Accountants Are Encouraged To Interpret Interests Accounting Essay

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Colin Boyd, The Structural Origins of Conflicts of Interest in the Accounting Profession? details the events that led to the collapse of Enron and scandals at other companies. Do you believe that corporate capital punishment was a just outcome for Arthur Andersen and its many employees and partners? Why, or why not? Appeal to moral theories that have been discussed in Chapter 6 in defending your position.


How much of a disregard for ethics should society tolerate in a company?

A professional accountant has an obligation to record, provide, and attest to information regarding the economic affairs of an organization. According to the American Institute of Certified Public Accountants an accountant is duty bound to adhere to a professional code of conduct, which emphasizes integrity, objectivity, confidentiality, and competency. A further obligation, which accountants have and which accrues to all professionals, is to look out for the best interest of the client. The accountant is hired to perform a service for the client.

Accountants are encouraged to interpret interests in such a way that even though something appears to be in a client?s or employer?s interest, if it is not in the public?s interest, then that appearance is false and misleading. Accountants provide information, and if this information persuades people to act in one way or other, and their action either benefits or harms the persons giving or getting the information, such information giving takes on ethical importance.

Arthur Anderson tarnished the integrity of the accounting profession by its blatant disregard of the Professional Code of Conduct of accountants in not one instances, but multiple; according to the Dow Jones Newswire, July 12, 2002, Arthur Anderson presented a poor picture as a professional accounting firm, committing errors which cost companies, such as Waste Management, Sunbeam, WorldCom, Global Crossing, Qwest, Baptist Foundation of Arizona, Halliburton, and Enron, their employees, shareholders and the public millions

With such a pattern of misconduct, Arthur Anderson developed complacency towards irregular accounting, providing legitimacy to fraudulent assessments and audits. They caused significant financial disaster to investors, employees, and retirement funds, destroying public confidence not only in the accounting firm and profession, but also in the market itself.

Because Arthur Anderson provided auditing services for bonds and credit ratings for municipal, state, and federal governments, the resounding impact of Arthur Anderson?s improper business and accounting practices affected far more than those that invest in stocks, mutual funds and other financial services. Even for those that do not own or trade stock, Arthur Anderson?s misconduct was felt.

Unfortunately some of Arthur Anderson?s many employees and partners that did not engage in the actions, as were the many individuals indirectly impacted by Arthur Anderson?s actions, were caught in uncontrollable collateral damage, in a sense financial murder therefore I believe the judgment of corporate capital punishment for Arthur Andersen was a just outcome.


Ronald F. Duska, Brenda Shay Duska,

and Julie Anne Ragatz

Duska, R. F., & Duska, B. S. (2003). Accounting ethics.

Malden, MA: Blackwell.

Dow Jones News Wire July 12, 2002, Retrieved on 8 January 2011, from

Question 2

Explain Brenkert?s position in ?Marketing and the Vulnerable.? Next, apply his arguments to the case study ?Kraft Foods Inc.: The Cost of Advertising on Children?s Waistlines? on page 339 of the textbook. What would Brenkert likely conclude about this case? Why? Do you agree or disagree with Brenkert? Why?


Brenkert?s position in ?Marketing and the Vulnerable? argues the need to improve the ethical behaviors of organizations as they discharge their marketing tasks and responsibilities, to implement guidelines to which marketing organizations would have to follow to ensure those who are deemed vulnerable, or specially vulnerable are not manipulated or taken unfair advantage of. Brenkert argued that marketers should not target those who are specially vulnerable in ways such that their marketing campaign depends upon the vulnerabilities of that specially vulnerable group (text).

So, in relation to Kraft marketing to children, and understanding that the goal of marketing is to increase the amount of product sold and marketing strategies are designed to cast a broad net without considering the effects on vulnerable populations. Brenkert would most likely conclude that Kraft is conducting unethical marketing practices, because children are cognitively vulnerable due to their undeveloped abilities, any marketing done to children must be done in ways that do not presuppose those vulnerabilities (text). He would further conclude that although Kraft may be in accordance with the legal time restrictions on advertising to children, the restrictions themselves are inadequate. They were established with an assumption of greater adult or parental supervision than what actually exists, although the FCC?s limits the amount of advertising on children?s television programming, this does not directly address the issue; the very content of those advertisements must be monitored (text).

