Do you think there are any circumstances when you should go outside the company to report financial wrongdoing?
If so, to what person/organization would you go? Why? If not, why would you not take the information outside the company?
19. Assume that a corporate officer or other executive asks you, as the accountant for the company, to omit or leave out certain financial figures from the balance sheet that may paint the business in a bad light to the public and investors. Because the request does not involve a direct manipula- tion of numbers or records, would you agree to go along with the request? What ethical consid- erations exist for you in deciding on a course of action?
20. Sir Walter Scott (1771–1832), the Scottish novelist and poet, wrote: “Oh what a tangled web we weave, when first we practice to deceive.” Comment on what you think Scott meant by this phrase.
Endnotes 1. Freeh, Sporkin, and Sullivan, LLP, Report of the Special Investigative Counsel Regarding the Actions of The Pennsylvania State University Related to the Child Sexual Abuse Committed by Gerald A. Sandusky, July 12, 2012, www.thefreehreportonpsu.com/REPORT_FINAL_071212.pdf .
2. Graham Winch, “Witness: I Saw Sandusky Raping Boy in Shower,” June 12, 2012, Available at: www.hlntv.com/article/2012/06/12/witness-i-saw-sandusky-raping-child . http://www.hlntv .com/article/2012/06/12/witness-i-saw-sandusky-raping-child .
3. Eyder Peralta, “Paterno, Others Slammed In Report For Failing To Protect Sandusky’s Victims,” July 12, 2012, Available at: www.npr.org/blogs/thetwo-way/2012/07/12/156654260/ was-there-a-coverup-report-on-penn-state-scandal-may-tell-us .
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4. Jeffrey Toobin, “Former Penn State President Graham Spanier Speaks,” the New Yorker online, August 22, 2012, Available at: www.newyorker.com/online/blogs/newsdesk/2012/08/graham- spanier-interview-on-sandusky-scandal.html#ixzz2PQ326lkq .
5. Max H. Bazerman and Ann E. Trebrunsel, Blind Spots: Why We Fail to Do What’s Right and What to Do about It (Princeton, NJ: Princeton University Press, 2011).
6. Steven M. Mintz, “Virtue Ethics and Accounting Education,” Issues in Accounting Education 10, no. 2 (Fall 1995), p. 257.
7. Susan Pulliam and Deborah Solomon, “Ms. Cooper Says No to Her Boss,” The Wall Street Journal, October 30, 2002, p. A1.
8. Lynne W. Jeter, Disconnected: Deceit and Betrayal at WorldCom (Hoboken, NJ: Wiley, 2003). 9. Securities Litigation Watch, Betty Vinson Gets 5 Months in Prison, http://slw.issproxy.com/
securities_litigation_blo/2005/08/betty_vinson_ge.html. 10. Cynthia Cooper, Extraordinary Circumstances (Hoboken, NJ: Wiley, 2008). 11. Teaching Values, The Golden Rule in World Religions, www.teachingvalues.com/goldenrule
.html . 12. William J. Prior, Virtue and Knowledge: An Introduction to Ancient Greek Ethics (London:
Routledge, 1991). 13. William H. Shaw and Vincent Barry, Moral Issues in Business (Belmont, CA: Wadsworth
Cengage Learning, 2010), p. 5. 14. James C. Gaa and Linda Thorne, “An Introduction to the Special Issue on Professionalism and
Ethics in Accounting Education,” Issues in Accounting Education 1, no. 1 (February 2004), p. 1. 15. Joseph Fletcher, Situation Ethics: The New Morality (Louisville: KY: Westminster John Knox
Press), 1966. 16. 2012 Report Card on the Ethics of American Youth’s Values and Actions (Los Angeles: Josephson
Institute of Ethics), http://charactercounts.org/programs/reportcard/2012/index.html. 17. Eric G. Lambert, Nancy Lynee Hogan, and Shannon M. Barton, “Collegiate Academic
Dishonesty Revisited: What Have They Done, How Often Have They Done It, Who Does It, and Why Do They Do It?” Electronic Journal of Sociology, 2003, www.sociology.org/content/ vol7.4/lambert_etal.html .
18. Donald L. McCabe and Linda Klebe Treviño, “Individual and Contextual Influences on Academic Dishonesty: A Multicampus Investigation,” Research in Higher Education 38, no. 3, 1997.
19. Paul Edwards, The Encyclopedia of Philosophy, Vol. 3 , edited by Paul Edwards (New York: Macmillan Company and Free Press, 1967).
20. Emily E. LaBeff, Robert E. Clark, Valerie J. Haines, and George M. Diekhoff, “Situational Ethics and College Student Cheating,” Sociological Inquiry 60, no. 2 (May 1990), pp. 190–197.
