Misc.

Question 1

What is cognitive dissonance?

Answer 1

• Describes the feeling of discomfort that results from holding two conflicting beliefs

Question 2

Why do good, smart people do bad things?

Answer 2

• Drift
• Destabilizing pride
• Power
• See enterprise as self extension
• People don’t learn from mistakes

Question 3

Give an example of drift

Answer 3

• Mid 1990s executives at Bristol Myers Squibb counted on big results from Capoten (new drug for lowering blood pressure
• Studies of pregnant women began to suggest negative impact on fetuses, but it was ignored
• Confident executives drifting into making the wrong decision

Question 4

What is a good analogy for drift?

Answer 4

“The Boiling Frog” (inability of people to react to significant changes that occur gradually)

Question 5

Is religion a moral panacea?

Answer 5

NO

• Bernard Cardinal Law: resigned in disgrace after failing to remove pedophile from the ministry
• Ken Lay: led regular bible studies

Question 6

Who refused to allow porn on the Adelphia cable system?

Answer 6

John Rigas

Question 7

Who led regular bible studies?

Answer 7

Ken Lay

Question 8

What can make moral failings hard to see?

Answer 8

Pride

Question 9

What is a moral virus?

Answer 9

Power

Question 10

Why is power a moral virus?

Answer 10

• Might makes right attitude (my needs are more important)

Question 11

Do people learn from their mistakes very often?

Answer 11

NO

Question 12

How can one mindfully mitigate drift?

Answer 12

Look to company guidelines

Question 13

How can one mindfully mitigate destabilizing pride?

Answer 13

Share dilemmas and true motives with at least one person, a confidant

Question 14

How can one mindfully mitigate self-deception?

Answer 14

Set aside time for introspection (when have I served the ultimate good for the function vs. myself)

Question 15

How can one mindfully mitigate power?

Answer 15

Develop and maintain a well-informed conscious; may require the support of a faith community

Question 16

Ethical fading is often due to what?

Answer 16

Motivated blindness

Question 17

In a survey of 31 libraries in the US and UK, what books are more likely to be stolen than any other book?

Answer 17

Ethics books

Question 18

Who was the banker that dodged $66,000 in train fares in London?

Answer 18

Jonathan Paul Burrows

Question 19

What did he do?

Answer 19

• Hadn’t bought a ticket from his original station

- Instead bought a pass that cost less

Question 20

What happened to Jon Burrows when he got caught at a train station?

Answer 20

Fired from company ( to maintain

Question 21

Why did Jon Burrows do it?

Answer 21

Drift, destabilizing pride, power (did it once, and didn’t get caught)

Question 22

What was Philip Zimbardo’s famous experiment called?

Answer 22

Stanford Prison Experiment

Question 23

What is the CPA’s role when preparing a tax return?

Answer 23

Be objective

Question 24

What is the CPA’s role when providing tax planning advice?

Answer 24

Advisory/Advocate (but still have a responsibility to act ethically)

Question 25

What is the CPA's role when representing the taxpayer?

Answer 25

Advisory/Advocate (but still have responsibility to act ethically)

Question 26

What is the difference between tax avoidance and tax evasion?

Answer 26

Tax avoidance = legal | Tax evasion = illegal

Question 27

What is the penalty for breaking the Congress Tax Code?

Answer 27

Fines/prison

Question 28

What is the penalty for breaking the AICPA Code?

Answer 28

Expelled

Question 29

What is the penalty for breaking state law?

Answer 29

Professional discipline (e.g. loss of license)

Question 30

What is the issue with marketing aggressive tax shelters?

Answer 30

- Reasonable v. aggressive shelter - What are the obligations when providing tax advice? - What about public interest?

Question 31

What was the case with the EY tax shelters?

Answer 31

- 1990s: made tax shelters for wealthy clients - Delayed up to 30 years of paying taxes on profits - $50k fee to legal advisors for saying it would be more likely than not be declared acceptable

Question 32

What was the case with the KPMG tax shelters?

Answer 32

- 2005: fraudulently generated $11B in fictitious tax losses, costing government $2.5 B in lost taxes - Too big to fail after AA

Question 33

What differentiates very aggressive tax shelters from reasonable tax shelters?

Answer 33

- Reasonable: passes more likely than not test | - Aggressive: doesn't pass

Question 34

In the wake of the EY and KPMG tax debacles, what did the IRS issue in Sept. 2007?

Answer 34

- Circular 230

Question 35

What does Apple do to lower taxes paid?

Answer 35

Flow foreign revenue through its Irish subsidiaries

Question 36

How does Irish law determine tax residence?

Answer 36

Where co is managed and controlled

Question 37

How does US law determine tax residence?

Answer 37

Where co. organized

Question 38

How is it that smokers are good for the economy?

Answer 38

Smokers save the rest of us money b/c they die sooner and consume far less in healthcare and pensions