I agree with Brenkert?s argument, in that young children are not as likely to distinguish fantasy from reality, that older children who are developmentally delayed still cannot distinguish fantasy from reality and the ability to understand what is being sold and why requires abstract thinking (Villani, 2002)



Villani, S (2002). Marketing to Vulnerable Youth. World Health Organization.

Question 3

Explain Holley?s position in ?Information Disclosure in Sales.? Next, apply his arguments to the case study ?Advice for Sale: How Companies Pay TV Experts for On-Air Product Mentions? On page 331 of the textbook. What would Holley likely conclude about this case? Why? Do you agree or disagree with Holley? Why?


David Holley?s position in ?Information Disclosure in Sales?argues sales personal have an ethical responsibility to the seller. His argument contends, according to text, (2008) that the salesperson?s role is as an advocate, thus the salesperson has the obligation to present a favorable story, the seller is also responsible for giving the buyer any information needed to make a reasonable judgment about whether to purchase the product which the buyer does not possess, referred to as the Mutual benefit rule (Text).

Holley would have concluded that although Mr. Oppenheim, Ms. De Monchy, and Mr. Greenberg were fulfilling their roles as advocates of specific products and presenting a favorable story, the failed to disclose their paid relationship with some of the products. According to Cain, Loewenstein, and Moore (2005), a person or an organization may be morally required to disclose information for three reasons: the release of information may prevent some significant harm that cannot easily be prevented in other ways, may be required to ensure fairness in markets, and may manage a conflict of interest. It is this last one with respect to disclosing a conflict of interest, in that disclosing a conflict enables the party who is potentially harmed to be aware of the conflict and take protective action (Cain, Loewenstein, & Moore, 2005). Mr. Oppenheim, Ms. De Monchy, and Mr. Greenberg, all had a personal interest that interferes with an obligation or duty to serve the interests of another. But had they disclosed their paid representation of the products, then buyers would have been able to question the sellers judgment and make a more informed decision. Disclosure of this information would have been inline with the Mutual benefit rule.

I agree with Holley, in that both sides of the bargaining table are afforded a fair and open transaction. Through the mutual benefit rule the seller is still acting as an advocate of their product, while also providing information to assist the buyer in making a fully informed decision on the purchase. Thus, the mutual benefit rule allows the salesperson to meet their ethical obligations while still fulfilling their role as advocate.


(Cain, Loewenstein, & Moore, 2005).

Cain, D. M., Loewenstein, G., & Moore, D. A. (2005). Coming clean but playing dirtier: The shortcomings of disclosures as a solution to conflicts of interest. New York: Cambridge University Press.


David M. Holley(1998).Information Disclosure in Sales.Journal of Business Ethics17 (6):177-187.

2002 Business Ethics Quarterly, Vol 12 Issue 1

Question 4

Two articles in Chapter 6 raise doubts about the ethical problems that underlie insider trading, primarily relying on utilitarian reasoning to support their positions. Examine the practices of insider trading from the perspective of deontological reasoning. Does this lead to different conclusions regarding the moral permissibility of these practices? Explain.


Through the utilitarian perspective, insider trading is viewed as being good if the result is the greatest good for the greatest number. But, an issue with the utilitarian perspective is the inability to accurately determine or gauge if the greatest good for the greatest number is being met.

From the deontological philosophical perspective, the moral system of thinking is based on the view that particular types of action and or behavior are intrinsically ethical or unethical, within rights and justice principles (Robin and Reidenbach, 1987). The principle is always to act so that everyone, faced with the same situation, should take the same actions

Deontological reasoning starts with the assertion of duties, but those duties must be justified externally, therefore if insider trading was to be seen an intrinsically ethical, then only a select few would gain from the information and the mere possibility of obtaining extraordinary profit through insider trading may encourage immoral behavior, such as information theft or espionage, or market manipulation. Whereas, if insider information was to be seen as intrinsically unethical, then tax preparers, doctors, plumbers, chefs, airline pilots and bargain shoppers would be immoral.

Insider trading must be analyzed in the context of the relationships among the firm, its shareholders, and its employees, insofar as it threatens the fiduciary relationship that is central to business. It is not necessarily immoral, unless it violates the trust that the company has placed in those people, either inside or outside the company, or infringes the company?s right to own its information (Text). If that is not the case, the use of inside information may be ethical, unless it causes harm to other investors or to society at large.