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Consider the following scenario, based on Cynthia Cooper's recollections of the events that brought down the telecommunications giant WorldCom. Cooper was an internal auditor at WorldCom and...

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Consider the following scenario, based on Cynthia Cooper's recollections of the events that
ought down the telecommunications giant WorldCom. Cooper was an internal auditor at WorldCom and eventually uncovered the fraud that would shut the company down. As she explained, it started with the Financial Controller's alarm at unexpectedly high line rental costs that would significantly decrease expected earnings. "Line rental costs" represent the money that WorldCom pays to use the telephony infrastructure (poles, wires, maintenance etc.) that are owned by other companies. The stakes appear high: unexpectedly high costs would mean that earnings are lower than expected. This would damage WorldCom's share price and increase the cost of future capital raising.
In the following passage, WorldCom's Chief Financial Officer (CFO) Scott Sullivan discusses the problem with the Financial Controller David Myers before enlisting vulnerable accountants into a fraudulent scheme that would eventually bankrupt the company:
The pressure is intense and building every hour. What are we going to do, David asks Scott. Scott is at a dangerous crossroads. He rationalizes that the cost of telling the truth is too high. In any case, there must be an e
or, he thinks, and it'll surely co
ect itself the following quarter. Change the numbers, he instructs David. Reduce line-cost expense so that the company can meet earnings guidance. "While [Scott] didn't believe that this was the right and appropriate thing to do," David later recalled, he said "this is what we needed to do at the time." Scott's instructions are stressful for David. But David has always felt loyal to his boss, so he, too, rationalizes. This will be temporary. There must be an e
or. Scott is sure of it. Either way, WorldCom is just going through a tough time. The industry will soon turn around. To change the financial statements, David will have to pull several of his mid-level accountants into the plan. David and Scott are at high enough levels in the company that they don't actually make accounting entries in the system. The trusted inner circle will have to grow.
David decides to relay Scott's message to his right-hand lieutenant, an accounting director named Buford (Buddy) Yates. David trusts Buddy. They've been friends for many years, having worked together at Lamar Life. Buddy joined WorldCom in 1997. With a stocky build and grey hair, some say he can be like a bulldog-he isn't afraid to speak his mind and doesn't mince words, turning gruff at times. This time is no exception. Buddy can't believe what he's hearing. Is Scott really serious? Very much so, David tells him. David then turns to Betty Vinson and Troy Normand, two mid-level accountants who report to Buddy and play a key role in compiling the financial results. They'll be able to analyze the details, help decide which specific accounts to adjust, and physically make changes in WorldCom's accounting system.
Like Buddy, Troy and Betty are extremely uncomfortable with Scott's request. This is beyond tweaking—to meet earnings expectations, they'd have to make adjustments in the hundreds of millions of dollars with no support and only the hope that the problem would co
ect itself. They're feeling upset and pressured, but there's little time to think things through—the company has to release its earnings to the public. All three are their families' primary
eadwinners. Not following orders could mean losing jobs that aren't easily replaceable in Jackson, Mississippi. Begrudgingly, they decide to go along with the plan—this once (Cooper 2010, pp. 5–6).
We are left to surmise how differently the future might have been for WorldCom and those mentioned in this
ief passage (all of the people mentioned served jail time) if only a more rigorous ethical environment had existed. At a time when professional people needed guidance, either none was at hand, or (perhaps the most surprising) they didn't know where to look. We now know that at that time, WorldCom had no formal ethics program—in fact one such program was dismissed as a waste of time (Schwartz XXXXXXXXXXWhen it mattered, the absence of such a program seriously limited the options available to those professionals.
However, professionals are not bereft of guidance. Accountants and others usually join professional associations. Accountants might join the American Accounting Association (AAA), the American Institute of Certified Practicing Accountants (AICPA), or—here in Australia—CPA Australia or Chartered Accountants Australia & New Zealand. Members of these associations are committed to comply with their association's own code of ethics. The code of ethics that binds the members of CPA Australia and Chartered Accountants Australia & New Zealand (APES 110) can be located in your learning resources.
We can only speculate how differently things might have been for these actors in the WorldCom tragedy, and for WorldCom itself, if its culture supported ethical thinking and ethical decision-making. In a more supported ethical culture, those accountants, at the very least, would never have allowed themselves to be pressured into actions they suspected were unethical and illegal.
References
Cooper, C 2010, Extraordinary Circumstances Kindle edition, John Wiley & Sons, Hoboken, NJ, from www.amazon.com/Extraordinary-Circumstances-Journey-Corporate-Whistleblower-ebook/dp/B00DBPKQBO
ef=sr11?s=digital-text&ie=UTF8&qid= XXXXXXXXXX&sr=1-1&keywords=cynthia+coope
.
