Exam 1 Flashcards
Normative ethics
Acting based on expected behaviors from society
Behavioural ethics
How to act in situations or pressures
4 ethical dilemmas
Truth vs loyalty
Justice vs mercy
Short term vs long term
Individual vs community
Moral motivation
Being able to internalise where codes of conduct come from
Moral character
Capacity to do what is necessary even when unpopular
Action, follow through
Fraud triangle weights from KPMG
Opportunity- 59%
Motive- 21%
Rationalisation- 11%
Moral justification
Lack of moral sensitivity
I lied to protect the company
Euphemistic labelling
I borrowed it instead of I stole it
Trivialising the act
Displacing responsibility
Putting responsibility on a specific person
I was just following orders.
Diffusing responsibility
Everyone else is doing it
Ethical fading
When someone doesn’t realise the decision they make has ethical implications
Miscalibration
Overconfidence in abilities to understand and handle issues
Miscalculation
Overestimating the extent to which you would engage in good behaviours
Motivated blindness
Overlooking unethical behaviour because it is in our best interest to ignore it.
Conflict of interest
Indirect blindness
Blaming a third party
Overvaluing outcomes
Ignoring process behind outcome
Knowledge is the most important thing
Ends justify the means
Ethical leadership
Bringing together communication, upholding rules, and focuses on stakeholders
Formal systems
Selection systems Policies Orientation Performance management Decision process
Informal systems
Norms
Rituals
Myths
Language
Altruistic cheating
Cheating to help someone else out, being loyal
Going south fraud motivations
Discounting
Familiarity
Escalation
Accounting openings for bias
Structural-mental
Ambiguity- discounting
Attachment- familiarity
Approval- easier than asking questions, escalation
World Com motivations
Industry was in decline due to dot com
Focused on expense:revenue to be #1 on Wall Street
Telecom Act- could not longer acquire cell phone companies
World com ethical breakdowns
Indirect blindness
Discounting bias
Overvaluing outcome
Slippery slope
Rest 4 models of ethical behaviour
Moral sensitivity
Moral judgement
Moral motivation
Moral character
Ethical breakdowns
I’ll conceived goals Motivated blindness Indirect blindness Slippery slope Overvaluing outcomes
Ethics vs morals
Ethics are operational, applied, actions
Morals are internal
Diann’s fraud schemes
Expense reimbursements
Altering salary
Duplicating checks
Creating dummy vendors
Focusing failures
Ethical fading
Miscalibration
Miscalculation
Milgram experiment rationalisations
Just doing what they’re told The victim wasn’t in that much pain Victim could have gotten out of straps Denial of the victim Slippery slope (more and more volts) Influenced most by someone else being experimented on in the room
3 types of bias affiliations
Employment
Alma mater
Chance
WorldCom contributing factors of fraud
Leadership and culture- company goals
Internal controls- CFOs general ledger access
Internal audit- reporting channels
External audit-auditor client relationships
Board of directors
Moral sensitivity
Being able to sense that something is wrong, helps prevent ethical fading
Ethical dilemma
A situation with two outcomes, both of which can be right
Corporate culture iceberg
Code of conduct/ethics are what we can see, top of the iceberg
Norms and culture are below the iceberg
I’ll conceived goals
Creating goals and incentives to motivate those around us but with unintended consequences
Rationalizations
Moral justification Advantageous comparison Euphemistic labelling Minimising the act Denial of the victim Displacing responsibility Diffusing responsibility Entitlement
