Week 2 Ethics

Question 1

what is ethics?

Answer 1

Manner by which we try to live our lives according to a standard of ‘right’ or ‘wrong’ behaviors

how we think and behave toward others and how we would like them to think and behave toward us

Question 2

what is moral standards?

Answer 2

Principles by which judgments are made about good and bad behavior that are based on:

• religion
• culture
• philosophical beliefs

Question 3

sources of belief?

Answer 3

• Family and friends •Ethnic background •Religion
• School
• Media
• Personal role models and mentors

Question 4

morality?

Answer 4

Collection of influences built over a person’s lifetime

Question 5

golden rule?

Answer 5

Do unto others as you would have them do unto you

Question 6

what are the 3 Kolberg’s stages of moral development?

Answer 6

1. preconventional
2. conventional
3. principled

Question 7

Kohlberg’s Stages of Moral Development

1. preconventional?

Answer 7

• make decisions based on immediate self interest

e. g. take flashdrive home from work as need one and dont want to pay

Question 8

Kohlberg’s Stages of Moral Development

2. conventional?

Answer 8

• make decisions that conform to expections of groups/institutions like family, peers, society
  e. g. think about taking usb but decide against as wouldnt look right

Question 9

Kohlberg’s Stages of Moral Development

3. principled?

Answer 9

• made decisions based on self-chosen ethical principles

e. g. dont take usb from work as believe wrong

Question 10

business ethics is?

Answer 10

Application of ethical standards to business situations.

Question 11

2 ways business ethics approached? what is not applicable as?

Answer 11

Approachable in two perspectives
• Descriptive - Documentation of what is
happening
• Normative (prescriptive) - Recommendation of what should happen

• Not applicable as a separate set of moral standards or ethical concepts from general ethics

Question 12

Stakeholder Impact from Unethical Behavior:

stockholder/shareholders?

Answer 12

• false/misleadings financial info on which to base investment decisions
• loss of stock value
• cancellation of dividends

Question 13

Stakeholder Impact from Unethical Behavior

employees?

Answer 13

• loss of employment

- not enough money to pay severance packages or meet pension obligations

Question 14

Stakeholder Impact from Unethical Behavior:

customers?

Answer 14

• poor service quality

Question 15

Stakeholder Impact from Unethical Behavior:

suppliers/vendor partners?

Answer 15

• delayed payment for delivered goods/services

- unpaid invoices when company declared bankruptcy

Question 16

Stakeholder Impact from Unethical Behavior:

Federal gov?

Answer 16

• loss of tax revenue

- failure to comply with all relevant legislation

Question 17

Stakeholder Impact from Unethical Behavior:

Creditors?

Answer 17

• loss of principal and interest payments

- failure to repay debt according to agreed schedule

Question 18

Stakeholder Impact from Unethical Behavior:

Community?

Answer 18

• unemployment of local residents

- economic decline

Question 19

what is code of ethics?

Answer 19

Company’s written standards of ethical behavior that are designed to guide managers and employees in making the decisions and choices they face every day

• Cornerstones of the organization
  
  • Mission
  • Values
  • Principles

Question 20

what is ethical dilemma?

Answer 20

Situation in which there is no obvious right or wrong decision, rather a right or right answer

Recognizing: the type of conflict can lead to the resolution of an ethical dilemma

Question 21

what the types of conflict for ethical dilemma?

Answer 21

• Truth versus loyalty
• Short term versus long term (financial benefits?)
• Justice versus mercy (follow instructions or forgive/compromise_
• Individual versus community (one person suffer for rest?)

Question 22

what are the 3 resolution principles?

Answer 22

1. ends-based (teleological (consequentialist) theories)
2. rules based (deontological(non-consequentialist) theories)
3. golden rule/ care based

Question 23

what is ends based?

Answer 23

Which decision would provide the greatest good for the greatest number of people?

Question 24

what is rule based?

Answer 24

What would happen if everyone made the same decision as you?

Question 25

what is accounting function?

Answer 25

Keeps track of all financial transactions by documenting the credits and debits and balancing the accounts at the end of the period

Question 26

what is auditing function?

Answer 26

Certification of an organization’s financial statements, or books, as being accurate by an impartial third-party professional

Question 27

internal auditors features?

Answer 27

- professionalism, integrity, efficiency - objective assessment of operation - provide counsel for improving management - suggest ways to reduce cost, increase profit - deliver competent consulting, assurance and facilitation services

Question 28

Auditor’s Code of Ethics?

Answer 28

• Not falsifying documents • Not stealing money from the organization • Not undertaking any other form of fraudulent activity

Question 29

Ethical Challenges Faced by Internal Auditors?

Answer 29

Generally Accepted Accounting Principles (GAAP) Creative bookkeeping techniques

Question 30

what is Generally Accepted Accounting Principles (GAAP):?

Answer 30

Set of standard operating procedures that govern the accounting profession o Not a set of laws and established legal precedents

Question 31

what is creative bookkeeping techniques?

Answer 31

``` • Legal to defer receipts from one quarter to the next to manage the tax liability • Ethical challenges faced o Falsifying accounts o Underreporting income o Overvaluing assets o Taking questionable deductions e.g., Enron and Arthur Andersen. ```

Question 32

In Australia, management accountants may join?

Answer 32

– CPA Australia – Institute of Chartered Accountants in Australia – Institute of Public Accountants (formerly NIA) – Chartered Institute of Management Accountants (CIMA)

Question 33

ethics in accounting?

Answer 33

* Code of Ethics for Professional Accountants | * Fundamental principles of the code

Question 34

what are Code of Ethics for Professional Accountants?

Answer 34

``` • Integrity : honesty/ truthfulness • Objectivity: unbias • Professional behaviour: comply with laws and regulations • Competence and Due care: professional knowledge and skills • Confidentiality ```

Question 35

Ethical decision making model | 5-step model:

Answer 35

1. identify fact and define ethical issue 2. identify principles or theoretical frameworks to address issue (e.g. Code of ethics, end-based, rule-based approach) 3. identify alternative course of action and effect on stakeholder 4. match alternatives from step 3 to step 2 5. determine which action to take

Question 36

How organisations can promote ethics?

Answer 36

1. Creating a strong ethical climate 2. Screening prospective employees 3. Instituting ethics codes and training programs 4. Rewarding ethical behaviour: protecting whistle-blowers

Question 37

who is a whistle blower?

Answer 37

employee who discovers corporate misconduct and chooses to bring it to attention of others

Question 38

what is internal whistle blowing?

Answer 38

employee discovering corporate misconduct and bringing it to attention of supervisor, who then follows established procedure to address it

Question 39

what is external whistle-blowing?

Answer 39

when employee discover corporate misconduct and chose to bring attention of law enforcement agencies and/or media

Question 40

When is Whistle-Blowing Ethical?

Answer 40

- when cause harm to public or break law - threat of harm - employee tries all methods internally first with no action - employee has accurate evidence - must have valid reasons to belive it will bring good results to company to remedy situation

Question 41

When is Whistle-Blowing Unethical?

Answer 41

* Motivation is the opportunity for financial gain or media attention * Employee is carrying out a vendetta against the company

Question 42

How does being good pay off?

Answer 42

* Effect on customers * Effect on employees’ work effort * Effect on job applicants and employee retention * Effect on sales growth * Effect on company efficiency * Effect on company revenue * Effect on share price * Effect on profits