What is meant by the term fiduciary relationship

Assignment Help Business Law and Ethics

Reference no: EM131881625

Questions

1. Answer the seven questions in the opening section of this chapter.

2. What is meant by the term "fiduciary relationship"?

3. Why are most of the ethical decisions that accountants face complex rather than straightforward?

4. When should an accountant place his or her duty to the public ahead of his or her duty to a client or employer?

5. Which would you choose as the key idea for ethical behavior in the accounting profession: "Protect the public interest" or "Protect the credibility of the profession"? Why?

6. Why is maintaining the confidentiality of client or employer matters essential to the effectiveness of the audit or accountant relationship?

7. What is the difference between exercising "due care" and "exercising professional skepticism"?

8. Why did the SEC ban certain nonaudit services from being offered to SEC registrant audit clients even though it has been possible to effectively manage such conflict of interest situations?

9. Where on the Kohlberg framework would you place your own usual motivation for making decisions?

10. Why do more professional accountants not report ethical wrongdoing? Consider their awareness and understanding of ethical issues as well as their motivation and courage for doing so.

11. Which type of conflict of interest should be of greater concern to a professional accountant actual or apparent?

12. An auditor naturally wishes his or her activity to be as profitable as possible, but when, if ever, should the drive for profit be tempered?

13. If the provision of management advisory services can create conflicts of interest, why are audit firms still offering them?

14. If you were an auditor, would you buy a new car at a dealership you audited for 17% off list price?

15. If you were a management accountant, would you buy a product from a supplier for personal use at 25% off list?

16. If you were a professional accountant and you discovered your superior was inflating his or her expense reports, what would you do?

17. Can a professional accountant serve two clients whose interests conflict? Explain.

18. If an auditor's fee is paid from the client company, is there not a conflict of interests that may lead to a lack of objectivity? Why doesn't it?

19. Why does the IFAC Code consider the appearance of a conflict of interests to be as important as a real but nonapparent influence that might sway the independence of mind of a professional accountant?

20. What is the most important contribution of a professional or corporate code of conduct?

21. Are one or more of the fundamental principles found in codes of conduct more important than the rest? Why?

22. Was the "expectations gap" that triggered the Treadway and Macdonald commis-sions the fault of the users of financial statements, the management who prepared them, the auditors, or the standard setters who decided what the disclosure stan-dards should be?

23. Why should codes focus on principles rather than specific detailed rules?

24. Is having an ethical culture important to having an effective system of internal con¬trol? Why or why not?

25. What should an auditor do if he or she believes that the ethical culture of a client is unsatisfactory?

26. Are the governing partners of accounting firms subject to a "due diligence" require¬ment similar to that for corporation executives in building an ethical culture? Can a firm and/or its governors be sanctioned for the misdeeds of its members?

27. An engineer employed by a large multidisciplinary accounting firm has spotted a condition in a client's plant that is seriously jeopardizing the safety of the client's workers. The engineer believes that the professional engineering code requires that this condition be reported to the authorities, but professional accounting codes do not. How should the head of the firm resolve this issue?

28. Transfer pricing can be used to shift profits to jurisdictions with low or no tax to reduce the taxes payable for multinational companies. If such profit shifting is legal, is it ethical? Was Apple well advised to shift $30 billion in profits to its Irish subsidi¬ary, where it paid no corporate income taxes on those profits? Why or why not?

29. Many professional accountants know of questionable transactions but fail to speak out against them. Can this lack of moral courage be corrected? How?

30. Why do codes of conduct or existing jurisprudence not provide sufficient guidance for accountants in ethical matters?

Reference no: EM131881625

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