Ethical Theories
This ethical theory seeks the greatest good for the greatest number.
What is utilitarianism?
This healthcare company’s CEO, Richard Scrushy, was charged with inflating earnings by $2.7 billion to meet Wall Street expectations.
What is HealthSouth?
Breaking the law is always unethical. True or false?
What is false?
This leader was convicted of wire fraud for misrepresenting his music festival to investors and ticket holders.
Who is Billy McFarland?
An employee is told to change numbers on a financial report so the company appears more profitable than it really is.
What is fraudulent financial reporting?
This ethical theory uses results or outcomes to evaluate the morality of an action.
What is consequentialism?
This once-revered energy company collapsed after using mark-to-market accounting and shell companies to hide debt and inflate earnings.
What is Enron?
This law requires companies to implement internal controls over financial reporting.
What is the Sarbanes-Oxley Act?
This leader was charged with 36 of the original 85 counts against him. He was found not guilty, and was acquitted of all charges in 2005.
Who is Richard Scrushy?
During a golf outing, a CFO casually mentions to a friend that the company is about to announce mass layoffs. The friend sells their stock the next day.
What is insider trading?
This ethical theory is based on developing moral character, positive habits, and striving to be a good person rather than just doing good acts.
What is virtue ethics?
Marketed as a high-end island music festival, this 2017 event turned into a disaster, exposing massive fraud by its founder, Billy McFarland.
What is the Fyre Festival?
This legal concept refers to a severe failure to perform one’s professional duties, even without intent to deceive.
What is gross negligence?
This leader was found guilty on all counts of securities and wire fraud. However, because they passed away before the sentencing, the convictions against them were vacated and legally erased.
Who is Kenneth Lay?
A junior accountant notices the same vendor has been paid twice for the same invoice, and suspects someone is routing the money to themselves.
What is embezzlement?
A manager decides to give all employees the same year-end bonus regardless of performance.
What is justice ethics?
This former Wall Street financier orchestrated the largest Ponzi scheme in history, defrauding investors out of billions over decades.
Who is Bernie Madoff?
Under Rule 10b-5 of the Securities Exchange Act, this mental state must be proven for auditors to be held liable for securities fraud.
What is scienter?
This leader and CFO was one of the key figures in organizing the complex web of off-balance-sheet special purpose entities used to conceal Enron’s massive losses in quarterly financial statements.
Who is Andy Fastow?
An accountant finds out the company is hiding millions in debt before a merger. Reporting it could cost him his job.
What is whistleblowing?
A whistleblower exposes unsafe working conditions because employees have a right to safety, even though it harms the company’s reputation.
What is the rights approach?
This telecommunications company falsely boosted profits by capitalizing line costs, leading to an $11 billion accounting scandal and massive bankruptcy.
What is WorldCom?
This legal concept holds auditors liable for failing to detect fraud, even without intent or knowledge, because their conduct reflected an extreme departure from professional standards.
What is constructive fraud?
This leader is quoted saying this about the California energy crisis: “What’s the difference between California and the Titanic? At least when the Titanic went down the lights were on.”
Who is Jeffrey Skilling?
A company delays recording expenses until the next quarter to make this quarter’s profits look better to investors.
What is earnings management?