Ethical Obligations and Decision Making in Accounting: Text and Cases 6th Edition, ISBN-13: 978-1264135943
[PDF eBook eTextbook] – Available Instantly
- Publisher: McGraw Hill; 6th edition (February 11, 2022)
- Language: English
- ISBN-10: 1264135947
- ISBN-13: 978-1264135943
This text provides comprehensive coverage of the ethical and professional issues that accounting professionals encounter, and helps students cultivate the ethical commitment needed to ensure that their work meets the highest standards of integrity, independence, and objectivity. Ethical Obligations and Decision Making in Accounting is designed to provide instructors with the best flexibility and pedagogical effectiveness of any book on the market. To that end, it includes numerous features designed to make both learning and teaching easier.
Table of Contents:
Table of Contents and Preface
Title Page
Copyright Page
Praise for Ethical Obligations and Decision Making in Accounting
Dedication
About the Authors
Foreword
Preface
Ethics Education
Overview of Sixth Edition
What’s New in the Sixth Edition?
Connect
End-of-Chapter Assignments
Suggestions for Classroom Discussion
Ethics IQ Test
Chapter-by-Chapter Enhancements
Acknowledgments
Connect
Instructors: Student Success Starts with You
Students: Get Learning that Fits You
Case Descriptions
Brief Contents
Table of Contents
Chapter 1: Ethical Reasoning: Implications for Accounting
Introduction
Integrity: The Basis of Accounting
Religious and Philosophical Foundations of Ethics
Greek Ethics
The Language of Ethics
Difference between Morals and Ethics
Difference between Values and Morals
Ethics and Laws
Laws and Ethical Obligations
The Moral Point of View
Student Cheating
Social Networking
The Six Pillars of Character
Virtues or Character Traits
Trustworthiness
Respect
Responsibility
Fairness
Caring
Citizenship
Reputation
Moral Courage
Modern Moral Philosophies
Teleology
Deontology
Justice
Virtue Ethics
Moral Relativism
The Public Interest in Accounting
Regulation of the Accounting Profession
The Public Interest in Accounting
Ethics and Professionalism
AICPA Code of Conduct
Application of Ethical Reasoning in Accounting
3D Printing Case Study
Scope and Organization of the Text
Concluding Thoughts
Ethics IQ Test
Discussion Questions
Comprehensive Questions
Endnotes
Chapter 1 Cases
Case 1-1Operation Varsity Blues
Case 1-2 Giles and Regas
Case 1-3 Unintended Consequences
Case 1-4 Lone Star School District
Case 1-5Lottery Bonanza
Case 1-6 Capitalization versus Expensing
Case 1-7 Eating Time
Case 1-8Section 179 Deduction for Equipment Purchases
Case 1-9 Cleveland Custom Cabinets
Case 1-10Getting Called-Out on Social Media
Chapter 2: Cognitive Processes and Ethical Decision Making in Accounting
Introduction
Behavioral Ethics
System 1 Versus System 2 Thinking
Cognitive Biases
Additional Factors Impacting Our Decisions
Kohlberg and the Cognitive Development Approach
Heinz and the Drug
Rest’s Four-Component Model of Ethical Decision Making
Moral Reasoning and Moral Behavior
Moral Sensitivity
Moral Judgment
Moral Focus
Moral Character
Aligning Ethical Behavior and Ethical Intent
What Makes for an Ethical Organization?
