Business & Professional Ethics
for Directors, Execu琀椀ves &
Accountants, 9e
Chapter 1—Ethics Expecta琀椀ons
Chapter Ques琀椀ons and Case Solu琀椀ons
Chapter Ques琀椀ons..................................................................2
Case Solu琀椀ons.........................................................................8
, Page |2
Chapter Ques琀椀ons
1. Why have concerns over pollu琀椀on become so important for management and directors?
Because the public perceive that our environment is 昀椀nite and that our well-being is threatened.
In turn they have in昀氀uenced poli琀椀cians to enact tougher laws and heavier penal琀椀es...up to $2
million/day, with the prospect of personal liability and jail. In addi琀椀on, U.S. courts have agreed
to hear lawsuits brought by foreigners for pollu琀椀on on foreign soil (see ethics case “Texaco: The
Ecuador Issue” in Chapter 1). Finally, pollu琀椀on can erode the trust necessary to preserve
stakeholder support, and this will be seen by stakeholders with resultant nega琀椀ve consequences
in consumer and capital markets.
2. Why are we more concerned now than our parents were about fair treatment of employees?
Our social consciousness is higher due to the reasons listed in Chapter 1.
3. What could professional accountants have done to prevent the development of the credibility gap
and the expecta琀椀ons gap?
See the discussion on the Treadway, Metcalf and Macdonald Commissions. Also see case
“Arthur Andersen’s Troubles,” in Chapter 2.
4. Why might ethical corporate behavior lead to higher pro昀椀tability?
Because a琀琀en琀椀on to ethical concerns can keep corpora琀椀ons out of costly problems such as
clean-up of pollu琀椀on, 昀椀nes, low morale, and loss of reputa琀椀on and stakeholder support; and it
can open up pro昀椀table opportuni琀椀es such as developing green product lines.
5. Why is it important for the clients of professional accountants to be ethical?
Because auditors don't check 100% of all transac琀椀ons and, even if they did, there would be
con昀氀icts of interest and other hidden issues which would be found only by chance. Making sure
that clients are ethical provides assurance that they will not be hiding things from the auditors
or engaging in unethical ac琀椀vi琀椀es. The value of the auditor's opinion depends upon it.
6. How can corpora琀椀ons ensure that their employees behave ethically?
By developing ethical corporate cultures based on codes of conduct to provide guidance;
training to provide awareness and understanding; monitoring to assure compliance; and
rewards or sanc琀椀ons to reinforce the desired behavior. Also, the top execu琀椀ves should set the
best example possible.
7. Why didn’t some corpora琀椀ons protect women employees from sexual abuse before 2017–2019?
Many factors have contributed to changes in workplaces and a琀�tudes toward sexual abuse over
the last decade, including the following reasons.
Business & Professional Ethics for Directors, Execu琀椀ves & Accountants, 9e
Leonard J. Brooks and Paul Dunn, ©2021, 2018 Cengage Learning, Inc.
, Page |3
Sexual abuse was once a taboo subject, but when media reported on some琀椀mes decades-old
abuses associated with pedophile priests, residen琀椀al schools, and sports coaches, etc., taboos
were eroded, par琀椀cularly because abuses had been directed toward boys and men. Public
outrage, media appe琀椀te, and vic琀椀ms realizing that they were not alone, increased coverage of
the topic.
At the same 琀椀me, cultural norms concerning the roles and treatment of women were changing.
The advent of desktop computers even played a role, because corporate employees were
expected to type their own documents and not rely on “tradi琀椀onal” secretarial work by women.
In professions and workplaces, more and more women were moving into non-tradi琀椀onal jobs. In
s琀椀ll male-dominated workplace and professions, women in new roles feared reprisal if they
complained of sexual abuse—if, indeed, they could 昀椀nd anyone to complain to. Complaints in
male-dominated workplaces—par琀椀cularly against a high-power or high-pro昀椀le abuser–may have
fallen on deaf ears. As more women gained roles of in昀氀uence, recogni琀椀on of workplace
discrimina琀椀on led to employment equity and pay equity programs.
As workplace norms changed, so did cultural ones. Through con琀椀nued media coverage, people
learned more about the pervasiveness of abuse and its recipe: abusers were usually in posi琀椀ons
of power and worked to isolate insecure or vulnerable vic琀椀ms and pressure them into secrecy
through shame or threats of reprisal. Old a琀�tudes of vic琀椀m blaming—that women were
responsible for or complicit in abuse, and that “No!” did not mean “no”–were being dispelled.
