Ethics Chapter Questions Chapter 1 1. Why have concerns over pollution become so important for management and Directors?

Stakeholders increasingly expect that a company's activities respect their values and best interest. Companies are held accountable to stakeholders (i.e.: responsible for smog, polluted water, acid rain, and oil spills.)

2. Why are we more concerned now than our parents were about fair treatment of employees?
Activist groups have increase spreading awareness, leisure time and disposable income increased allowing people to focus on other concerns beside livelihood.

3. What could professional accountants have done to prevent the development of the credibility gap and the expectations gap?
They can focus on primary loyalty to the public’s best interest and practice principles of independence of judgment, objectivity and integrity. 4. Why might ethical corporate behavior lead to higher profitability?
It’s more effective to focus on providing goods and services required by society efficiently, effectively, legally and ethically than to adopt the high-risk goal of making profit any way possible. 5. Why is it important for the clients of professional accountants to be ethical? An accountant is only as good as the information provided to him/her. We need reliable information to do our job appropriately and efficiently 6. How can corporations ensure that their employees behave ethically?
Managers must be motivated and given incentives to work hard in the interests of stockholders. Their behavior must also be scrutinized to ensure they do not behave illegally or unethically and pursue goals that threaten stockholders, employees, customers, and the public’s interests 7. Should executives and Directors be sent to jail for the acts of their corporation's employees? Yes they should be sent to jail, due to the fact that should be aware on what’s going on in their corporations. 8. Why are the expectations of a corporation’s stakeholders important to the reputation of the corporation and to its profitability?
The expectations are supposed to be built into a company's code of conduct, policies, strategies, and activities. In order to ensure stakeholder interest are respected and the company's reputation will gain support.

9. How can a corporation show respect for its stakeholders? By simply taking into account stakeholder interests in their policies and procedures, and activities that respect and so on.

10. How can conflicts of interest between stakeholders be resolved by a corporation’s management? By delving into the values that determine a corporations reputation, and managing those values so that potential risk are avoided and/or effectively migrated.

11. Why are philosophical approaches to ethical decision making relevant to modern corporations and professional accountants? Reasonable approaches to ethical decisions are needed in modern corporations because they deal internationally and should be very understanding of how their actions affect others. If modern corporations do not learn to ethically handle issues then this could affect achievement of strategic objectives. Modern corporations need to also learn how to respect and acknowledge interests of different cultures.

12. What are the common elements of the three approaches to ethical decision making which are briefly outlined in the chapter?
They all begin with the identification of significant stakeholders, an investigation of their interest and a ranking of those interests to ensure that the most important are given adequate attention during the remaining analysis, and more consideration at the decision stage.

13. Is a professional accountant a businessperson pursuing a profit or a fiduciary that is to act in the public interest? Professional accountants should be a fiduciary that acts in the public interest to uphold the credibility and reputation of the accounting profession as well as the corporations they work for. They also need to be trustworthy and need to report what is actually going on.

14. Why is it important for a professional accountant to understand the ethical trends discussed in this chapter?
Without a thorough understanding we cannot properly do our jobs as accountants. You cannot apply what you do not know.

15. Why should a professional accountant be aware of the Ethics Code of the International Federation of Accountants (IFAC)? For the simple fact that the principles inherent in the new international code are becoming the basis for future behavior and education of professional accountants.

16. Why is an ethical corporate culture important?
Most Modern corporations, however, usually deal internationally and should understand how their impacts are regarded as well as the sensitivities they arouse. Handling these ethically is a growing expectation and will contribute significantly to the achievement of strategic objectives in the near future.