BSA 3104 PART III Ethics PDF

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PART III ETHICSTOPIC 8 - ETHICAL REASONING: IMPLICATIONS FORACCOUNTINGA. INTEGRITY: The basis for Accounting  Is a fundamental trait of character that enables a CPA to withstand client and competitive pressures that might otherwise lead to the subordination of judgement. A person of integrity will...

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PART III ETHICS TOPIC 8 - ETHICAL REASONING: IMPLICATIONS FOR ACCOUNTING A.

INTEGRITY: The basis for Accounting  Is a fundamental trait of character that enables a CPA to withstand client and competitive pressures that might otherwise lead to the subordination of judgement.  A person of integrity will act out of moral principle and not expediency.  A person will do what is right even if it means the loss of a job or client.  In accounting, the public interest , (i.e. investors and creditors) always must be placed ahead of one’s own selfinterests of others, including a supervisor or client.  Means that a person acts on principle—a conviction that there is a right way to act when faced with an ethical dilemma.  One must never let loyalty to a client cloud good judgement and ethical decision making.  INTEGRITY is the key to carrying out the GOLDEN RULE.  A PERSON of integrity acts with truthfulness, courage, sincerity, and honesty.  Means to have the courage to stand by your principles even in the face of pressure to bow to the demands of others.

 The ethical responsibility of a CPA in these instances is to adhere to the ETHICS of the accounting profession and

not to subordinate professional judgement to the judgment of others.  Integrity encompasses the whole of the person. And it is the foundation virtue of ancient Greek philosophy of virtue.  The origin of Western philosophy trace back to the ancient Greeks, including SOCRATES, PLATO, and ARISTOTLE.

 The ancient Greek philosophy of virtue deals with questions such as: What is the best sort of life for human beings to live? Greek thinkers saw the attainment of a good life as the TELOS, the end or goal of human existence. For most Greek philosophers, the end is eudaimonia, which is usually translated as “HAPPINESS.” WORLDCOM A. GENE MORSE - APRIL & MAY 2002  Auditor at World Com. B. CYNTHIA COOPER, company’s director of internal auditing and Morse’s boss, who instructed Morse to “ keep going”.  Formed an investigation team to determine whether their hunch was right.  Initial investigation, the team discovered $3.8 billion of misallocated expenses and phony accounting entries. C.

SCOTT SULLIVAN  the Chief Financial Officer (CFO)

D.

BERNIE EBBERS – the CEO – resigned under pressure

from WorldCom’s Board of Directors

E. BETTY VINSON - a former WorldCom mid-level accounting manager went along with the fraud because his superiors told her to do so.  She pleaded guilty in October 2002 to participating in the financial fraud at the company.  She was sentenced to 5 months in prison and five months of house arrest.  Represents the typical “pawn” in a financial fraud.  Why did she involved herself in the fraud? a. feared of losing her job b. her benefits c. the means to provide for her family

B.

Religious and Philosophical Foundations of Ethics  All world’s great religions contain in their religious texts some version of the Golden Rule: “ do unto other as you would wish them to do unto you.”  In other words, we should treat others the way we would want to be treated. This is the basic ethic that guides all religions.  If we believe honesty is important, then we should be honest with others and expect the same in return. RELIGION

Christianity

EXPRESSION OF THE CITATION GOLDEN RULE All things whatsoever ye Matthew 7:1 would that men should do to you, Do ye so to them, for this is the law and the prophets

Confucianism

Do not do to others what Analects 12:2 you would not like yourself. The there will be no

resentment against you, either in the family or in the state. Buddhism Hurt not others in ways that you yourself would find hurtful. Hinduism This is the sum of duty, do naught onto others what you would not have them do unto you. ISLAM No one of you is a believer until he desires for his brother that which he desires for himself. JUDAISM What is hateful to you, do not do to your fellowman, this is the entire Law; all the rest is commentary. TAOISM Regard your neighbor’s gain as your gain, and your neighbor’s loss as your own loss. ZOROASTRIANISM That nature alone is good which refrains from doing to another whatsoever is not good for itself. C.

Uda-navarga 5,1 Mahabharata 5,1517

Sunnah

Talmud, shabbat 3id

Tai Shang Kan Yin P’ien

Dadisten-Idinik 94, 5

What is Ethics

Overview Definition of Ethics  Nominal definition: Ethics ( from ethos = customs, conduct or manner of behaving) is a science that deals with customs or conduct of man.  Real/Essential Definition:

1. Ethics is a science, which deals with human conduct from the point

of view of “good” or “bad”, right or wrong. 2. Ethics is the philosophical science, which establishes the moral order of human acts. 3. Ethics is the science of moral duty. 4. Ethics is the science which deals with those acts that proceed from the deliberate will of man, especially as they are ordered to the ultimate end of man. 5. Ethics is the philosophical (ultimate reasons)Science (treatise, systematic inquiry)of Human Acts (material object) under the aspect of moral rectitude (FORMAL OBJECT)  Ordinary Usage: Ethics is understood to be a code of honor, code of conduct, professional ethics e.g. for Nurses, Doctors, Teachers, Army Officers. One must observe this code one under penalty of offending good taste or arousing the displeasure of fellow practitioners, without any intrinsic sanction, often even contrary to Ethics e.g. Japanese Military Code of Honor, Bushido, Harakiri Other Definitions:

@ the most basic level:...