AMERICAN UNIVERSITY
SYLLABUS: ACCT-600 ETHICS IN BUSINESS AND ACCOUNTING
I. Instructor Information
Instructor:
Office:
Phone/email:
Office Hours:
II. Course Information
Course Number:
Course Title:
Credit Hours:
Semester:
Class Meets:
ACCT-600
Ethics in Business and Accounting
3 semester credit hours
Text: Business and Professional Ethics for Directors, Executives, and Accountants, 4th Edition
Leonard J. Brooks, © 2007 South-Western College Publishing Company,
ISBN-10: 0324375395
III. Course Objectives
This course provides a thorough examination of the major ethical issues in business and
specifically, within the accounting profession. Students should develop: the ability to recognize
an ethics issue; skills of analytical analysis; appreciation of uncertainty in the practice of
accounting and understanding of ethical issues and standards that affect the accounting
profession.
IV. Course Content
A central purpose of the course is to develop students’ understanding of ethical
concepts and applications in business situations. This understanding requires students to be able
to recognize ethical dilemmas and challenges in business situations, and apply concepts from
major ethical frameworks in analyzing such situations. The course examines the profit motive
and the public good, social responsibility in corporations, environmental concerns, consumer and
employee relations, confidentiality, whistle blowing, advertising and hiring practices. The
AICPA Code is evaluated in contrast with ethical codes of other organizations and professions.
Specifically, this course will prepare students for the following areas, required by the
AIPCA in preparation for the CPA examination in the area of regulation1:
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“Uniform CPA Examination: Examination Content Specifications.” AICPA. 14 June 2002 <http://www.cpaexam.org/download/CSOs%20for%20revised%20CPA%20Exam.pdf>.
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I. Ethics and professional and legal responsibilities
A. Code of Professional Conduct
B. Proficiency, independence, and due care
C. Ethics and responsibilities in tax practice
D. Licensing and disciplinary systems imposed by the profession and state regulatory
bodies
E. Legal responsibilities and liabilities
1. Common law liability to clients and third parties
2. Federal statutory liability
F. Privileged communications and confidentiality
We will discuss components of business, focusing on: (i) profit and the public good, (ii)
environmentalism, (iii) whistle blowing, (iv) notions of professionalism, and (v) codes of
conduct and standards promulgated by the AICPA, as well as other rule making bodies will be
introduced. Learning will be facilitated through class discussions, lectures, cases, and projects.
Specific focus will be given to ensure that students:
• Understand and appreciate the role that business ethics plays for internal and external
users.
• Comprehend the significance of ethical behavior in business.
• Understand and apply basic ethical theories to real-life business problems.
• Demonstrate a proficiency in the mechanics of analyzing and approaching ethical
dilemmas.
• Demonstrate an understanding and proficiency for current legal and professional
standards applicable to accountants.
• Show critical thought and the ability to construct organized written arguments.
V. Requirements and Evaluation
A. Grade Components
Midterm Exam
Final Exam
Paper I
Paper II
Project
Participation
20%
25%
15%
15%
15%
10%
B. Grade Distribution
A: 93-100
A-: 90-92
C+: 77-78
C: 70-76
B+: 87-89
C-: 68-69
B: 80-86
D: 60-67
B-: 78-79
F: 0-60
C. Academic Integrity
Standards of academic conduct are set forth in the University's Academic
Integrity Code. By registering, you have acknowledged your awareness of the Academic
Integrity Code, and you are obliged to become familiar with your rights and
responsibilities as defined by the Code. Violations of the Academic Integrity Code will
not be treated lightly, and disciplinary actions will be taken should such violations occur.
Please see me if your have any questions about the academic violations described in the
Code in general or as they relate to particular requirements for this course.
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VI. Course Schedule
DATES
Week 1
Topic
CHAPTER 1: ETHICS EXPECTATIONS
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Weeks 2 & 3
developments that have changed and are changing the ethical
expectations for business, and the accounting profession,
resulting expectations for accountability, governance and
fiduciary duty,
basic concepts in business ethics, stakeholder accountability,
reputation, and risk management,
implications for corporations, directors and executives, and
for professional accountants.
CHAPTER 2: GOVERNANCE, ACCOUNTING AND
AUDITING, POST-ENRON
Review the Enron, Arthur Andersen and WorldCom fiascoes to reveal:
• How fraudulent transaction were arranged and carried out,
• How flaws in the following permitted and facilitated these
transactions:
• Focus of accountability,
• Governance perspective, understanding and
mechanisms including the corporate culture involved,
• Motivation systems, including remuneration, stock
option and bonus systems
• Understanding of roles, risks and mandates:
• By directors and executives
• By professional accountants
• By Lawyers
• By Bankers who facilitated these transactions
• What the impacts have been and will be on these corporate and
professional participants due to:
• Reactions by government and regulatory agencies
• The Sarbanes-Oxley Act of 2002
• Resulting SEC, NYSE and OSC regulations
• The New Framework for Accountability and Governance
• Future developments that are likely
Weeks 4 & 5
CHAPTER 3: CORPORATE ETHICAL
GOVERNANCE & ACCOUNTABILITY
Develop a framework to:
• Generate and maintain the support of shareholders and
stakeholders in the face of rising expectations of
performance
• Facilitate the achievement of corporate strategic objectives
• Protect corporations, directors, executive and professional
accountants from loss of reputation and trust due to
unethical behavior, and
• Maintain a watching brief on likely future developments.