21. See, for example: Donald L. McCabe, Kenneth D. Butterfield, and Linda Klebe Treviño, “Academic Dishonesty in Graduate Business Programs: Prevalance, Causes, and Proposed Action,” Academy of Management Learning & Education 5 (2006): 294–305.
22. See, for example, Kathy Lund Dean and Jeri Mullins Beggs, “University Professors and Teaching Ethics: Conceptualizations and Expectations, Journal of Management Education, 30, no. 1 (2006), pp. 15–44.
23. McCabe, Butterfield, and Treviño. 24. Raef A. Lawson, “Is Classroom Cheating Related to Business Students’ Propensity to Cheat in
the ‘Real World’?” Journal of Business Ethics, 49, no. 2, (2004), pp. 189–199. 25. Randi L. Sims, “The Relationship between Academic Dishonesty and Unethical Business
Practices,” Journal of Education for Business, 68, no. 12, (1993), pp. 37–50. 26. Geert Hofstede, Culture’s Consequences: International Differences in Work-Related Values
( London: Sage, 1980). 27. Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviours, Institutions, and
Organizations (Thousand Oaks, CA: Sage, 2001), p. 359. 28. Michael Minkov, What Makes Us Different and Similar: A New Interpretation of the World Values
Survey and Other Cross-Cultural Data (Sofia, Bulgaria: Klasika y Stil Publishing House, 2007).
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29. The results are published on a website devoted to Hofstede’s work: www. http://geert-hofstede .com/countries.html .
30. Aristotle, Nicomachean Ethics, trans. W. D. Ross (Oxford, U.K.: Oxford University Press, 1925).
31. Michael Josephson, Making Ethical Decisions, rev. ed. (Los Angeles: Josephson Institute of Ethics, 2002).
32. Alasdair MacIntyre, After Virtue, 2d ed. (Notre Dame, IN: University of Notre Dame Press, 1984). 33. American Institute of Certified Public Accountants (AICPA), AICPA Professional Standards.
Volume 2 as of June 1, 2009, Section 102-4 (New York: AICPA, 2009). 34. Josephson. 35. George Washington, George Washington’s Rules of Civility and Decent Behavior in Company
and Conversation (Bedford, ME: Applewood Books, 1994), p. 9. 36. Washington. 37. Cognitive Sciences Laboratory at Princeton University, WordNet, http.wordnet.princeton.edu. 38. Martin Luther King Jr., The Peaceful Warrior (New York: Pocket Books, 1968). 39. Josephson. 40. Josephson. 41. Edmund L. Pincoffs, Quandaries and Virtues against Reductivism in Ethics (Lawrence:
University Press of Kansas, 1986). 42. Josephson. 43. Josephson. 44. Rhonda Schwartz, Brian Ross, and Chris Francescani, “Edwards Admits Sexual Affair; Lied as
Presidential Candidate” (Interview with Nightline ), August 8, 2008. 45. Martin Steubs and Brett Wilkinson, “Restoring the Profession’s Public Interest Role,” The CPA
Journal 79, no. 11, (2009) pp. 62–66. 46. James E. Copeland, Jr., “Ethics as an Imperative,” Accounting Horizons 19, no. 1 (2005), pp. 35–43. 47. National Association of State Boards of Accountancy, Uniform Accountancy Act (UAA) Model
Rules Revised (2011), Nashville, TN: NASBA. 48. Texas Administrative Code (2011) Title 22, Part 22, Chapter 511, Subchapter C, §511.58 (c).
www.tsbpa.state.tx.us/education/ethic-course-requirements.html . 49. Colorado Board of Accountancy (2010) Rules of the Colorado State Board of Accountancy
www.dora.state.co.us/accountants/Rules103010.pdf . 50. California Board of Accountancy (2011) SB 773. www.legiscan.com/gaits/text/353631 . 51. SB 773. 52. American Institute of Certified Public Accountants, Code of Professional Conduct at June 1,
2012 (New York: AICPA, 2012); www.aicpa.org/Research/Standards/CodeofConduct/Pages/ default.aspx .
53. Kurt Baier, The Rational and Moral Order: The Social Roots of Reason and Morality (Oxford, U.K.: Oxford University Press, 1994).
54. Steven M. Mintz, “Virtue Ethics and Accounting Education,” Issues in Accounting Education 10, no. 2 (1995), p. 260.
55. O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics: Ethical Decision Making and Cases, 9th ed. (Mason, OH: South-Western, Cengage Learning, 2011), p. 157.
56. Ferrell et al., p. 157. 57. Ferrell et al., p. 158. 58. Manuel Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “Calculating
Consequences: The Utilitarian Approach to Ethics,” Issues in Ethics 2, no. 1 (Winter 1989), www.scu.edu/ethics .
