Exam 6: Ethical Issues in Finance and Accounting

Conflicts of interest are outlined in a number of articles in the chapter. Name and explain two sources of the conflicts of interest in the accounting firm-client relationship.

In John R. Boatright's "Ethical Issues in Financial Services" churning is defined as: excessive or inappropriate trading for a client's account by a broker who has control over the account with the intent to generate commissions rather than to benefit the client.

Colin Boyd explains that the homogeneity of services and relative homogeneity of accounting standards across nations were largely what made possible the wave of mergers that resulted in what is known today as the "Big Five" accounting firms.

Duska and Duska in "Ethics in Auditing: The Auditing Function" defend the rather demanding position that, based upon Kant's universalizability principle, auditors must avoid even the perception of conflict of interest. Begin by providing the best possible explanation/defense of their arguments leading to this conclusion, including an explanation of the universalizability principle and how it supports their conclusions. Then explain whether you believe that the authors' reasoning supports the conclusion they argue for.

Ronald F. Duska and Brenda Shay Duska in "Ethics in Auditing: The Auditing Function" argue that auditors have equally powerful and often conflicting duties to both the public and the clients they are hired to audit.

According to Colin Boyd in "The Structural Origins of Conflicts of Interest in the Accounting Profession" the primary result of the Enron scandal was:

"Opinion shopping", according to Colin Boyd, is a thing of the past since the passage of the Sarbanes Oxley Act.

Boyd, in "The Structural Origins of Conflicts of Interest in the Accounting Profession", highlighted "horizontal integration" of accounting firms. Explain what this means.

As outlined by John Boatright, explain the practice of "churning" a client's account.

Richard Nielson defines leverage as which of the following