Module B + C Flashcards
Categorical imperative
Kant’s specification of an unconditional obligation to act as
One thinks others should act regardless of circumstances
Act-utilitariansm
Emphasis on an individual act as it is affected by specific
Circumstances of a situation
By focusing on individual acts, the long run effect of setting
Examples for other people appears to be ignored
Commission
Percentage fee charged for professional services
in connection With executing a transaction Or performing some
other business activity
Contingent fee 3
Type of compensation established for performance of any service
In an arrangement where no amount will be charged
Unless specific finding or result is attained/or fee depends on
The result
Ex. CPA’s can charge contingent fees for representing client in IRS
tax audit, or consulting service engagement
Fees are not contingent if they are…
Fixed by a court or public authority, in tax matters
Covered member (broad definition)
Individual who might be in position to compromise integrity of audit
Covered member (4 part definition AICPA Code of Professional Conduct), individual among others who is…
1 on audit engagement team
2 in position to influence audit engagement
3 partner or manager of nonaudit client service team
4 partner from local office
Generalization argument 3
Judicious combination of imperative and utilitarian principles
To act as one thinks others should act in similar circumstances
Ex. “What would happen if everyone acted in a certain way?” If the
Answer to the question is the consequences would be undesirable,
The conclusion is that way of acting is unethical and shouldn’t be
done
Independence
Mental attitude and appearance that auditor is not influenced
By others in judgements and decisions
Referral fee 3
1) Compensation CPA receives for recommending another CPA’s
Services and 2) that a CPA pays to obtain a client
May not be based on percentage of amount of any transaction
Rule-utilitarianism
Emphasis on centrality rules for ethical behavior while still
maintaining the criterion for greatest universal good
Decision makers must first determine the rules that will promote
The greatest general good for the largest number of people
Self-regulation
Quality control reviews and disciplinary actions conducted by fellow CPAs-professional peers
Virtue ethics, define, examples
Focus on the role of one’s character in decision making process
Ex. “What action will help me become my ideal self?”, “what action would I be proudest of?”
Ethics 3 elements
1 decision problems
2 moral principles
3 good or bad
Decision problems
Questions requiring reflective choice
Moral principles
Guides of right and wrong
Good or bad
Concerned with consequences
Ethical situation
Individual must make a choice, and right choice isn’t absolutely
Clear
Ethical problem situation
Choice of alternative actions affects well being of others
Ethical behavior 3 elements
That which…
1 produces the greatest good
2 conforms to moral rules and principles
3 demonstrates virtues you value most
Codes of professional ethics
Provide guidance in addressing situations that may not be
Specifically available in general ethics theories
Problem with using conscience as a guide?
It tells you about the wrong decision after you act
Imperative principle
Directs decision maker to act according to requirements of
Ethical rule
Does not involve considering consequence
Principle of utilitarianism
Emphasizes examining consequences of action rather than
following some rules
The criterion of producing greater good is made an explicit part
Of the decision process