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Chapter 3. Professionalism and Ethics. Outline. Objectives Characteristics of a professional Ethics concepts Ethics codes in accounting Resolution of ethical dilemmas Recent ethics cases. Bell:: Communicates Thinks Technical knowledge Integrates . Ethical behavior

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Presentation Transcript
chapter 3

Chapter 3

Professionalism and Ethics

outline
Outline
  • Objectives
  • Characteristics of a professional
  • Ethics concepts
  • Ethics codes in accounting
  • Resolution of ethical dilemmas
  • Recent ethics cases
characteristics of a professional
Bell::

Communicates

Thinks

Technical knowledge

Integrates

Ethical behavior

Recognizes outside influences

Actively seeks additional knowledge

Characteristics of a professional
characteristics of a professional1
Characteristics of a professional

McDonald:

  • Specialized knowledge
  • Complexity
  • Autonomy
  • Code of ethical behavior
characteristics of a professional2
Characteristics of a professional

Houle :

  • Conceptual
  • Performance
  • Collective identity
ethics concepts
What is ethics?

What is metaethics?

What is normative ethics

What is applied ethics?

Ethics concepts
ethics concepts1
Ethics concepts

Schools of ethical thought

  • Utilitarianism:
  • Rights and duties:
  • Justice:
  • Virtues:
ethics codes in accounting
Ethics codes in accounting

Institute of Management Accountants

ethics codes in accounting1
Association of Certified Fraud Examiners

Professionalism

Avoid bad conduct

integrity

Obey the law

Don’t determine guilt

Confidentiality

Full disclosure

Continuing education

Ethics codes in accounting
ethics codes in accounting2
American Institute of CPAs

Principles of Professional Conduct

Rules: Applicability and Definitions

Independence, Integrity and Objectivity

General Standards Accounting Principles

Responsibilities to Clients

Responsibilities to Colleagues

Other Responsibilities and Practices

Ethics codes in accounting
resolution of ethical dilemmas
Resolution of ethical dilemmas

Langenderfer and Rockness proposed an eight-step process:

  • ID
    • Facts
    • Ethics issues
    • stakeholders involved
  • Define
    • Norms
    • principles
    • values
resolution of ethical dilemmas1
Resolution of ethical dilemmas

Langenderfer and Rockness (continued)

  • ID alternative actions
  • Decide best action
  • Evaluate the consequences of each possible course of action
resolution of ethical dilemmas2
Resolution of ethical dilemmas

Langenderfer and Rockness (concluded)

  • If appropriate, discuss the alternative with a trusted person
  • Reach a decision
recent ethics cases
Recent ethics cases
  • Charles Ponzi
    • Multi-million dollar fraud with international postal reply coupons
    • Used money from new investors to pay off old investors
    • Five years in federal prison for mail fraud with additional time in Massachusetts
recent ethics cases1
Recent ethics cases
  • Adelphia Cable
    • Rigas family
    • Company funded over $2 billion in personal loans to family
    • Deceptive accounting practices
    • Co-mingled personal assets with corporate assets
recent ethics cases2
Enron

Natural gas and pipeline industries

Moved into trading rights for oil and gas pipelines

Earnings increased without cash flow

Stock price increased 20 quarters in a row

Earnings management, off balance-sheet debt, related-party transactions, disclosure issues

Bankruptcy in December 2001

Demise of Arthur Andersen followed

Recent ethics cases
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