ACT 505 Principles and Ethics of Accounting - Free Samples to Students

Apply the following ethical framework to each scenario:
1. What standards and principles of ethics did Johnny and Mary Jo violate? Should Johnny be sanctioned by the firm or the PCAOB? If so, how? Should Mary Jo be sanctioned by the university office responsible for ensuring academic integrity? If so, how?
2. Who are the main stakeholders in each situation aside from Johnny and Mary Jo? How might each of these stakeholders be affected by Johnny’s and Mary Jo’s choices, respectively?
3. How might Johnny and Mary Jo rationalize their behavior as acceptable?
4. What alternative actions would you recommend for Johnny and Mary Jo?
5. Johnny and Mary Jo both failed to speak up when confronted with their ethical dilemmas. What factors contributed to their silence? Assume that they wanted to act ethically. How could they have given voice to their concerns?

Introduction

Accounting and auditing is a crucial sector in an organization as it deals with all the financial operations of an organization. Based on the importance of the sector, accountants and auditors operate within various ethical standards and principles. The content of this paper seeks to discuss accounting and professional ethical standards as well as principals about two professional case scenarios. The first professional scenario is about Jonny who is a certified accountant acting as the senior auditor in charge of the audit engagement. Jonny is an employee of ABC company audit firm who is currently working with an existing client. However, during the audits, Jonny and the manager collude to commit some acts which are not according to the accounting and auditing professional ethical codes of standard and accounting principles when they realized that PCAOB was to visits them soon for examination. The content further applies professional accounting ethics and principle to the second case of Marry Jo who uses a study bank which should only be used by instructors since she was tired. Marry Jo further signs the certification of showing exam integrity. The content further concludes with summary and recommendation of what the two should have when in such situations.

Case scenarios

Question one: Standards and principles of ethics and Mary Jo violated and the appropriate sanctions

Considering both the two case scenarios, it can be concluded that both parties involved Johnny and Mary

Any stance of violation of ethical principles should not go unsanctioned. (Fiolleau, Libby and Thorne 2017). For the case of Johnny and the manager, they resort to dishonesty on realizing that the files meant for audits are incomplete. This is about vital documents like worksheet and final version of the signed engagement letter. The two colleagues decide to seek means of updating the files forgetting the importance of blueprints of the data. Marry Jo also gets classified in the same category with the colleagues above since she cheats in her tests. In light of the above instances, a breach of integrity principle often occurs due to dishonesty (Cheng and Flasher 2018). The offenders should be sanctioned in manner that is outlined buy the ethical frame as folows ; the first case of Johnny, he should face dismissal from the department as an in-charge of the company, and for the example of Marry Jo, she should be put under disciplinary probation by dismissing her from graduate or any other professional program.

Question 2:

Other primary stakeholders and how they are affected by Johnny’s and Mary’s choices

Apart from Johnny and Marry Jo as the primary culprits of violation of standards and principles of ethical misconduct, there are other fundamental stakeholders noted within the two cases. They are the manager of ABC company for scenario one and Samantha for situation two respectively. The decision of Jonny updating the files using a print from the previous version of the worksheet and adding marks initials and backdating the working paper have direct repercussions on both main stakeholders involved. The manager is likely to be dismissed or removed from the rank. This is so because Jonny conducted himself in that manner with the permission from the manager to obtain the original client’s signature which was essential for the engagement letter. Secondly, Samantha is a critical stakeholder in the breach of integrity that her fellow student was involved. It is Samantha’s advice that allures Marry Jo to download the test bank using the website she was given by her colleague. Since the two people know that the test bank document is meant for the instructor only and they go ahead using the material, they are both susceptible to the same punishment. Samantha is affected in the sense that if she is revealed by her friend to their institution that she has been using the test bank, she can be expelled permanently from the institution. Her transcripts, which she has all as may also have a permanent notation of disciplinary expulsion. Punishment for violation of ethics not only spoils reputation but also chances to get employment (García and Vicente 2017). For the culprit, it will not only affect her on matters internship in the job market but also shall have soiled her reputation within the institution and even outside

Question 3: How Johnny and Mary Jo might rationalize their behavior as acceptable

Rationalizing an action does not mean approving a wrong deed (Schnatterly, Gangloff and Tuschke 2018). Even though it is crystal clear in the two cases that both Johnny and Mary Jo have violated the aspect of the integrity of ethical principles and standards by cheating, the duo might have a chance to rationalize their behavior as “acceptable.” Johnny, as a certified public accountant in the acting capacity of senior audit in the company, has been working hard to accomplish his engagements alongside other engagements. However, the spring season has been a busy season that resulted to him bei unable to complete the paperwork on time. Moreover, the Public Company Accounting Oversight Board gave them a visit notification hardly in two weeks’ time. This could not be enough time to complete all the paperwork hence a little more time ought to have been added otherwise the process would have been smooth thus justification of his action as morally acceptable. On the other hand, Mary Jo can also substantiate her behavior as morally acceptable in the following way. She did not want to fail in her exams though she was tired of reading because the exams have been three in a row within one week. This compelled her to seek other means necessary for excelling in her examination. With the secret advice from a friend whose past transcripts are marked all as she bought the idea of downloading the test bank for the textbook, she uses to study. Besides, the accounting 355 class been the hardest of the semester. Like it’s always said that the end justifies the means, these reasons might explain her behavior.

