Ethics in Accounting: A Decision-Making Approach

Chapter 6Greed, Corruption, and Collusion

AM I ETHICAL?

During a recent event at a local country club, you looked forward to playing a round of golf with the CFO of your CPA firm's largest tax client. Prior to the event, the CFO insisted that you two bet $500 on who would win your golf match. The CFO is a terrible golfer, and he was well aware that you were on your college's varsity golf team.

Your firm provides tax compliance services for this client, but does not provide audit or other attest services. This client currently is being investigated by the IRS for improperly sheltering offshore income from taxation. As your firm's top international tax specialist, it is highly likely that you will assist in representing this client in an upcoming meeting with an IRS Revenue Agent.

Is it ethical for you to bet the CFO on your golf match?

1. Yes, but you should inform your supervisor about this bet
2. Yes, as long as gambling of this nature is legal in your state
3. Yes, because your firm does not perform attest services for this client
4. No, because this disguised gift may tend to compromise your objectivity

The SOLUTION is revealed at the end of the chapter.

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

1. Understand the psychology of greed.
2. Identify the elements of bribery and understand the various legal prohibitions against it.
3. Distinguish between kickbacks, referral fees, commissions, contingency fees, and impermissible gifts and entertainment.
4. Understand ...