Social media, used as a vehicle by the #MeToo movement in 2017, rocketed the awareness of
abuses against women to new heights. The movement spread a feeling of strength-in-numbers
and an a琀�tude of “We’re not going to take it anymore.” Emboldened by widespread support,
changing a琀�tudes among women and men, and more women in roles of in昀氀uence, corpora琀椀ons
were forced to appear proac琀椀ve and intolerant of abuse.
Prior to 2017, there were rela琀椀vely few instances were powerful men were successfully
prosecuted in court with serious 昀椀nes or prison as outcomes. That all changed with cases
involving Bill Cosby (convicted in 2018) and Harry Weinstein (convicted in 2020). 12 Corpora琀椀ons
took note, and they took ac琀椀on against execu琀椀ves they formerly excused.
See also the answer to ques琀椀on 13, Chapter 7, page 590: “The #MeToo Movement has 昀椀nally
succeeded in ge琀�ng women’s allega琀椀ons of sexual abuse to be taken seriously by management
and boards of directors. Why did it take so long for this 琀椀pping point to be reached?”
8. Should execu琀椀ves and directors be sent to jail for the acts of their corpora琀椀on's employees?
Yes, they should, if the execu琀椀ves and directors act negligently or without engaging in due
1
Eric Levenson, “Harvey Weinstein's trial is closely tracking Bill Cosby's. But there's 1 major difference,”
CNN.com, January 28, 2020, https://www.cnn.com/2020/01/28/us/harvey-weinstein-bill-cosby-trial/index.html.
2
Mike Hayes and Meg Wagner, “Harvey Weinstein found guilty,” CNN.com, February 24, 2020,
https://www.cnn.com/us/live-news/harvey-weinstein-verdict/index.html.
Business & Professional Ethics for Directors, Execu琀椀ves & Accountants, 9e
Leonard J. Brooks and Paul Dunn, ©2021, 2018 Cengage Learning, Inc.
, Page |4
diligence procedures, which are designed to ensure that reasonable and proper ac琀椀ons are
taken.
9. Why are the expecta琀椀ons of a corpora琀椀on’s stakeholders important to the reputa琀椀on of the
corpora琀椀on and to its pro昀椀tability?
Without the support of key or primary stakeholders such as customers and employees,
sustained pro昀椀tability is not possible. A corpora琀椀on’s reputa琀椀on is based on the elements that
such stakeholders 昀椀nd relevant to their support, including credibility, reliability, trustworthiness
and accep琀椀ng responsibility.
10. How can a corpora琀椀on show respect for its stakeholders?
By taking their interests into account (respec琀椀ng them) when making decisions.
11. How can con昀氀icts between the interests of stakeholders be resolved by a corpora琀椀on’s
management?
By displaying sensi琀椀vity to each side, ranking the interests involved, and using this ranking to fa-
vor the most important, as discussed in the Text, Chapter 4. Stakeholders should be made
aware of the ranking and decision process where possible. In the end, tough trade-o昀昀 decisions
may be involved, but stakeholders should have con昀椀dence in the process.
12. Why are philosophical approaches to ethical decision making relevant to modern corpora琀椀ons and
professional accountants?
The philosophical approaches to ethical decision making (u琀椀litarianism, deontology, and virtue
ethics—see Text, Chapters 3 & 4) are relevant because of stakeholders’ greater and growing
ethical awareness, sensi琀椀vity, and power. Stakeholders can make a di昀昀erence to the reputa琀椀ons
and fortunes of companies and of professional accountants. Their support is needed now more
than ever.
13. What are the common elements of the three prac琀椀cal approaches to ethical decision making that
are brie昀氀y outlined in the chapter?
The common elements are measures of well-o昀昀ness, fairness, right(ness), and virtues expected.
14. Is a professional accountant a businessperson pursuing pro昀椀t or a 昀椀duciary that is to act in the
public interest?
Both, but when there is a con昀氀ict between these roles, the professional accountant must place
昀椀duciary duty above personal pro昀椀t. Otherwise, the public interest will not be protected (which
is the primary goal of a professional—see later chapters in the Text, par琀椀cularly Chapter 6, for
discussion).