Question 4: Alternative actions that would recommend for Johnny and Mary Jo

Apart from dismissal from the department, for the case of Johnny, other alternative activities could be: firstly, reassigning Johnny in another area related to public accounting like marketing not conducting auditing. This would give him another chance to behave appropriately but this time in a different field. Secondly, Johnny can be reduced from the classification as acting senior in the company to lower status. Removing one from loftier condition to lower one serves a warning to the person involved and any other colleague that may fall in the same situation (Redman and Caplan 2017). Lastly and the more severe alternative could be termination of the employment. This is a harsh example that will make an employee to never portray any case of misconduct according to GAAP (Mayo 2017). For the instance of Mary Jo, another makeup test can be administered, but the test should be more difficult than the original trial. Alternatively, she may not be awarded any credit for the initial analysis to serve as an example to Marry Jo and the rest of the colleagues who may use test bank document that is meant for the instructor.

Question 5:

1. Factors that contributed to Johnny’s and Mary’s silence when confronted with ethical dilemmas.

Responding to situations in workplaces and any other place may adversely influence the conduct of an individual on matters ethical decision making (Stouten et al. 2018). Often when caught in an ethical dilemma, persons involved may resort to remain silent. Among the factors that contributed to the silence of Jonny and Mary when confronted may include the following; loyalty, fear, and futility (Rotman, Khamitov and Connors 2018). According to the first scenario where Johnny and his company manager involved in actions of dishonesty, the possible factor that could have made Johnny keep mum is loyalty. Loyalty often tends to exist between a junior and a senior in a workplace though not a compulsion (Graham 2018). Johnny perhaps could not respond when questioned about his actions since he wanted to maintain that actual relationship with the manager from whom he took directives. He can also be said to have the sense of loyalty to his company since speaking about his ethical dilemma would tarnish the name of the company he works. Mary on the other end failed to speak up probably because of the sense of loyalty she hers to her friend. Offering to speak about how she ended up using the test bank as a study material before exams would mean betraying her loyalty to Samantha.

Another factor that prompted the silence of both the parties is fear. The fear of failing to justify their actions knowing well the dictates of ethics and the probable consequences rendered them silent (Wachs 2018). Mary, for example, went ahead to sign a certification that she is aware of the academic integrity code of her institution and academic integrity policies set I the syllabus thus she could not speak after all those actions. The last factor of their silence is due to futility. This is the fear of not being heard by anyone for an act of ignorance (Voss 2018). Speaking or defending their behavior would be futile since no one would be ready to listen to what they have to say. The first thing that any employer is required to know is the ethical consideration of the profession, but other people may choose to ignore them due to circumstances that prevail. Mary had read the statements in the cover page of the test bank, “meant for instructor use only,” and the copyright notice on a footnote on each page still decided to use the document since she was running short of time. Her response would, therefore, automatically prove futile.

1. How they could have given voice to their concerns assuming they wanted to act ethically

People may find themselves on the wrong side of ethical conduct due to unavoidable circumstances (Wu et al. 2018). Considering the two parties wanted to act ethically, and the situations were as tricky as such, they would have voiced their concerns in these ways. Johnny and the company would have communicated with PCAOB through email, or letters to consider rescheduling their time of visit. By being open to express your perception with others, owing to different circumstances, one avoids situations of breaching ethical conducts. In every institution, there are various channels and levels of communication (Yang et al. 2018). In academic institutions, for example, there are different departments that deal with specific issues. The problem in the second scenario was lack of enough time to prepare for exams and the complexity of the subject. Mary could have aired here grievances concerning the scheduling of the timetable by visiting relevant departments for help.

Conclusion

In summary, the studying accounting ensures that the learner acquires different perspectives of accounting that will enable the student also to appreciate the concepts that underscore accounting practices (Iphofen and Tolich 2018.) People in all fields of study and different profession should endeavor to uphold the ethics and principles that govern an institution. These are the moral expectations that are required from every single person for their wellbeing and the benefit of an entity like business or institutions. Additionally, contemporary issues are witnessed in workplaces such as companies, for example keeping quiet even when someone breaches the principles of conduct. Such practices must be solved amicably by learning to speak up against them and generally desisting from getting involved into any unethical practice since every stance of such has their consequences as having been discussed within this paper.

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