Organizational Influences on Ethical Decision Making
Ethical Culture
Ethical Climate
Equity, Diversity, and Inclusion
Diversity Versus Inclusion
Equality Versus Equity
Components of EDI Initiatives
Sexual Harassment
Uber Sexual Harassment Case
Factors That Influence Ethical Decision Making
Individual Factors
Organizational Factors
Ethical Dissonance Model
Opportunity
Business Ethics Intentions, Behavior, and Evaluations
Ethical Decision-Making Models
Ethical Decision Making in Accounting and Auditing
Components of the Model
Integrated Ethical Decision-Making Process
Application of the Integrated Ethical Decision-Making Model: Ace Manufacturing
Giving Voice to Values
Reasons and Rationalizations
Levers
Application of GVV Methodology: Ace Manufacturing
Concluding Thoughts
Discussion Questions
Comprehensive Questions
Endnotes
Chapter 2 Cases
Case 2-1 A Team Player? (a GVV case)
Case 2-2 FDA Liability Concerns (a GVV case)
Case 2-3 Taxes and the Cannabis Business (a GVV case)
Case 2-4 A Faulty Budget (a GVV Case)
Case 2-5 Not so Diverse, Equitable or Inclusive (a GVV Case)
Case 2-6 The Normalization of Unethical Behavior: The Harvey Weinstein Case
Case 2-7 Milton Manufacturing Company
Case 2-8 Chefs Delight: That Slope Looks Slippery (a GVV case)
Case 2-9 Racially Charged Language Inhibits Inclusive Cultures
Case 2-10 WorldCom
Chapter 3: Organizational Ethics and Corporate Governance
Introduction
Fraud in Organizations
Occupational Fraud
Financial Statement Fraud
Seven Signs of Ethical Collapse
Pressure to Maintain the Numbers
Fear of Reprisals
Loyalty to the Boss
Conflicts of Interest and the Board of Directors
Innovations
Goodness in Some Areas Atones for Evil in Others
Ethics in the Workplace
Compliance Function
Integrity: The Basis for Trust in the Workplace
Employees Perceptions of Ethics in the Workplace
Using Social Media to Criticize the Employer18
Foundation of Corporate Governance Systems
Ethical and Legal Responsibilities of Officers and Directors
Components of Corporate Governance Systems
Executive Compensation
Corporate Governance Oversight and Regulation
Corporate Governance Responsibilities
Corporate Social Responsibilities
Sustainability
Triple Bottom Line (TBL)
Views ofMillennials
Conscious Capitalism
Models of CSR
Examples of CSR
Impact of Governmental Regulations
Corporate Governance Structures and Relationships
Relationships between Audit Committee, Internal Auditors, and External Auditors
Internal Controls as a Monitoring Device
Equifax Data Breach
Whistleblowing
Morality of Whistleblowing
Rights and Duties
Anthony Menendez v. Halliburton, Inc.73
Dodd-Frank Provisions
Whistleblowing Payouts
Implications of Supreme Court Decision in Digital Realty Trust, Inc. v. Somers
Whistleblowers Can Use Confidential Company Documents to Expose Fraud
Concluding Thoughts
Discussion Questions
Comprehensive Questions
Endnotes
Chapter 3 Cases
Case 3-1 The Parable of the Sadhu
Case 3-2 Rite Aid Inventory Surplus Fraud
Case 3-3 United Thermostatic Controls (a GVV case)
Case 3-4 Franklin Industries’ Whistleblowing (a GVV Case)
Case 3-5 Theranos: A Cautionary Tale for Silicon Valley
Case 3-6 Blow the Whistle or Don’t Blow the Whistle
Case 3-7 Wells Fargo—A Toxic Sales Culture
Case 3-8 Accountant Takes on Halliburton and Wins!
Case 3-9 Expense or Capitalize Research and Development Costs(a GVV Case)
Case 3-10 Cheating on Internal Training Exams at KPMG
Chapter 4: AICPA Code of Professional Conduct
Introduction
What is Professional Judgment in Accounting?
KPMG Professional Judgment Framework
Link between Professional Judgment and Cognitive Processes
Link between Professional Judgment and AICPA Code of Professional Conduct
AICPA Code: Independence Considerations for Members in Public Practice
Introduction to Revised Code
Conceptual Framework for AICPA Independence Standards
Safeguards to Counteract Threats
Sarbanes-Oxley Act(SOX): Nonaudit Services
Relationships That May Impair Independence
SEC Actions on Auditor Independence
SEC Actions against Big Four Audit Firms
Emerging Issues
AICPA Code: Ethical Conflicts
AICPA Code: Conceptual Framework for Members in Business
Threats and Safeguards
Link between Conceptual Framework and Giving Voice to Values
Rules for the Performance of Professional Services
General Standards Rule
Acts Discreditable
Contingent Fees
Commissions and Referral Fees
Advertising and Other Forms of Solicitation
Confidential Information
Form of Organization and Name
The Spirit of the Rules
Ethics and Tax Services
Statements on Standards for Tax Services (SSTS)
Treasury Circular 230
Tax Shelters
PCAOB Rules
Rule 3520—Auditor Independence
Rule 3521—Contingent Fees
Rule 3522—Tax Transactions
Rule 3523—Tax Services for Persons in Financial Reporting Oversight Roles
Rule 3524—Audit Committee Preapproval of Certain Tax Services
Rule 3525—Audit Committee Preapproval of Nonauditing Services Related to Internal Control over Financial Reporting
Rule 3526—Communication with Audit Committees Concerning Independence
PCAOB Inspections
Concluding Thoughts
Discussion Questions
Comprehensive Questions
Endnotes
Chapter 4 Cases
Case 4-1 KBC Solutions
Case 4-2 Beauda Medical Center
Case 4-3 Family Games, Inc. (a GVV case)
Case 4-4 Threats to Audit Independence
Case 4-5 Han, Kang & Lee, LLC (a GVV case)
Case 4-6 Tax Shelters
Case 4-7 Sexual Harassment at EY
Case 4-8 Marcum LLP
Case 4-9 PwC Mischaracterizes Nonaudit Services
Case 4-10 Johnson Pharmaceuticals (a GVV case)
Chapter 5: Fraud in Financial Statements and Auditor Responsibilities
Introduction
Fraud in Financial Statements
Introduction
Nature and Causes of Misstatements
Errors, Fraud, and Illegal Acts
The Fraud Triangle and AU-C 240
Incentives/Pressures to Commit Fraud
Opportunity to Commit Fraud
Rationalization for the Fraud
Frisch’s Restaurant: Trust but Verify
Fraud Considerations and Risk Assessment
Fraud Risk Assessment
Assessing Management: Red Flags
Is There a Dark Triad Personality Risk?
