Chat with AIExam 2: Cognitive Processes and Ethical Decision Making in Accounting
The "Milton Manufacturing" case illustrates:
(35) 
VerifiedA
In stage 5 of Kohlberg's model, ethical reasoning is motivated by:
(34) VerifiedC
Describe the Giving Voice to Values framework. What are the reasons and rationalizations frequently given in financial statement fraud situations?
(31) Verified"Giving Voice to Values (GVV)" is a behavioral ethics approach that shifts the focus away from traditional philosophical reasoning to an emphasis on developing the capacity to effectively express one's values in a way that positively influences others by finding the levers to effectively voice and enact one's values. The methodology asks the protagonist to think about the arguments others might make that create barriers to expressing one's values in the workplace and how best to counteract these "reasons and rationalizations." GVV is used post-decision-making, that is, you have already decided what to do. It can be used to ward off the necessity for whistle-blowing if by voicing values others can be convinced about the wrongness of their intended behavior/decisions.
GVV provides a framework to deal with the opposing points of view based on the following series of questions.
What are the main arguments you are trying to counter? That is, what are the reasons and rationalizations you need to address?
What is at stake for the key parties, including those who disagree with you?
What levers can you use to influence those who disagree with you?
What is your most powerful and persuasive response to the reasons and rationalizations you need to address? To whom should the argument be made? When and in what context?
The most frequent categories of argument or rationalization that we face when we speak out against unethical practice. Some of the most common arguments include:
Expected or Standard Practice: "Everyone does this, so it's really standard practice. It's even expected."
Materiality: "The impact of this action is not material. It doesn't really hurt anyone."
Locus of Responsibility: "This is not my responsibility; I'm just following orders here."
Locus of Loyalty: "I know this isn't quite fair to the customer but I don't want to hurt my reports/team/boss/company."
Isolated Incident: "This is a one-time request; you won't be asked to do it again."
A good example in accounting is the WorldCom fraud. Betty Vinson was convinced it was a one-time request. She felt the need to be loyal and a team player. She believed Scott Sullivan knew what was the correct accounting because of his higher position, and rationalized she did not develop the questionable accounting. She was just following orders.
On the other hand, Cynthia Cooper was the hero in the WorldCom fraud ordering her internal audit staff to do an exhaustive investigation into the recording of "prepaid capacity" costs, which were payments for telecommunications access on other providers' networks that should have been expensed as incurred each year but, instead, were capitalized to show a higher level of earnings. Cooper knew it was her responsibility as the vice president of internal audit to make sure the improper accounting was corrected. She knew it was material in amount and wasn't (or shouldn't have been) standard practice. She did not fall for the "locus of loyalty" argument of Scott Sullivan, the CFO.
In his evaluation of Kidder's model, Johnson points out that:
(34) Thorne's "Integrated Model of Ethical Decision Making" can best be described as:
(39) In the Gateway Hospital case, Kristen's best argument to counter the reasons and rationalizations Troy might give for requesting an extra days' reimbursement is?
(32) Assume your values conflict with what you are being asked to do. Under the Giving Voice to Values methodology which of the following statements reflects the thought process you might have in developing a game plan to voice your values?
(26) Assume your supervisor has reduced the number of hours you charged to the client because it was over budget. You will not be paid for those hours. What would you do and why? Use ethical reasoning.
(32) In reference to Rest's four-component Model of Morality, which component reflects an individual's willingness to place ethical values ahead of non-ethical values that relate to self-interest?
(37) What is an important part in making an ethical choice, according to Kidder?
(31) In using the GVV framework, questions to pose for dealing with the opposing points of view include all of the following except:
(30) Taken from Case 1-2 Giles and Regas.
Ed Giles and Susan Regas have never been happier than during the past four months since they have been seeing each other. Giles is a 35-year-old CPA and a partner in the medium-sized accounting firm of Saduga & Mihca. Regas is a 25-year-old senior accountant in the same firm. Although it is acceptable for peers to date, the firm does not permit two members of different ranks within the firm to do so. A partner should not date a senior in the firm any more than a senior should date a junior staff accountant. If such dating eventually leads to marriage, then one of the two must resign because of the conflicts of interest. Both Giles and Regas know the firm's policy on dating, and they have tried to be discreet about their relationship because they don't want to raise any suspicions.
While most of the staff seem to know about Giles and Regas, it is not common knowledge among the partners that the two of them are dating. Perhaps that is why Regas was assigned to work on the audit of CAA Industries for a second year, even though Giles is the supervising partner on the engagement.
As the audit progresses, it becomes clear to the junior staff members that Giles and Regas are spending personal time together during the workday. On one occasion, they were observed leaving for lunch together. Regas did not return to the client's office until three hours later. On another occasion, Regas seemed distracted from her work, and later that day, she received a dozen roses from Giles. A friend of Regas's who knew about the relationship, Ruth Revilo, became concerned when she happened to see the flowers and a card that accompanied them. The card was signed, "Love, Poochie." Regas had once told Revilo that it was the nickname that Regas gave to Giles.
Revilo pulls Regas aside at the end of the day and says, "We have to talk."
"What is it?" Regas asks.
"I know the flowers are from Giles," Revilo says. "Are you crazy?"
"It's none of your business," Regas responds.
Revilo goes on to explain that others on the audit engagement team are aware of the relationship between the two. Revilo cautions Regas about jeopardizing her future with the firm by getting involved in a serious dating relationship with someone of a higher rank. Regas does not respond to this comment.
Regas promises to talk to Giles and thanks Revilo for her concern. That same day, Regas telephones Giles and tells him she wants to put aside her personal relationship with him until the CAA audit is complete in two weeks. She suggests that, at the end of the two-week period, they get together and thoroughly examine the possible implications of their continued relationship. Giles reluctantly agrees.
However, Giles appears at the CAA audit a few days later. He pulls Regas aside and states, "I do want to put our relationship on hold until after this audit."
"We cannot be talking about this now! The audit team or the client could hear."
"Then let's have dinner tonight to discuss it. I won't leave until you say yes."
"Okay."
As Regas is returning to the audit room, Revilo says, "The team is uncomfortable with you and Giles having personal conversations in front of them. You promised this would stop."
"I appreciate your concerns again. I am working on it! Please give me some time and space."
"You don't have much time. Some of the team are talking of going to HR or the managing partner about the situation."
Required:
Analyze the case using GVV.
What are the main arguments Revilo (and the audit team) are trying to counter? What the reasons and rationalizations Revilo needs to address?
What is at stake for the key parties?
What levers can Revilo use to influence Regas and Giles?
What levers can Revilo use to influence Regas and Giles?
What is the most powerful and persuasive response to the reasons and rationalizations Revilo needs to address? To whom and when?
(37) The philosophical methods of moral reasoning suggest that once we have ascertained the facts, we should ask ourselves certain questions when trying to resolve a moral issue. Which of the following is NOT one of those questions?
(36) Which of the following is NOT one of the levers Larry Davis might use to convince Paul Jones about the rightness of his point of view in the Ace Manufacturing case discussed in the chapter?
(33) According to Kidder, which of the following is least likely to be a step or checkpoint in ethical decision-making guidelines?
(26) Cognitive dissonance creates a problem that can be described as:
(36) In the "Heinz and the Drug" case described in the chapter, if Heinz was reasoning at stage 5 he might decide to steal the drug based on which of the following reasoning?
(34) The results of studies indicate that CPAs reason primarily at:
(38) 
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