Ethical Considerations (2/1)

Question 1

Definition of “business ethics”

Answer 1

“Science of morals” = MORAL is an accepted rule or standard of human behavior
Know right from wrong in workplace
Do right even though negative outcome results

Question 2

Factors that may lead to unethical behavior 
Organization factors (4)

Answer 2

1. Pressure to improve short run performance
2. Overemphasis on adherence to chain of command
3. Informal work-group loyalties
4. Committee decision processes

Question 3

Factors that may lead to unethical behavior 
External factors (2)

Answer 3

1. Pressure of competition (financially tough)

2. Variations in cultural norms

Question 4

Purpose of code of ethical behavior (6)

Answer 4

1. Promote policy to assure certain behavior
2. Communicate org purpose and beliefs
3. Establish unfirm ethical guidelines “the moral maze”
4. Communicate acceptable values
5. Means to police violations
6. Assure trust in profession is not lost

Question 5

Categories of ethics/illegal violations

Answer 5

Errors (unintentional)
Irregularities (auditing terminology)
Illegal Acts (company doing it)

Question 6

Types of irregularities:

Answer 6

Defalaction

Fraudulent financial reporting

Question 7

Types of illegal acts

Answer 7

Direct effect:

Indirect effect

Question 8

IIA Code of Ethics

Answer 8

Governing Standard of the Profession
Provides board principles and specific rules of conduct
divided into 4 sections

Question 9

IIA Code of Ethics: Integrity

Answer 9

Shall perform duties with 
HONESTY
DILIGENCE
and
RESPONSIBILITY
Shall obey relevant laws

Question 10

IIA code of ethics: objectivity

Answer 10

Shall not participate in any activity that will impair objectivity ex. conflicting jobs
Shall refrain from auditing areas where previously employed (ONE YEAR)