W2-T2

Week 2

Discussion # 1

Based your past or current leadership experience and/or your potential future experience as a leader, how have or could a code of ethics be used in professional and/or personal decision making? If you have a mentor or coach, then ask this person about experience with codes of ethics. If you do not have a mentor or coach, then ask someone who you would like to be a mentor or coach in your life. Share the insights that you gain from this person.

Comment # 1 to AA

A code of ethics is a document that contains a set of recommendations that serve to guide the behavior of managers and employees in a company on multiple issues with one another, with the company, and with other external parties (Valentine, Hanson, & Fleischman, 2019). A large number of companies have established a code of ethics for their members to follow, however, some smaller ones might not have developed a code of ethics due to a lack of means to create and enforce it. Codes of ethics can also be established by other authoritative bodies. For example, the AICPA has established its own code of ethics, the AICPA Code of Professional Conduct, “to provide guidance and rules to all members in the performance of their professional responsibilities” (AICPA, 2014, p.1).

It is express that a code of ethics has an important role in influencing decision making (Lere & Gaumnitz, 2003). However, for a code of ethics to have an effect on the decisions of an individual, it must influence the individual’s beliefs enough to make him or her choose the ethical action (Lere & Gaumnitz, 2003). Code of ethics can be used in professional and personal decision making to determine what behaviors are considered acceptable or unacceptable in the workplace or in society in general. People often have a general idea of what is considered wrong or right in society, however, when it comes to their professional life, they might encounter situations where it is not clear what course of action is considered ethical. Codes of ethics can be useful in a professional setting to clarify what action or conduct in expected when faced with certain issues or decisions that are specific to the field.

Smaller businesses might forgo adopting a code of ethics due to the lack of resources to develop and implement such code. Other companies might have an established code of ethics but are not doing a good job enforcing it. For a code of ethics to influence decisions, it must be known by the members of the company. Familiarization with the code of ethics and enforcement of the rules and principles provided in it is essential for it to successfully influence decisions. It is also important that the rules and principles provided by the code of ethics are not vague as these would make it more difficult for decision-makers to determine if a position taken classifies as unethical or ethical when compared to the provisions of the code (Lere & Gaumnitz, 2003).

Comment # 2

I have experience in making an ethical decision as a leader of my division during my time with one of the banks in Russia. I have worked for 9 years in the branch of Sberbank of Russia, the largest bank in the Russian Federation. Because the banks operate and manage different types of finances, it is important to maintain morale and ethical principles in the working environment.

First of all, to be attractive to customers, the bank employees have to provide services with fairness and transparency which is crucial for the bank's reputation and future relationships with customers. Banks are always monitoring how employees follow ethical principles. Dealing with money is not an easy job sometimes. Even if you are not working with cash, you can be easily compromised by the customer who would like to apply for a loan.     

By this time, I was working as a loan originator, underwriter, and loan expert in one. We have not divided responsibility in a loan department for a while like it was in western banks. It was not a violation of requirements, it was written duties and responsibilities in Russian banks which I liked because you could control everything without asking someone else. If one person was able to handle a few positions, it was never considered as a possibility for fraud because we have many audits, external and internal, plus other government agencies had the authority to check off the bank.

Because I was an employee who has been interviewing customers, collecting all required papers, checking customer background, credit history, and later preparing conclusion to the Loan Committee for the decision, many customers thought I can influence the Loan Committee decision. One day, early morning, one of the customers came to my apartment with the bribe. Honestly, I felt I have been disrespected at that moment and politely asked a person to leave, otherwise, I will report it to my management. The same day our staff had a brief meeting regarding this incident. We discussed that each of us has the responsibility for maintaining ethical principles not only internally but also externally to protect our and bank reputation.

Individual ethics refers to joining the normal rules of morality. In the case where a person has a moral deficit means that it put personal interests before collective legal rules and moral standards before ordinary business which may affect the business climate. Individual ethics is the cornerstone of the group or collective ethics (Fetiniuc & Luchian, 2014, para. 42).

Discussion # 2

Post a summary in your own words including complete reference information for one of the current peer-reviewed primary publications that relates to your selected current accounting problem. Also attach a copy of the publication. Include a comment as to how the publication relates to your selected current accounting problem. No later than midnight Sunday, post value-adding comments to at least two of your colleagues' and/or your professor's postings. 