59. Velasquez et al., 1989. 60. Velasquez et al., 1989. 61. Velasquez et al., 1989
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62. Velasquez et al., 1989. 63. Ferrell et al., pp. 160–161. 64. Manuel Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “Rights,” Issues in
Ethics 3, no. 1 (Winter 1990), www.scu.edu/ethics . 65. Velasquez et al., 1990. 66. Immanuel Kant, Foundations of Metaphysics of Morals, trans. Lewis White Beck (New York:
Liberal Arts Press, 1959), p. 39. 67. Velasquez et al., 1990. 68. Velasquez, et al. 1990. 69. William Styron, Sophie’s Choice (London: Chelsea House, 2001). 70. Manuel Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “Justice and Fairness,”
Issues in Ethics 3, no. 2 (Spring 1990). 71. Ferrell et al., p. 165. 72. MacIntyre, pp. 187–190. 73. MacIntyre, pp. 190–192. 74. Mintz, 1995. 75. Mintz, 1995. 76. IMA—The Association of Accountants and Financial Professionals in Business, IMA Statement
of Ethical Professional Practice, www.imanet.org/pdfs/statement%20of%20Ethics_web.pdf . 77. “Why U.S. Companies Aren’t So American Anymore,” June 30, 2011, www.money.usnews
.com/money/blogs/flowchart/2011/06/30/why-us-companies-arent-so-american-anymore . 78. Ralph Waldo Emerson, Essays: First and Second Series (New York: Vintage Paperback, 1990). 79. See: www.espn.go.com/mlb/story/_/id/8828339/no-players-elected-baseball-hall-fame-writers . 80. International Federation of Accountants (IFAC), A Public Interest Framework for the
Accountancy Profession, November 4, 2010, www.ifac.org/publications-resources/public- interest-framework-accountancy-profession .
81. Ethics Resource Center (ERC), 2011 National Business Ethics Survey: Workplace Ethics in Transition, www.ethics.org/nbes/files/FinalNBES-web.pdf .
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Chapter 1 Cases
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42 Chapter 1 Ethical Reasoning: Implications for Accounting
Yes. Cheating occurs at the prestigious Harvard University. In 2012, Harvard forced dozens of students to leave in its largest cheating scandal in memory but the institution would not address assertions that the blame rested partly with a pro- fessor and his teaching assistants. The issue is whether cheat- ing is truly cheating when students collaborate with each other to find the right answer—in a take-home final exam.
Harvard released the results of its investigation into the controversy, in which 125 undergraduates were alleged to have cheated on an exam in May 2012. 1 The university said that more than half of the students were forced to withdraw, a penalty that typically lasts from two to four semesters. Of the remaining cases, about half were put on disciplinary pro- bation—a strong warning that becomes part of a student’s official record. The rest of the students avoided punishment.
In previous years, students thought of Government 1310 as an easy class with optional attendance and frequent col- laboration. But students who took it in spring 2012 said that it had suddenly become quite difficult, with tests that were hard to comprehend, so they sought help from the gradu- ate teaching assistants who ran the class discussion groups, graded assignments, and advised them on interpreting exam questions.
Administrators said that on final-exam questions, some students supplied identical answers (right down to typo- graphical errors in some cases), indicating that they had written them together or plagiarized them. But some stu- dents claimed that the similarities in their answers were due to sharing notes or sitting in on sessions with the same teaching assistants. The instructions on the take-home exam explicitly prohibited collaboration, but many students said they did not think that included talking with teaching assistants.
The first page of the exam contained these instruc- tions: “The exam is completely open book, open note, open Internet, etc. However, in all other regards, this should fall under similar guidelines that apply to in-class exams. More
specifically, students may not discuss the exam with others— this includes resident tutors, writing centers, etc.”
Students complained about confusing questions on the final exam. Due to “some good questions” from students, the instruc- tor clarified three exam questions by email before the due date of the exams.
Students claim to have believed that collaboration was allowed in the course. The course’s instructor and the teach- ing assistants sometimes encouraged collaboration, in fact. The teaching assistants who graded the exams—graduate students graded the exams and ran weekly discussion sessions—varied widely in how they prepared students for the exams, so it was common for students in different sections to share lecture notes and reading materials. During the final exam, some teaching assistants even worked with students to define unfamiliar terms and help them figure out exactly what certain test questions were asking.
Some have questioned whether it is the test’s design, rather than the students’ conduct, that should be criticized. Others place the blame on the teaching assistants who opened the door to collaboration outside of class by their own behav- ior in helping students to understand the questions better.
Answer the following questions about the Harvard cheating scandal.
1. Using Josephson’s Six Pillars of Character, which of the character traits (virtues) apply to the Harvard cheating scandal and how do they apply with respect to the actions of each of the stakeholders in this case?
2. Who is at fault for the cheating scandal? Is it the students, the teaching assistants, the professor, or the institution? Use the concepts of egoism and enlightened egoism to support your answer.
3. From a deontological perspective and the point of view of achieving justice, were anyone’s rights violated by the events of the scandal and outcome of the case? Explain why or why not.
Case 1-1