Schwartz, MS 2004, ‘Effective Corporate Codes of Ethics: Perceptions of Code Users’, Journal of Business Ethics, vol. 55, no. 4, pp. 321–341.
Requirements
You are to submit an individual report containing three parts, but with a common title page, executive summary, introduction, conclusion and reference list.
This is not really an assignment about WorldCom: it is about where guidance can be found when confronted with a potential unethical (even illegal) outcome. In this assignment you will be evaluating philosophies/theories, the AAA model and APES 110 to determine how they can guide or inform an ethical outcome.
Part A (8 marks, 500 words)
Consider the motivations and actions of David and Buddy in the case study above. From the theories (philosophies) of ethics discussed in Modules 1 & 2, select one for each of David and Buddy.
1. Clearly identify which theory you are using for each, and provide a
ief description of the theory.
1. Explain the actions of David and Buddy in terms of your selected theory.
1. Explain why this theory was a good choice for explaining this situation. What was the theory good at describing, and what was not good at describing.
Part B (8 marks, 1,000 words)
Assume the role of Buddy. Before you agree to do what David wants, you reach into your top drawer and pull out the seven step AAA Ethical Decision-making Model. Use the model to decide what your decision should be.
To answer this part, use the seven steps as sub-headings and set out your response to each step. Some steps will require more research than others.
At the end, clearly state what your decision is, and make sure it is a logical conclusion from your seven steps.
Part C (8 marks, 1,000 words)
Assume that David is a member of CPA Australia and that he has asked you to advise him on the application of APES 110 to this situation. As a senior professional accountant, David has a responsibility to ensure that he and the accountants that work for him provide ethical advice and services.
As an expert on APES 110, advise David on the requirements of APES 110. Given the scenario that has been described above, assume that David has not yet pressured Buddy to act unethically. What are the fundamental principles that David and his staff must uphold? What threats does David face and what safeguards could he put in place to mitigate threats to the fundamental principles?
You are required to submit:
Your report should be in the following format:
1. Title Page
1. Executive Summary
1. Introduction
1. Report (24 marks, 2,500 words), comprising:
2. Part A (8 marks, 500 words)
2. Part B (8 marks, 1,000 words)
2. Part C (8 marks, 1,000 words)
1. Conclusion
1. Reference list (APA style)
Your report will be assessed on:
1. Quality of your report (out of 24 marks)
1. Quality of your English expression (out of 3 marks)
1. Quality of your report's readability (out of 3 marks)
This provides a total of 30 marks for your report.
Ru
ic
    Key Criteria
    Exceeds expactations (HD) 85–100%
    Exceeds expectations (D) 75–84%
    Meets expectations (C) 65–74%
    Meets minimum expectations (P) 50–64%
    Below expectations (F) < 50%
    Organisation/structure(3 marks)
    The ideas are a
anged in an extremely logical, structured and coherent manner. The introduction and conclusion clearly set out what is covered in the report.
    The ideas are a
anged in a fairly logical, structured and coherent manner. The introduction and conclusion indicate what is covered in the report but not in a clear and succinct manner.
    The ideas are a
anged in a logical, some-what structured and coherent manner. The introduction and conclusion give a basic overview of what is in the report.
    The report follows a basic structure, but the reader has to work hard to understand it.
    There is little, if any, coherent structure to the document.
    Content knowledge & literature review (24 marks)
    Demonstrates a balanced and very high level of detailed knowledge of core concepts by providing a very high level of analysis. Utilises cu
ent, appropriate and credible sources.
    Demonstrates a balanced and high level of knowledge of core concepts by providing a high level of analysis. Utilises mostly cu
ent, appropriate and credible sources.
    Demonstrates a good level of knowledge of some of the core concepts by providing some level of analysis. Utilises some cu
ent, appropriate and credible sources.
    Demonstrates limited knowledge of core concepts by providing a limited level of analysis. Utilises few cu
ent, appropriate and credible sources.
    Demonstrates little, if any, knowledge of the core concepts with extremely limited, if any, analysis. Utilises little, if any, cu
ent, appropriate and credible sources.
    Quality of writing & presentation (3 marks)
    Quality of writing at a very high standard. Paragraphs are coherently connected to each other. Co
ect grammar, spelling and punctuation.
    Quality of writing is of a high standard. Paragraphs are mostly well structured. Few grammar, spelling and punctuation mistakes.
    Quality of writing is of a good standard. Few grammar, spelling and punctuation mistakes.
    Some problems with sentence structure and presentation Frequent grammar, punctuation and spelling mistakes. Use of inappropriate language.
