3air_im16 - 128 CHAPTER 16 Professional Ethics and Auditor...

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CHAPTER 16 Professional Ethics and Auditor Responsibilities LEARNING OBJECTIVES Review Checkpoints Exercises and Problems Discussion Cases 1. Reason through an ethical decision problem using the imperative, utilitarian, and generalization principles of moral philosophy. 1, 2, 3, 4 33, 34, 35, 36, 37 2. Analyze fact situations and decide whether an accountant's conduct does or does not conform to the AICPA rules of conduct. 5, 6, 7 26, 27, 28, 29, 30 38, 39, 40 3. Identify and explain the major differences between AICPA and SEC views on auditors' independence. 8 31, 32 4. Name and explain various professional associations and government agencies that enforce rules of conduct and explain the types of penalties they can impose on accountants. 9 10, 11 POWERPOINT SLIDES PowerPoint slides are included on the website. Please take special note of: * Fundamental Principles A Note on Chapter 16, relating to the "Generalization Argument": In the interest of fairness, it should be noted that the generalization argument does not work in all cases, particularly in two circumstances: (1) When the argument is invertible , that is (a) when both doing something and not doing something would be undesirable and (b) when both everyone and not everyone doing something would be undesirable. For example: "What if everyone were a full-time farmer?" The results would be undesirable in our society because all other social functions would disappear, but this cannot mean that no one should be a farmer because then we would all starve. (2) When the argument is reiterable , that is, when arbitrary times, places or measures can be inserted in such a way as to make a decision appear to be nonsense. For example, "What if every auditor were permitted to own 1/10 of a share of each client's common stock?" Presumably, the consequences of such minor holdings would not be generally undesirable, and so ownership of 1/10 of a share could be permitted. Now change the amount to 2/10, 3/10, 10, 100, 99%, and the problem becomes one of "where to draw the line." SOLUTIONS FOR REVIEW CHECKPOINTS 128
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16.1 A professional accountant must be prepared to be agent, spectator, advisor, instructor, judge, critic. 16.2 Apparently, in ethical philosophy, the word "conscience" is used to describe the "undefinable mental process that yields moral decisions." A close kin in the political science terms would be "anarchy." Conscience might not be a sufficient guide for personal ethics decisions because the individual's undefinable mental processes may be based on caprice, immaturity, ignorance, stubbornness, or misunderstanding. Conscience may fail to show the consistency, clarity, practicability, impartiality, and adequacy preferred in ethical standards and behavior. Exactly the same can be said about professional ethics decisions because a nonhypocritical individual can no more split his behavior between personal life and professional life than he can voluntarily split his own personality. 16.3
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This note was uploaded on 02/08/2012 for the course IAF IAF520 taught by Professor Aldcorn during the Winter '08 term at Seneca.

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3air_im16 - 128 CHAPTER 16 Professional Ethics and Auditor...

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