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Ethics in Accounting > Misc. > Flashcards

Misc. Flashcards

1
Q

What is cognitive dissonance?

A
  • Describes the feeling of discomfort that results from holding two conflicting beliefs
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2
Q

Why do good, smart people do bad things?

A
  • Drift
  • Destabilizing pride
  • Power
  • See enterprise as self extension
  • People don’t learn from mistakes
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3
Q

Give an example of drift

A
  • Mid 1990s executives at Bristol Myers Squibb counted on big results from Capoten (new drug for lowering blood pressure
  • Studies of pregnant women began to suggest negative impact on fetuses, but it was ignored
  • Confident executives drifting into making the wrong decision
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4
Q

What is a good analogy for drift?

A

“The Boiling Frog” (inability of people to react to significant changes that occur gradually)

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5
Q

Is religion a moral panacea?

A

NO

  • Bernard Cardinal Law: resigned in disgrace after failing to remove pedophile from the ministry
  • Ken Lay: led regular bible studies
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6
Q

Who refused to allow porn on the Adelphia cable system?

A

John Rigas

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7
Q

Who led regular bible studies?

A

Ken Lay

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8
Q

What can make moral failings hard to see?

A

Pride

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9
Q

What is a moral virus?

A

Power

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10
Q

Why is power a moral virus?

A
  • Might makes right attitude (my needs are more important)
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11
Q

Do people learn from their mistakes very often?

A

NO

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12
Q

How can one mindfully mitigate drift?

A

Look to company guidelines

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13
Q

How can one mindfully mitigate destabilizing pride?

A

Share dilemmas and true motives with at least one person, a confidant

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14
Q

How can one mindfully mitigate self-deception?

A

Set aside time for introspection (when have I served the ultimate good for the function vs. myself)

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15
Q

How can one mindfully mitigate power?

A

Develop and maintain a well-informed conscious; may require the support of a faith community

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16
Q

Ethical fading is often due to what?

A

Motivated blindness

17
Q

In a survey of 31 libraries in the US and UK, what books are more likely to be stolen than any other book?

A

Ethics books

18
Q

Who was the banker that dodged $66,000 in train fares in London?

A

Jonathan Paul Burrows

19
Q

What did he do?

A
  • Hadn’t bought a ticket from his original station

- Instead bought a pass that cost less

20
Q

What happened to Jon Burrows when he got caught at a train station?

A

Fired from company ( to maintain

21
Q

Why did Jon Burrows do it?

A

Drift, destabilizing pride, power (did it once, and didn’t get caught)

22
Q

What was Philip Zimbardo’s famous experiment called?

A

Stanford Prison Experiment

23
Q

What is the CPA’s role when preparing a tax return?

A

Be objective

24
Q

What is the CPA’s role when providing tax planning advice?

A

Advisory/Advocate (but still have a responsibility to act ethically)

25
Q

What is the CPA’s role when representing the taxpayer?

A

Advisory/Advocate (but still have responsibility to act ethically)

26
Q

What is the difference between tax avoidance and tax evasion?

A

Tax avoidance = legal

Tax evasion = illegal

27
Q

What is the penalty for breaking the Congress Tax Code?

A

Fines/prison

28
Q

What is the penalty for breaking the AICPA Code?

A

Expelled

29
Q

What is the penalty for breaking state law?

A

Professional discipline (e.g. loss of license)

30
Q

What is the issue with marketing aggressive tax shelters?

A
  • Reasonable v. aggressive shelter
  • What are the obligations when providing tax advice?
  • What about public interest?
31
Q

What was the case with the EY tax shelters?

A
  • 1990s: made tax shelters for wealthy clients
  • Delayed up to 30 years of paying taxes on profits
  • $50k fee to legal advisors for saying it would be more likely than not be declared acceptable
32
Q

What was the case with the KPMG tax shelters?

A
  • 2005: fraudulently generated $11B in fictitious tax losses, costing government $2.5 B in lost taxes
  • Too big to fail after AA
33
Q

What differentiates very aggressive tax shelters from reasonable tax shelters?

A
  • Reasonable: passes more likely than not test

- Aggressive: doesn’t pass

34
Q

In the wake of the EY and KPMG tax debacles, what did the IRS issue in Sept. 2007?

A
  • Circular 230
35
Q

What does Apple do to lower taxes paid?

A

Flow foreign revenue through its Irish subsidiaries

36
Q

How does Irish law determine tax residence?

A

Where co is managed and controlled

37
Q

How does US law determine tax residence?

A

Where co. organized

38
Q

How is it that smokers are good for the economy?

A

Smokers save the rest of us money b/c they die sooner and consume far less in healthcare and pensions

Ethics in Accounting (13 decks)

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