Ethics Case Dilemma
ETHICS CASE
Dilemma of an Accountant
In 1976 Senator Lee Metcalf (D-Mont.) released a report on the public accounting industry which rocked the profession. Despite a decade of revisions in rules and regulations (variously established by the
Securities and Exchange Commission, Accounting
Principles Board, and Financial Accounting Standards
Board), public accounting firms were still perceived by many on Capitol Hill as biased in favor of their clients, incapable of or unwilling to police themselves, and at times participants in coverups of client affairs. Senator Metcalf even went so far as to suggest nationalizing the industry in light of these activities. Just prior to the Metcalf report, Daniel Potter began working as a staff accountant for Baker
Greenleaf, one of the Big Eight accounting firms. In preparation for his CPA examination, Dan had rigorously studied the code of ethics of the American
Institute of Certified Public Accountants (AICPA) and had thoroughly familiarized himself with his profession’s guidelines for morality. He was aware of ethical situations which might pose practical problems, such as maintaining independence from the client or bearing the responsibility for reporting a client’s unlawful or unreasonably misleading activities, and he knew the channels through which a CPA was expected to resolve unethical business policies.
Dan had taken the guidelines very seriously; they were not only an integral part of the auditing exam, they also expressed to him the fundamental dignity every independent auditor was obligated to maintain and calling of the profession—namely, to help sustain the system of checks and balances on which capitalism has been based. Daniel Potter firmly believed that every independent auditor was obligated to maintain professional integrity, if what he believed to be the best economic system in the world was to survive. Thus, when Senator Metcalf’s report was released, Dan was very
Dilemma of an Accountant
In 1976 Senator Lee Metcalf (D-Mont.) released a report on the public accounting industry which rocked the profession. Despite a decade of revisions in rules and regulations (variously established by the
Securities and Exchange Commission, Accounting
Principles Board, and Financial Accounting Standards
Board), public accounting firms were still perceived by many on Capitol Hill as biased in favor of their clients, incapable of or unwilling to police themselves, and at times participants in coverups of client affairs. Senator Metcalf even went so far as to suggest nationalizing the industry in light of these activities. Just prior to the Metcalf report, Daniel Potter began working as a staff accountant for Baker
Greenleaf, one of the Big Eight accounting firms. In preparation for his CPA examination, Dan had rigorously studied the code of ethics of the American
Institute of Certified Public Accountants (AICPA) and had thoroughly familiarized himself with his profession’s guidelines for morality. He was aware of ethical situations which might pose practical problems, such as maintaining independence from the client or bearing the responsibility for reporting a client’s unlawful or unreasonably misleading activities, and he knew the channels through which a CPA was expected to resolve unethical business policies.
Dan had taken the guidelines very seriously; they were not only an integral part of the auditing exam, they also expressed to him the fundamental dignity every independent auditor was obligated to maintain and calling of the profession—namely, to help sustain the system of checks and balances on which capitalism has been based. Daniel Potter firmly believed that every independent auditor was obligated to maintain professional integrity, if what he believed to be the best economic system in the world was to survive. Thus, when Senator Metcalf’s report was released, Dan was very