    Quality of writing is at a very poor standard so barely understandable. Many spelling mistakes. Little or no evidence of proof reading.
Answered Same Day Aug 15, 2020 ACCT20080 Central Queensland University

Solution

Shanaaya answered on Aug 24 2020
127 Votes
Ethical Issues
    2018
    
[Ethical Issues]
Student Name
Student ID
University Name
Executive Summary
This report focuses on the ‘Moral & Ethical issues’ related to the employees. This document highlights the needs of the ethical strategy, trends along with it applying from the framework of the AAA interpretation to analyze the capabilities which can help in ethical working of the Organization (Belal, 2016). The main idea of the document is to concentrate and analyze the strategy and the trends related to the organization and the ethical consideration of the employees, due to which it has kept the competition at bay along with keeping the customers engrossed.  This document serves the purpose and focuses on the various stakeholders associated with the organization and the employees.
Introduction
David Myers being one of the oldest accounts financial controllers of the company. He is faithful, ethical and courageous insider. According to David AAA model is more suitable. This model focuses on ethical elements which impact business decisions, its outcome directly affects to the key shareholders and the various stakeholders in different ways which needs to be determined with respect to the different ethical values. The ethical issue here is that he should accept to make fraudulent changes or not. If he accepts to make changes in accounts, he would be not be acting ethically and would also be neglecting his duties. He would be deceiving the public by making fraudulent accounts. His ethics are on stake. If he agrees to make fraudulent changes he would be counted in partners in crime.
                    Report                    
Part A
1. Explain the actions of David and Buddy in terms of your selected theory.
As per the codes of the American Accounting Association (AAA) model one needs to comply with the ethical issues take into account (Ho, 2015),
- It starts through the decision making process which needs to be evaluated with respect to the value to be under consideration.
- Secondly, the main focus remains in determining the core ethical values which needs to be attributed with respect to the stake.
- Thirdly, it needs to evaluate the norms or the principles or ethics that can
ing out the social, ethical consideration with respect to the professional behavioral effect (Bloom,2013).
- Fourthly, even the core implications of the professional codes of standard ethics and matching with respect to the social expectations in terms of any profession can be related with the values and responsibilities.
- Fifthly, to ensure we have set outcome should be evaluated form the lens of the norms, principles or attaining the core values that can highlight the outcome.
- Sixthly, one should consider a normal outcome in order to match with the final decision to attain a full knowledge or a full recognition.
- It is established that in the AAA model one can determine the auditor which can also progress to uncovers with respect to the i
egular cash payment along with receiving the unsatisfactory explanation to determine the client’s finance director. This can work out with a ethical consideration (Caratti, 2018).
2.     Explain why this theory was a good choice for explaining this situation. What was the theory good at describing, and what was not good at describing.
According to AAA model David accepts decision of his boss i
espective of ethics due to his faithful nature and also he make final decision with full knowledge of outcome (Martinov-Bennie, 2015).
For Buddy we adopt APES 110 theory.
APES 110 Code of Ethics for Professional Accountants, adopted by CPA Australia and Chartered Accountants Australia & New Zealand, Whosoever is a member should require to needs to adhere with respect to the principles such as the: (a) Essence of Integrity (b) Attainment of the Objectivity (c) Determining the core Professional competence along with the proper care (d) Level of Confidentiality (e) Determining the Professional behavior (Eldenburg, 2016).
So as per this theory Buddy is required to follow these principles
Also, while following these principles, Buddy may have to face few threats like Self Interest Threat or the consideration of the Self Review Threat along with the balance of the Advocacy Threat. The other threat such as the Familiarity Threat and intimidation threat needs to be also included.
In regards to such threats, few safeguards are also provided to him. Safeguards are the actions that may not completely eliminate the threat but would definitely reduce threat to a limit
Over here in this case AAA model would be good to be suggested as this theory warns you more about ethics, norms and principles which need to be followed by any organization, so that they work in a clean environment. The main purpose is to have a normal outcome to balance with the final outcome in order to attain a full knowledge and recognition (Gaudine, 2016).
Part B
THE AMERICAN ACCOUNTING ASSOCIATION (AAA) MODEL
According to The American Accounting Association (AAA) model for making ethical decision the American Accounting Association (AAA), the American Institute of Certified Practicing Accountants (AICPA), needs to adhere to the seven steps to take an ethical decision (Hoque, 2018).
This model focuses on ethical elements which impact business decisions, its outcome directly affects to key holders, with relation to the ethical values. As per the codes of the American Accounting Association (AAA) model one needs to comply with the ethical issues take into account
 1. The facts of the case are developed –You should firstly make yourself more clear and understandable while you take the decision that is there must not be any ambiguity or confusion on the factors which are taken into...
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