Accounting information system chapter 3

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Accounting Information Systems

Chapter #3 Professionalism and Ethics
1. Reading review questions

a. List and discuss ten characteristics of a professional and / or professional behavior. Where possible, include a specific example of each characteristic from your own experience as a student.
Students may fall back on Bell’s list of seven items discussed in the chapter as a start:communicates effectively; thinks rationally, logically and coherently; appropriately uses technical knowledge; integrates knowledge from many disciplines; exhibits ethical professional behavior; recognizes the influence of political, social, economic, legal and regulatory forces; actively seeks additional knowledge. They might also consider McDonald’s four criteria: specialized knowledge base,complex skills, autonomy of practice and adherence to a code of ethical behavior. However, the best responses to this question will demonstrate students’ ability to think beyond those lists. Other items might include (but are certainly not limited to): contributes to the community, demonstrates good research skills, uses information technology appropriately and actively participates in professionalorganizations.
b. Define “ethics.” Explain why ethics is so important in the accounting profession.
In an accounting context, ethics refers to the behavioral codes and norms that govern decision making and communication within and outside the profession. Ethics are particularly important in accounting because of the trust the public places in accountants, and because accounting is not ablack-and-white discipline.

c. Compare and contrast the ethical codes of the AICPA, IMA and ACFE.
Similarities in the codes include their focus on the behavior of accountants, their inclusion in accounting professional exams and their broad applicability in a variety of organizational contexts. Differences include the specific behaviors and situations addressed, as well as theorganizational structure of each code.
d. What basic schools of thought exist regarding ethical behavior? What are the strengths and weaknesses of each one?
The four schools of thought with some strengths and weaknesses are summarized in the table below:
Strengths Weaknesses
Utilitarianism Acceptable outcomes are clear and easy to understand. Fails to consider damage / harm that might result frompursuing this philosophy.
Rights & duties Respects and considers the impact decisions will have on individuals. Decision makers may disagree on the fundamental rights & duties of individuals.
Justice Focuses on outcomes and results of decisions. Someone must decide what is just / right.
Virtues Sets a high standard for behavior. Difficult to live up to this philosophy in the face ofconflicting priorities.

e. Explain the basic facts of fraud schemes associated with Ponzi, Adelphia and Enron.
• Ponzi initiated the type of fraud that now bears his name. He solicited investors for a project, but failed to pay them a return from the project itself. Instead, he used money from new investors to pay off old investors. Note that Ponzi schemes can also be described as “pyramid”schemes, but that not all pyramid schemes are Ponzi schemes.
• In Adelphia Cable, the Rigas family used their personal positions and organizational power to misuse corporate assets. They also engaged in “shady” accounting practices to bolster their firm’s performance in financial markets.
• Enron was the largest bankrtupcy in US history at the time of its declaration. Company officers, such as Layand Skilling, ignored traditional accounting rules related to revenue recognition; in other cases, however, they followed the letter of accounting standards while ignoring their spirit (such as in their use of special purpose entities).
f. In a manner specified by your instructor, respond to the questions for this chapter’s opening vignette.
• Is Mark acting unethically? Why, or why not?...
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