Ch 4 Practical Ethical Decision Making Flashcards
Who is the face of egoism?
Rand
Who is the face of utilitarianism?
Bentham
Who is the face of deontology?
Kant
What were the key facts in the Sunbeam case?
- Chainsaw Al hired as CEO
- Al cut employees and products
- Sales went up
- Al got a huge bonus
- Got caught for bad accounting practices
- Charged
Why didn’t Sunbeam’s BOD catch on to the manipulations?
- Chainsaw Al was chairperson of the board
- He gave everyone stock options (conflict of interest)
How should a BOD make sure that it gets the information it needs to monitor management actions and accounting policies?
Have a whistleblowing mechanism
If you are a professional accountant who reports an ethical problem to your superior who does nothing, what more should you do?
- Talk to another senior exec you trust
- Talk to company ethics committee
- Talk to audit committee of BOD
- Contact Chair of BOD
- IMA hotline
- Get a lawyer
What problems can you identify with Arthur Andersen’s work as auditor of Sunbeam?
- Failed to verify reasonability of reserves and ultimate use of cookie jar reserves used
- Didn’t exercise enough professional skepticism
- Lack of independence
How should a Board assess the performance of their company’s auditors?
- Question them on their audit approach
- Assess them on their knowledge of company
- Compare the auditor’s performance w/ that of other auditors that board members have encountered
- Periodically ask for bids from other firms
Can a Board effectively monitor a CEO who is also the Chair of the Board?
- Need to have a “Lead Director” who acts as a quasi-chair so that CEO
- AND Chair is invited to leave the room for open discussion by rest of Board
What ethical paradigm did Al Dunlap follow at Sunbeam?
Ethical egoism
According to the authors, do any of the traditional decision-making approaches incorporate a thorough review of the motivations for the decisions involved?
NO (needs to include virtue)
What does mens rea mean?
Guilty mind
What five questions are asked about a proposed decision in the “Modified 5-Question Approach to Ethical Decision Making”?
Is the decision:
1) Profitable?
2) Legal?
3) Fair?
4) Right?
5) Demonstrating expected motivation, virtues and character?
The authors suggest that the “Modified 5-Question Approach to Ethical Decision Making” is better suited to what types of decisions?
Better suited to decisions
1) W/o externalities and
2) Where a specific focus is desired by decision maker
Which modified approach to ethical decision making do the authors suggest is better suited to decisions that have considerable impacts outside the organization?
Modified Moral Standards Approach
What four moral standards does the “Modified Moral Standards” approach look at?
1) Utilitarian
2) Individual rights
3) Justice
4) Virtues
The following standards make up the Modified Moral Standards approach:
a) Utilitarian, Individual rights, Justice & Virtues
b) Utilitarian, Individual rights, Fairness & Justice
c) Legal, Individual rights, and Justice & Virtues
d) Utilitarian, Moral rights, Justice & Legal
e) Legal, Moral rights, Justice & Virtues
a) Utilitarian, Individual rights, Justice & Virtues
What concepts does the “Modified Pastin Approach” use?
1) Ground rule ethics
2) End point ethics
3) Rule ethics
4) Social contract ethics
5) Virtue ethics
Modified Pastin Approach. What is purpose for examining ground rule ethics?
To illuminate an organization’s and/or an individual’s rules and values
Modified Pastin Approach. What is purpose for examining end point ethics?
To determine the greatest net good for all concerned
Modified Pastin Approach. What is purpose for examining rule ethics?
To determine what boundaries a person or organization should take into account according to ethical principles
Modified Pastin Approach. What is purpose for examining social contract ethics?
To determine how to move the boundaries to remove concerns or conflicts
Modified Pastin Approach. What is purpose for examining virtue ethics?
To determine if motivations, virtues, character traits demonstrated in the decision are ethical
True or false.
The modified Pastin’s approach adds the concept of Ground Rule Ethics to ethical decision making.
True
Is the modified 5-question approach to ethical decision making superior to the modified moral standards or modified Pastin approach?
Not really. Author suggests:
- Circumstances will dictate the approach which is most attractive/suitable
What does the commons problem refer to?
Refers to inadvertent or knowing overuse of jointly owned assets or resources
Give an example of a commons problem.
- Grazing livestock on land owned in common.
- Polluting the environment
Which of the following is a common ethics decision-making pitfall?
a) Conforming to an unethical culture
b) Misinterpreting public expectations
c) Focusing on ST profit and shareholder impacts only
d) Focusing only on legalities
e) Two of the above
f) All of the above
f) All of the above
Give an example of behavior that might be unethical even though ‘‘everyone is doing it’’
Bribery of foreign officials while doing business overseas