Assignment
Read Text Ch. 1
Possible Cases:
Betaseron A,
Union Carbide-Bhopal,
or Martha Stewart
Read Text Ch. 2
Possible Cases:
Waste Management, Inc. or
Sunbeam Corporation.
Read Text Ch. 3
Possible Cases:
Adelphia, Tyco, Nortel, Bankers
Trust, or Barings Bank.
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Weeks 6, 7 & 8
CHAPTER 4:
PROFESSIONAL ACCOUNTING IN THE PUBLIC
INTEREST, POST-ENRON
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Explore the role of the professional accountant. A thorough
understanding of that role and the considerations which shape it
determine how a professional accountant ought to act with regard
to the services offered, the judgment and values applied, and the
sources of ethical guidance referred to.
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Provide background on the ethical dimensions of professional
accounting and a deeper understanding of the value-added by the
profession.
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Concept of fiduciary service in the public interest, changes
brought by SOX, and the contributions in prospect from the
IFAC Code of Ethics to which the AICPA, CICA, ICAEW,
IMA, SMAC and CGAAC as well as most professional
accounting bodies in other countries will harmonize their codes
in the next few years.
Read Text Ch. 4,
Possible Cases:
Lang Michener Affair,
Locker Room Talk ,
Advice for Sam and Ruby or
Dilemma of an Accountant
Paper #1 – Due
Review for Exam #1
Week 9
Week 10 & 11
Exam #1
CHAPTER 5:
APPROACHES TO ETHICAL DECISION MAKING
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Week 12 & 13
why traditional philosophical approaches to ethical decision
making are so useful,
why ethical actions need to take stakeholder interests into
account,
what the fundamental interests of stakeholders are,
how to assess the impact of proposed actions on these interests,
how to make these assessments comprehensive,
how to use the approaches outlined and moral imagination to
improve unethical decisions, and
how to deal with problems of the commons.
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CHAPTER 6:
MANAGING ETHICS RISKS & OPPORTUNITIES
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Ethics risk and opportunity management
Ethics strategies and tactics for effective management of
stakeholder relations
Workplace ethics
International operations
Corporate social responsibility/accountability and audit
Crisis management.
Read Text Ch. 5
Possible Cases:
Kardell Paper Co.,
Ford/ Firestone Tire Recal,
Betaseron,
Pinto Case or Vioxx Decisions
Read Ch. 6
Possible Cases:
The Texaco’s Jelly Beans or
Downsizing… Case
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Paper #2 - Due
Class Presentations & Final Exam Review
Week14
Final Exam Week FINAL
EXAM
Case Topics:
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Enron, Arthur Andersen and WorldCom focus on governance and accounting failures that
directors, executives and professional accountants must now be on guard against.
Martha Stewart’s Lost Reputation provides a clear linkage between ethics, behavior and
success as opposed to the newly popular “perp” walk that many fear.
Ford/Firestone Tire Recall and the Ford Pinto show how poor ethics and memory can become
in a corporate culture of denial.
Bankers Trust and Barings Bank are recent tragedies involving derivatives, poor ethical culture and controls, and
fraud.
Adelphia, Tyco, HealthSouth and Parmalat…provide insights into how over-dominant CEOs and/or family
domination can lead to corporate looting.
Nortel’s Audit Committee was in the Dark and Kardell Paper depict decisions that directors must face more often
than most would expect.
Parmalat, Royal Ahold, Italian Tax Mores and Jail, Texaco in Ecuador and Jail and the
German Subcontractor reveal the difficult problems of foreign and multinational
operations in different cultures and regulatory regimes.
Lord Conrad Black’s Fiduciary Duty, the Lang Michener Affair, Advice for Sam and Ruby, and Multidisciplinary
Practices look at the traditional and future role of the fiduciary and of the accounting profession.
Risk Management …, and Texaco’s Jelly Beans and look at new areas for global business facing diversity.
Vioxx Decisions…, Betaseron…, Dow Corning Breast Implants, Downsize…, Kardell Paper and Aids Medication
in South Africa feature business decisions that companies face frequently.
Dilemma of an Accountant is an excellent case to introduce the role and problems of an auditor to classes which
have very limited understanding of accounting or auditing.
Just Do It – Make the Numbers, Opinion Shopping, Lowballing a Fee Quotation and To Qualify or Not bring to
reality the real life pressures that accountants face.
Locker Room Talk provides a stimulating way to introduce conflicts of interest, confidentiality, etc. without any
required acknowledge of technical accounting, as do Loyalty, but to Whom, and Conflicts of Interest on
Wall Street.
Ford Pinto can be used in managerial accounting and control courses to introduce the need for non-traditional,
cost-benefit analyses.
Exxon Valdez, Shell Brent Spar, and Wind River Energy are most exciting ways to introduce crisis management
and facing activist stakeholders like Greenpeace, and would be at home in strategy as well as accounting
and management control courses.
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