Tyco Fraud
Internal Controls Over Financial Reporting
Audit Committee Responsibilities for Fraud Risk Assessment
Auditor’s Communication with Those Charged with Governance
Management Representations and Financial Statement Certifications
Qwest Communications International Inc.
Audit Report and Auditing Standards
Background
Audit Report
PCAOB AS 1301: Communications with Audit Committees27
PCAOB AS 3101: The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion28
Audit Opinions
Limitations of the Audit Report and the Future of the Auditing Profession
Limitations of the Audit Report
Generally Accepted Auditing Standards (GAAS)
The Future of the Auditing Profession
Concluding Thoughts
Discussion Questions
Comprehensive Questions
Endnotes
Chapter 5 Cases
Case 5-1 Loyalty and Fraud Reporting (a GVV case)
Case 5-2 ZZZZ Best1
Case 5-3 Reauditing Financial Statements
Case 5-4 GE Multibillion Insurance Charge
Case 5-5 Audit Planning Gone Awry
Case 5-6 EY Target of German Regulators Over Suspected Audit Deficiencies at Wirecard
Case 5-7 Diamond Foods: Accounting for Nuts1
Case 5-8 Critical Audit Matters or Potentially Damaging Disclosure?
Case 5-9 Weatherford International
Case 5-10 Potential Fraud at EP Sports
Chapter 6: Motivation for Fraudulent Financial Reporting
Introduction
Characteristics of Earnings Management
Motivation for Earnings Management
Income Smoothing
Ethical Choices
Acceptability of Earnings Management
How Managers and Accountants Perceive Earnings Management
Ethics of Earnings Management
Earnings Guidance
Audit Committee Responsibilities
Pull-In Sales
Using Social Media to Report Earnings Guidance and Financial Results
Red Flags
Earnings Quality
Financial Statement Analysis
Green Mountain Coffee Roasters
Revenue Recognition
Financial Shenanigans
Financial Statement Effects
Examples of Shenanigans
Non-GAAP Financial Metrics
Non-GAAP Financial Metrics
Revisiting Financial Shenanigans
Concluding Thoughts
Discussion Questions
Comprehensive Questions
Endnotes
Chapter 6 Cases
Case 6-1 Winners & Losers, Inc.
Case 6-2 Solutions Network, Inc. (a GVV case)
Case 6-3 Allergan: Mind the GAAP
Case 6-4 The Potential Darkside of Using Non-GAAP Metrics (a GVV case)
Case 6-5 Harrison Industries
Case 6-6 TierOne Bank
Case 6-7 Non-GAAP Metric Disclosure by General Electric: Value Added, Red Herring, or Red Flag?
Case 6-8BMW’s Sales ReportingPractices
Case 6-9 The North Face, Inc.
Case 6-10 Beazer Homes
Chapter 7: Consequences of Earnings Management: The Need for Ethical Leadership in Accounting
Introduction
Characteristics of Financial Statement Restatements
Summary Reporting of Accounting Restatements
Restatements Due to Errors in Accounting and Reporting
Restatements Due to Operational Issues
MagnaChip Semiconductor, Ltd
SEC Clawback for Accounting Violations
Corporate Governance and Earnings Management
What is Ethical Leadership?
Types of Leaders
Social Learning Theory
Ethical Skills of Leaders in Accounting Firms
Leadership Failures in the Accounting Profession
Ethical Leadership in the Accounting Profession
Concluding Thoughts
Discussion Questions
Comprehensive Questions
End Notes
Chapter 7 Cases
Case 7-1 Should the Financial Statements be Reissued or Revised?
Case 7-2 PPP Loans: Free Money at a Cost (a GVV case)
Case 7-3 Managing Earnings and Putting Ethical Leadership to the Test
Case 7-4 Monsanto Company Roundup
Case 7-5 Kraft Heinz
Case 7-6 New Leadership at General Electric
Case 7-7 Krispy Kreme Doughnuts Inc.
