Ethics in Accounting
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Questions and Answers

Which of these is NOT a factor that leads to ethical dilemmas for managers?

  • Strict adherence to a rigid set of rules (correct)
  • Potential for personal/organizational benefit
  • Choice between alternatives
  • Minimizing losses to 'save face'

    • Why is ethical behavior important for accountants?

  • It ensures compliance with government regulations.
  • It promotes trust and confidence in the accounting profession.
  • It prevents the need for increased government oversight.
  • All of the above. (correct)

    • What is the primary purpose of an ethical framework in decision-making?

  • To help individuals analyze and evaluate ethical dilemmas. (correct)
  • To provide a set of rigid rules to follow in every situation.
  • To eliminate the need for subjective judgments about ethical issues.
  • To guarantee that all decisions made will be considered ethical.

    • What is a key component of ethical behavior?

    <p>Acting in a way that aligns with personal values and beliefs. (A)</p> Signup and view all the answers

    What does the text suggest is a positive outcome of ethical behavior in accounting?

    <p>Improved public perception of the accounting profession. (B)</p> Signup and view all the answers

    Which of these is NOT considered a component of the ethical decision-making model?

    <p>Consulting with legal counsel for guidance. (D)</p> Signup and view all the answers

    What is the significance of ethical behavior in accounting?

    <p>It's a fundamental principle that underpins the integrity of the profession. (C)</p> Signup and view all the answers

    Which of the following is NOT mentioned as a potential benefit of ethical behavior for accountants?

    <p>Enhanced financial performance. (C)</p> Signup and view all the answers

    Which of these stakeholders is NOT explicitly mentioned in the text?

    <p>Charity Staff (B)</p> Signup and view all the answers

    Which option aligns with the ethical guidelines mentioned in the text?

    <p>Option C: Continue to do charity audits but without the motive of obtaining new clients (C)</p> Signup and view all the answers

    Which option BEST aligns with Candice's initial motivation for providing free audits?

    <p>To help local charities in her community (A)</p> Signup and view all the answers

    What is the primary ethical concern with implementing Option A (donation referral)?

    <p>It could create a conflict of interest between Candice and the charity (C)</p> Signup and view all the answers

    Which of the following is a potential consequence of discontinuing the charity audits (Option B)?

    <p>Candice's reputation in the community may be negatively impacted (A)</p> Signup and view all the answers

    What is the PRIMARY difference between Option C and the initial approach taken by Candice?

    <p>Option C eliminates the referral program (D)</p> Signup and view all the answers

    Which of these is NOT a potential concern with Option A?

    <p>It could lead to financial difficulties for the charity itself (A)</p> Signup and view all the answers

    What is the significance of the text mentioning that Candice lives in a small community?

    <p>It emphasizes the importance of maintaining a good reputation in the community (D)</p> Signup and view all the answers

    Study Notes

    Ethics in Accounting (BAT4M)

    • Curriculum Expectations: The course aims to teach students about the impact of ethical issues on accounting practices, the relationship between Generally Accepted Accounting Principles (GAAP) and accounting practices, and the roles of various agencies affecting accounting practices.

    Learning Goals

    • Describe the impact of ethical issues on accounting practices
    • Demonstrate the relationship between GAAP and accounting practices
    • Describe the roles of various agencies and their effects on accounting practices

    Success Criteria

    • Define ethics and relate its importance to the accounting profession.
    • Use an ethical framework to help make ethical decisions.

    Business Ethics

    • Ethics: Moral principles, rules of conduct, and values related to human behavior (right, wrong, good, bad).
    • Ethical Behavior: Legal behavior with implications from individual, social, and corporate priorities.
    • Ethical Dilemmas: Situations faced by managers daily, requiring choices between alternatives that may impact personal or organizational benefit, or minimize losses.

    Why Accountants Should Act Ethically

    • Governing Bodies: Accounting governing bodies require ethical behavior; unprofessional conduct can lead to license loss.
    • Societal Expectations: Increased societal emphasis on corporate responsibility in the information age.
    • Public Image: Improved public image for the accounting profession.
    • Employee/Community Pride: Ethical behavior contributes to employee/community pride.
    • Reduced Turnover: Less personnel turnover when employees feel valued.
    • Human Respect: Treating others with respect, as desired.

    Ethical Decision-Making Model

    • Define the Dilemma: Clearly identify the ethical problem.
    • List the Facts: Collect all relevant information.
    • Identify Stakeholders: Note who is affected.
    • List and Evaluate Options: Assess legality, GAAP compliance, Code of Conduct adherence, ethical considerations.
    • Make a Decision: Consider impact on others, and professional organizations.
    • Review and Revise: Refine the approach if necessary.

    Case Study: Candice Crown, CPA

    • Dilemma: Should Candice provide free audits to charities and offer referrals for a fee?
    • Facts: It's Candice's policy to provide free audits to local charities. She's considering a $250 referral fee. There are few charities in her small community.
    • Stakeholders: Candice, her clients, charities, club members, other local accountants.
    • Options:
    • Implement the donation referral.
    • Discontinue doing charity audits.
    • Continue charity audits without aiming at gaining new clients.
    • Evaluation of Options:
    • Option A: Potential violation of professional codes (e.g., commission receiving).
    • Option B: Negative impact on business reputation and community perception.
    • Option C: Acceptable approach to maintain ethical conduct and business image.
    • Decision: The optimal solution is likely Option C. Continue to offer free audits without the referral program to maintain professional integrity and positive community standing.

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