Reference no: EM13584180
1. Identify the ethical and legal issues of which Gerard needs to be aware.
2. Discuss the advantages and disadvantages of each decision Gerard has made and could make.
3. Discuss the issue of accounting firms going into the financial services market.
4. Discuss the types of groups that are influencing Gerard.
Story:
Gerard had been with Trawlers Accounting, a medium sized firm, for several years. Gerard has received a promotion and now headed a department. Some interesting changes were occurring in the accounting industry. For example,Gerard's superior had decided that all CPAs would take exams to become registered investment advisors. The rationale for such a new development was simple. The firm could use its relationships with clients to increase investment revenues. Because of the long term nature of these relationships with many firms and individuals as well as the implicit sense of honesty that CPAs must bring to their jobs, clients understood that a violation of so high trust was unlikely-- or so Gerard's boss argued. Many of the people in Gerard's department didn't like this new policy; however, some who had passed the exams had increased their pay by 15 percent. During lunch, one of Gerard's financial friends engaged him heatedly.
"what are you doing, Gerard, is called unfair competition," the friend accused him. "Your CPAs have exclusive access to confidential client taxpayer information, which could give you insight into people's finanacial needs. Besides, you could easily direct clients to mutual funds that you already own in order to keep your own personal investments afloat. Also, if your people start chasing commissions and fees on mutual funds that go bad, your credibility will become suspect, and no one will trust you again. Plus, your people will now have to keep abrest of finanacial, tax, and accounting changes."
When Gerard got to his office, he found that some of his people had been recommending a group of mutual funds that Trawlers has been auditing. Then someone from another of his company's accounting clients, CENA Mutual Funds, telephoned.
"What's the idea of having your people suggest PPI Mutual Funds when they are in direct competition with us?" The caller yelled. "We pay you a lot to do our accounting procedures, and that's how you reward us? I want to know by the end of the day if you are going to continue to push our competitor's product. I dont have to tell you that this will directly affect your department and you. Also, things like this get around the business circles, if you know what I mean."