Case 7-8 Sunbeam Corporation
Case 7-9 KPMG Tax Shelter Scandal
Case 7-10 Theranos: Accounting for Bad Blood
Chapter 8: Auditors’ Legal Liabilities and Defenses
Introduction
Legal Liabilities of Auditors: An Overview
Common-Law Liability
Liability to Clients—Privity Relationship
Professional Negligence
Defending Audit-Malpractice Cases
Recklessness
Negligent Misrepresentation
Liability to Third Parties
Actually Foreseen Third Parties
Reasonably Foreseeable Third Parties
Common-Law Liability For Fraud
Statutory Law Liability for Fraud
Liability for Fraudulent Misrepresentation
Income Tax Fraud versus Tax Negligence
Auditor Defenses to Negligence and Fraud
Auditor Defenses to Negligence
Auditor Defenses to Negligent Misrepresentation
Auditor Defenses to Fraud
Consideration of Fraud in a Financial Statement Audit
Statutory Liability
Securities Act of 1933
Section 11 Liability Under Securities Act of 1933
Section 11 Liability Standard for Auditors
Section 11 Auditors’ “Opinion” Statements
Securities Exchange Act of 1934
Private Securities Litigation Reform Act (PSLRA)
Proportionate Liability
Establishing Scienter
SOX and Auditor Legal Liabilities
Section 404. Internal Control over Financial Reporting
Section 302. Corporate Responsibility for Financial Reports
Foreign Corrupt Practices Act (FCPA)
Concluding Thoughts
Discussion Questions
Comprehensive Questions
Endnotes
Chapter 8 Cases
Case 8-1 Your Tax Client
Case 8-2 Joker & Wild LLC
Case 8-3 QSGI, Inc.
Case 8-4 Anjoorian et al.: Third-Party Liability
Case 8-5 Vertical Pharmaceuticals Inc. et al. v. Deloitte & Touche LLP1
Case 8-6 Kay & Lee, LLP
Case 8-7 Alexion
Case 8-8 Disclosing Material Weaknesses in ICFR or Protecting the Firm from Litigation? (A GVV case)
Case 8-9 Miller Energy Resources, Inc.
Case 8-10 Biotechnologies
Cases
Introduction
Major Case 1: Colonial Bank
Colonial Bank
Major Case 2: Logitech International
Logitech International
Major Case 3: Kiley Nolan’s Ethical Dilemma (a GVV Case)
Kiley Nolan’s Ethical Dilemma (a GVV Case)
Major Case 4: Cendant Corporation
Cendant Corporation1
Major Case 5: Vivendi Universal
Vivendi Universal
Major Case 6: Luckin Coffee
Luckin Coffee
Name Index
Name Index
Subject Index
Subject Index
Additional Student Resources
Additional Student Resources
Accessibility Content: Text Alternatives for Images
Road to Making Ethical Decisions Text Alternative (Chapter 2)
Exhibit 2.1 Text Alternative (Chapter 2)
Exhibit 3.1 Text Alternative (Chapter 3)
Exhibit 3.10 Text Alternative (Chapter 3)
Exhibit 3.16 Text Alternative (Chapter 3)
Exhibit 1 Text Alternative (Chapter 3)
Exhibit 4.3 Text Alternative (Chapter 4)
Exhibit 6.6 Text Alternative (Chapter 6)
Exhibit 7.1 Text Alternative (Chapter 7)
Exhibit 8.7 Text Alternative (Chapter 8)
William F. Miller, EdD, CPA, CGMA, is a professor of accounting in the Accounting and Finance Department at the College of Business, University of Wisconsin, Eau Claire. Dr. Miller received his EdD from the University of Saint Thomas, Saint Paul, Minnesota. He also has over 23 years of professional accounting experience and maintains an active consulting practice. He has authored or co-authored over 20 publications, including a book on Giving Voice to Values in Accounting, and has won the Institute of Management Accountants Carl Menconi Ethics Case writing competition three times (2011, 2012, and 2015), and won the American Accounting Association’s Public Interest Section best contribution to teaching award in 2015.
Steven M. Mintz, DBA, CPA, is a professor of accounting in the Orfalea College of Business at the California Polytechnic State University–San Luis Obsipo. Dr. Mintz received his DBA from George Washington University. His first book, titled Cases in Accounting Ethics and Professionalism, was also published by McGraw-Hill. Dr. Mintz has recently been acknowledged by accounting researchers as one of the top publishers in accounting ethics and in accounting education. He was selected for the 2014 Max Block Distinguished Article Award in the “Technical Analysis” category by The CPA Journal. Dr. Mintz received the 2015 Accounting Exemplar Award of the Public Interest Section of the American Accounting Association. He also has received the Faculty Excellence Award of the California Society of CPAs. Dr. Mintz writes two popular ethics blogs under the names “Ethics Sage” and “Workplace Ethics Advice.”
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