should be encouraged to be loyal to the company and to take pride in the work they do. Without such loyalty and pride, the work that employees perform will not adhere to the necessary standards of…… [Read More]
In the business actuality of the present day, where knowledge management together with intangible assets are fundamental sources of competitive advantage, the individual action and behavior of employees ranging from first-line personnel to management can facilitate the success or downfall of an organization’s reputation. This has a substantial effect on share value, the capability to attract and sustain consumers, investors, personnel, or clients, and the risk of violating compliance (Jamshidinavid and Kamari, 2012). Addressing business ethics and responsibility issues within a business entity begins the compliance of the pertinent legislations and codes of practice. As a provider of business needs with scarce resources, there is the need to have the capability to make a distinction between the appropriate and inappropriate way of taking expense into account when making decisions regarding practices and processes of clients. In the contemporary business setting, the role that is played by accountants is significant.…… [Read More]
It also publishes interpretations about certain rules.
WHEN AN ACCOUNTANT FAILS
The AICPA's Code of Professional Conduct is considered to be a binding agreement for every CPA in America.
As with other professions most accountants are ethical and honest in their dealings with their clients, however every so often a problem arises that must be disciplined. This can happen in a purposeful attempt to be deceitful, or it can happen by an error in judgment or an error in practice. egardless of how or why it happened a review is called for and a sanction or discipline course of action is decided upon (Badawi, 2002).
Most of the violations that occur are ethical dilemmas that are relatively easy to solve but some of the problems become quite in depth and resolution is more difficult to reach.
A study of conduct violations in a ten-year period produced the following result.
The…… [Read More]