Business & Professional Ethics for Directors, Execu琀椀ves & Accountants, 9e
Leonard J. Brooks and Paul Dunn, ©2021, 2018 Cengage Learning, Inc.
for Directors, Execu琀椀ves &
Accountants, 9e
Chapter 1—Ethics Expecta琀椀ons
Chapter Ques琀椀ons and Case Solu琀椀ons
Chapter Ques琀椀ons..................................................................2
Case Solu琀椀ons.........................................................................8
, Page |2
Chapter Ques琀椀ons
1. Why have concerns over pollu琀椀on become so important for management and directors?
Because the public perceive that our environment is 昀椀nite and that our well-being is threatened.
In turn they have in昀氀uenced poli琀椀cians to enact tougher laws and heavier penal琀椀es...up to $2
million/day, with the prospect of personal liability and jail. In addi琀椀on, U.S. courts have agreed
to hear lawsuits brought by foreigners for pollu琀椀on on foreign soil (see ethics case “Texaco: The
Ecuador Issue” in Chapter 1). Finally, pollu琀椀on can erode the trust necessary to preserve
stakeholder support, and this will be seen by stakeholders with resultant nega琀椀ve consequences
in consumer and capital markets.
2. Why are we more concerned now than our parents were about fair treatment of employees?
Our social consciousness is higher due to the reasons listed in Chapter 1.
3. What could professional accountants have done to prevent the development of the credibility gap
and the expecta琀椀ons gap?
See the discussion on the Treadway, Metcalf and Macdonald Commissions. Also see case
“Arthur Andersen’s Troubles,” in Chapter 2.
4. Why might ethical corporate behavior lead to higher pro昀椀tability?
Because a琀琀en琀椀on to ethical concerns can keep corpora琀椀ons out of costly problems such as
clean-up of pollu琀椀on, 昀椀nes, low morale, and loss of reputa琀椀on and stakeholder support; and it
can open up pro昀椀table opportuni琀椀es such as developing green product lines.
5. Why is it important for the clients of professional accountants to be ethical?
Because auditors don't check 100% of all transac琀椀ons and, even if they did, there would be
con昀氀icts of interest and other hidden issues which would be found only by chance. Making sure
that clients are ethical provides assurance that they will not be hiding things from the auditors
or engaging in unethical ac琀椀vi琀椀es. The value of the auditor's opinion depends upon it.
6. How can corpora琀椀ons ensure that their employees behave ethically?
By developing ethical corporate cultures based on codes of conduct to provide guidance;
training to provide awareness and understanding; monitoring to assure compliance; and
rewards or sanc琀椀ons to reinforce the desired behavior. Also, the top execu琀椀ves should set the
best example possible.
7. Why didn’t some corpora琀椀ons protect women employees from sexual abuse before 2017–2019?
Many factors have contributed to changes in workplaces and a琀�tudes toward sexual abuse over
the last decade, including the following reasons.
Business & Professional Ethics for Directors, Execu琀椀ves & Accountants, 9e
Leonard J. Brooks and Paul Dunn, ©2021, 2018 Cengage Learning, Inc.
, Page |3
Sexual abuse was once a taboo subject, but when media reported on some琀椀mes decades-old
abuses associated with pedophile priests, residen琀椀al schools, and sports coaches, etc., taboos
were eroded, par琀椀cularly because abuses had been directed toward boys and men. Public
outrage, media appe琀椀te, and vic琀椀ms realizing that they were not alone, increased coverage of
the topic.
At the same 琀椀me, cultural norms concerning the roles and treatment of women were changing.
The advent of desktop computers even played a role, because corporate employees were
expected to type their own documents and not rely on “tradi琀椀onal” secretarial work by women.
In professions and workplaces, more and more women were moving into non-tradi琀椀onal jobs. In
s琀椀ll male-dominated workplace and professions, women in new roles feared reprisal if they
complained of sexual abuse—if, indeed, they could 昀椀nd anyone to complain to. Complaints in
male-dominated workplaces—par琀椀cularly against a high-power or high-pro昀椀le abuser–may have
fallen on deaf ears. As more women gained roles of in昀氀uence, recogni琀椀on of workplace
discrimina琀椀on led to employment equity and pay equity programs.
As workplace norms changed, so did cultural ones. Through con琀椀nued media coverage, people
learned more about the pervasiveness of abuse and its recipe: abusers were usually in posi琀椀ons
of power and worked to isolate insecure or vulnerable vic琀椀ms and pressure them into secrecy
through shame or threats of reprisal. Old a琀�tudes of vic琀椀m blaming—that women were
responsible for or complicit in abuse, and that “No!” did not mean “no”–were being dispelled.
