AF1100 – Financial Institutions
Tutorial Questions – Week 10
Duska et AL’s Accounting Ethics – Discussion Questions 1-5 chapter 1 – page 29
Question 1
Throughout this chapter of the book, there are various mentions to numbers from the accounting system and uses made of those, but we can summarise the key ideas as follows:
- Accounting information is prepared for the company’s shareholders who use that information to make investment decisions (whether to buy, sell or keep shares in the company)
- All other users (employees, customers, competitors, lenders, etc.) have access to the published information and they then use it to make their own decisions, as well
- As such, reliability of all stakeholders on the quality of the accounting information is high and that puts the onus on the accountants to produce quality and timely information
Question 2
If you look at page 19 of the book, there is a list of different roles that are fulfilled by accountants, and each of them requires different skills, use of personal judgement and use of appropriate techniques and principles.
As such, there is not a single body of knowledge all accountants need to possess, but rather a common knowledge base which then needs to be developed/augmented by each individual accountant, which is tailored to the role they are taking on. Thus the concept of art and craft, as each role will be different.
Question 3
Accountants perform their duties in the public’s best interest. As such, any information that is relevant for the public to understand the true performance of a company needs to be disclosed and it is the obligation of the accountant to do so.
See section on Ethics of Disclosure in the book.
Question 4
See book section on Roles an Accountant can Fulfil, which includes a good identification of the different roles of the accountant and the potential ethical issues they might face.
Question 5
The main aim of the preparation of accounts is to present a true picture of the company’s performance, so the development of accounting standards is driven by that objective. In order to do so, standards try to ensure there is a consistent approach in the accounting of similar transactions by all companies, while at the same time ensuring there are rules that apply to all transactions a company can face.
See also discussion on the Development of Explicit Accounting Standards and Regulations on this chapter of the book for further details.
Duska et AL’s Accounting Ethics – Discussion Questions 1-6 chapter 2 – page 52
Question 1
See the sections on “Actions” and “Social Practices, Institutions and Systems” on this chapter of the book, for a good explanation of these concepts and the differences between them.
Question 2
Very complete answer and discussion, listing the five reasons for studying ethics in the section of the chapter titles “Why Study Ethics”.
Question 3
Ethical analysis, as the name indicates, is about understanding whether a professional’s actions can be classified as ethical or not. Being ethical can have different meanings, but the assessment of whether an action is ethical or not needs to be done in light of the six principles recognised in the AICPA code of ethics, as listed and discussed on page 42 of this chapter of the book.
Question 4
This is more of five reasons rather than four, and they covered in significant details in the five sections of the chapter starting with Questions to Ask to Justify and Action: the Basis of Ethical Theory.
The five subsequent questions, heading each section are the key questions one needs to ask when deciding whether an action is ethical or not and making sure the correct answer is given to each of them constitutes the reasons to evaluate the ethics of the action.
Question 5
An ethical dilemma exists when there is a conflict between the reasons listed in the previous question. For example, if an action is in the best interest of the accountant but it goes against a commitment previously made, the accountant is facing a conflict of interest.
Question 6
Any example from your own experience (doesn’t need to be accounting related, as we as individuals frequently face ethical dilemmas as well) or that you might have heard of is acceptable.
