Misc. Flashcards
What is cognitive dissonance?
- Describes the feeling of discomfort that results from holding two conflicting beliefs
Why do good, smart people do bad things?
- Drift
- Destabilizing pride
- Power
- See enterprise as self extension
- People don’t learn from mistakes
Give an example of drift
- 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
What is a good analogy for drift?
“The Boiling Frog” (inability of people to react to significant changes that occur gradually)
Is religion a moral panacea?
NO
- Bernard Cardinal Law: resigned in disgrace after failing to remove pedophile from the ministry
- Ken Lay: led regular bible studies
Who refused to allow porn on the Adelphia cable system?
John Rigas
Who led regular bible studies?
Ken Lay
What can make moral failings hard to see?
Pride
What is a moral virus?
Power
Why is power a moral virus?
- Might makes right attitude (my needs are more important)
Do people learn from their mistakes very often?
NO
How can one mindfully mitigate drift?
Look to company guidelines
How can one mindfully mitigate destabilizing pride?
Share dilemmas and true motives with at least one person, a confidant
How can one mindfully mitigate self-deception?
Set aside time for introspection (when have I served the ultimate good for the function vs. myself)
How can one mindfully mitigate power?
Develop and maintain a well-informed conscious; may require the support of a faith community
Ethical fading is often due to what?
Motivated blindness
In a survey of 31 libraries in the US and UK, what books are more likely to be stolen than any other book?
Ethics books
Who was the banker that dodged $66,000 in train fares in London?
Jonathan Paul Burrows
What did he do?
- Hadn’t bought a ticket from his original station
- Instead bought a pass that cost less
What happened to Jon Burrows when he got caught at a train station?
Fired from company ( to maintain
Why did Jon Burrows do it?
Drift, destabilizing pride, power (did it once, and didn’t get caught)
What was Philip Zimbardo’s famous experiment called?
Stanford Prison Experiment
What is the CPA’s role when preparing a tax return?
Be objective
What is the CPA’s role when providing tax planning advice?
Advisory/Advocate (but still have a responsibility to act ethically)
What is the CPA’s role when representing the taxpayer?
Advisory/Advocate (but still have responsibility to act ethically)
What is the difference between tax avoidance and tax evasion?
Tax avoidance = legal
Tax evasion = illegal
What is the penalty for breaking the Congress Tax Code?
Fines/prison
What is the penalty for breaking the AICPA Code?
Expelled
What is the penalty for breaking state law?
Professional discipline (e.g. loss of license)
What is the issue with marketing aggressive tax shelters?
- Reasonable v. aggressive shelter
- What are the obligations when providing tax advice?
- What about public interest?
What was the case with the EY tax shelters?
- 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
What was the case with the KPMG tax shelters?
- 2005: fraudulently generated $11B in fictitious tax losses, costing government $2.5 B in lost taxes
- Too big to fail after AA
What differentiates very aggressive tax shelters from reasonable tax shelters?
- Reasonable: passes more likely than not test
- Aggressive: doesn’t pass
In the wake of the EY and KPMG tax debacles, what did the IRS issue in Sept. 2007?
- Circular 230
What does Apple do to lower taxes paid?
Flow foreign revenue through its Irish subsidiaries
How does Irish law determine tax residence?
Where co is managed and controlled
How does US law determine tax residence?
Where co. organized
How is it that smokers are good for the economy?
Smokers save the rest of us money b/c they die sooner and consume far less in healthcare and pensions
