Chapter 4 Instructor's Guide

Chapter 4 Instructor's Guide - Chapter 4 Professional...

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Chapter 4 Professional Ethics Concern for ethical conduct of all business people has become an increasing concern in business, accounting, and auditing education in recent years. The first part of the chapter deals with general ethical issues facing business people. A useful way to deal with ethical conduct issues is to assign a case for discussion. Any of 4-28 to 4-30 will do nicely. The case can be used for a discussion of many issues in ethical conduct including the following: 1. The importance of ethical conduct. 2. How acting ethically at an early stage of one's career is likely to impact lifelong behavior. 3. The Josephson Institute ethical principles. 4. Ethical dilemmas and how to resolve them. 5. Special need for ethics by CPAs. Chapter Opening Vignette - “The Value of the Audit Depends on Auditor Independence” This vignette addresses the importance of auditor independence. It can be used as an introduction to general ethical issues by emphasizing the need for auditors to maintain the highest ethical standards. The vignette can also be used as an introduction to the topic of independence. Ask students why independence is so important for auditors, and whether it is reasonable to prohibit comparatively small investments in audit clients. Mid-chapter Vignette – “Some Ethical Violations are More Severe than Others” (page 80) We use the ethical dilemma involving Bryan Longview and the supervisor’s request that he work hours and not record the time (page 78) as an opportunity to discuss the competitive pressures in the audit environment. After applying the six- step approach to resolving this ethical dilemma, students appreciate that many people are potentially affected by the decision not to record time. We ask students how they would handle this type of request from a supervisor, and why not recording time may be against firm policy. The mid-chapter vignette involving Tom Holton (page 80) signing off on uncompleted procedures is a good follow-up to this discussion, and indicates that some responses to time pressure are never appropriate. Code of Professional Conduct (page 81) A useful way to discuss the Code of Professional Conduct is with a question: What is the difference between ethics in the philosophical sense and the Code of Professional Conduct for CPAs or other professional groups? The answer is that the latter is based on the former, but the CPA's Code is much more specific. Ethics in general involves the set of moral standards for right or wrong that a person, group, or a society develops. The Code of Professional Conduct concerns right and wrong behavior for CPAs. 4-1
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Next, ask why CPAs need a code of professional conduct. Review Question 4-3 is a good way to ask the question. We emphasize the need and desire to control the actions and behavior of the members for the good of the profession and society. This is a good place to discuss various ways our society encourages CPAs to conduct themselves appropriately. Figure 4-2
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This note was uploaded on 01/23/2010 for the course ACCOUNTING auditing taught by Professor Pro-abuel-ezz during the Spring '10 term at Cairo University.

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Chapter 4 Instructor's Guide - Chapter 4 Professional...

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