Peer-reviewed secondary publications are a great way to explore other peoples' interpretations, summaries and opinions about the primary publications. Primary publications are to be used for your research report. You are to interpret, summarize plus provide your analysis, conclusions and recommendations yourself. The primary publications are those issued by organizations such as the FASB, IASB, GASB, IRS, SEC plus research reports by various organizations such as the Big 4 CPA firms, ACFE, AICPA, and  Associations related to your specific topic.

Peer-reviewed secondary publications are publications that summarize and/or interpret and/or comment on the peer-reviewed primary publications. 

Comment # 1

A primary publication related to the effects of the provisions of the Tax Cuts and Jobs Act on individuals and businesses is The Budget and Economic Outlook: 2020-2030 prepared by the Congressional Budget Office (CBO). This document presents the projections for federal debt, revenues, and spending for a period of 10 years. The document also presents the current and expected effects of tax provisions such as the Tax Cuts and Jobs Act on the economy. In this document, it is express that gross domestic product is expected to rise in the next years due to the expiration of provisions of the TCJA.

The expiration of these tax provisions will result in an increase in individual income tax receipts. Many tax provisions that reduced the tax burden of individuals are set to expire and tax rates will increase. Increases in estate and gift tax receipts are also projected as a result of changes in the TCJA provisions that doubled the estate and gift tax exemption (CBO, 2020). Overall, the expiration of the TCJA provisions is expected to generate an increase in individual tax receipts of 0.8% relative to GDP (CBO, 2020, p.24).

The expiration of the TCJA will also result in an increase in corporate tax receipts. It is expressed that the change in provisions that will most significantly increase corporate tax receipts is the 100 percent bonus depreciation deduction in equipment investments which is set to phase out in the next couple of years (CBO, 2020). The report also addresses the effects of TCJA on consumer spending. It is expressed that the TCJA supported spending growth due to the reduction in individual income taxes which increased spendable income (CBO, 2020). However, it is expected for this boost in spending to slow down as the provisions of the TCJA expire and its effect diminishes (CBO, 2020).

Comment # 2

    One of the peer-reviewed primary publications that directly relates to my selected accounting problem is PCAOB AS 2405: Illegal acts by clients (attached). The purpose of this standard is to provide information about auditors’ responsibilities if possible illegal acts were detected during the audit. Even if illegal acts relates more to an entity’s operation aspects than to its financial and accounting aspects, investor, shareholders, and other parties might be affected if an entity will not comply with laws and regulations.

     For auditors, the responsibility to detect misstatement caused by illegal acts is equal to those if detecting misstatement caused by fraud or error. PCAOB does not have audit procedures specifically designed for detecting illegal acts as well as clarification what acts can be considered illegal. However, auditors’ responsible for the response to possible illegal acts with consideration of the effect on the financial statements.

     Disclosure of illegal acts to parties other than the client’s authorities are not required to avoid the violation of the auditor’s ethical and legal obligations of confidentiality. Disclosure of illegal acts are required to a government agency, SEC, and in response to a subpoena in particular circumstances.

     Because there is little information and no clarifications of auditor's responsibility in association with illegal acts, some research regarding the possible improvement of the existing standard in the discussion by regulators and researchers.

     Below is a list of references associated with my research topic:

Allen, C., C.P.A., & Snyder, Lisa, C.P.A., C.G.M.A. (2017). AICPA proposal raises the ethical bar: Incorporating international standards into the code of professional

     conduct: Certified public accountant. The CPA Journal, 4-12. https://search.proquest.com/docview/1897267956?accountid=35796

Highlights from Baruch college's 2017 auditing conference: Certified public accountant. (2018). The CPA Journal, 88(2), 16-

     19. https://search.proquest.com/docview/2185592547?accountid=35796

IESBA. (2020). Responding to noncompliance with laws and regulations. Projects. IESBA. https://www.ethicsboard.org/projects/responding-non-compliance-laws-and-

     regulations

Pany, K., & Zhang, J. (2013). Reporting illegal acts externally: Certified public accountant. The CPA Journal, 83(3), 64-

     67.  https://search.proquest.com/docview/1319818134?accountid=35796