Social media, used as a vehicle by the #MeToo movement in 2017, rocketed the awareness of
abuses against women to new heights. The movement spread a feeling of strength-in-numbers
and an a琀�tude of “We’re not going to take it anymore.” Emboldened by widespread support,
changing a琀�tudes among women and men, and more women in roles of in昀氀uence, corpora琀椀ons
were forced to appear proac琀椀ve and intolerant of abuse.
Prior to 2017, there were rela琀椀vely few instances were powerful men were successfully
prosecuted in court with serious 昀椀nes or prison as outcomes. That all changed with cases
involving Bill Cosby (convicted in 2018) and Harry Weinstein (convicted in 2020). 12 Corpora琀椀ons
took note, and they took ac琀椀on against execu琀椀ves they formerly excused.
See also the answer to ques琀椀on 13, Chapter 7, page 590: “The #MeToo Movement has 昀椀nally
succeeded in ge琀�ng women’s allega琀椀ons of sexual abuse to be taken seriously by management
and boards of directors. Why did it take so long for this 琀椀pping point to be reached?”
8. Should execu琀椀ves and directors be sent to jail for the acts of their corpora琀椀on's employees?
Yes, they should, if the execu琀椀ves and directors act negligently or without engaging in due
1
Eric Levenson, “Harvey Weinstein's trial is closely tracking Bill Cosby's. But there's 1 major difference,”
CNN.com, January 28, 2020, https://www.cnn.com/2020/01/28/us/harvey-weinstein-bill-cosby-trial/index.html.
2
Mike Hayes and Meg Wagner, “Harvey Weinstein found guilty,” CNN.com, February 24, 2020,
https://www.cnn.com/us/live-news/harvey-weinstein-verdict/index.html.
Business & Professional Ethics for Directors, Execu琀椀ves & Accountants, 9e
Leonard J. Brooks and Paul Dunn, ©2021, 2018 Cengage Learning, Inc.
, Page |4
diligence procedures, which are designed to ensure that reasonable and proper ac琀椀ons are
taken.
9. Why are the expecta琀椀ons of a corpora琀椀on’s stakeholders important to the reputa琀椀on of the
corpora琀椀on and to its pro昀椀tability?
Without the support of key or primary stakeholders such as customers and employees,
sustained pro昀椀tability is not possible. A corpora琀椀on’s reputa琀椀on is based on the elements that
such stakeholders 昀椀nd relevant to their support, including credibility, reliability, trustworthiness
and accep琀椀ng responsibility.
10. How can a corpora琀椀on show respect for its stakeholders?
By taking their interests into account (respec琀椀ng them) when making decisions.
11. How can con昀氀icts between the interests of stakeholders be resolved by a corpora琀椀on’s
management?
By displaying sensi琀椀vity to each side, ranking the interests involved, and using this ranking to fa-
vor the most important, as discussed in the Text, Chapter 4. Stakeholders should be made
aware of the ranking and decision process where possible. In the end, tough trade-o昀昀 decisions
may be involved, but stakeholders should have con昀椀dence in the process.
12. Why are philosophical approaches to ethical decision making relevant to modern corpora琀椀ons and
professional accountants?
The philosophical approaches to ethical decision making (u琀椀litarianism, deontology, and virtue
ethics—see Text, Chapters 3 & 4) are relevant because of stakeholders’ greater and growing
ethical awareness, sensi琀椀vity, and power. Stakeholders can make a di昀昀erence to the reputa琀椀ons
and fortunes of companies and of professional accountants. Their support is needed now more
than ever.
13. What are the common elements of the three prac琀椀cal approaches to ethical decision making that
are brie昀氀y outlined in the chapter?
The common elements are measures of well-o昀昀ness, fairness, right(ness), and virtues expected.
14. Is a professional accountant a businessperson pursuing pro昀椀t or a 昀椀duciary that is to act in the
public interest?
Both, but when there is a con昀氀ict between these roles, the professional accountant must place
昀椀duciary duty above personal pro昀椀t. Otherwise, the public interest will not be protected (which
is the primary goal of a professional—see later chapters in the Text, par琀椀cularly Chapter 6, for
discussion).
Business & Professional Ethics for Directors, Execu琀椀ves & Accountants, 9e
Leonard J. Brooks and Paul Dunn, ©2021, 2018 Cengage Learning, Inc.
