ethic essay 3

In the text, we point out that Rest’s model is not linear in nature. An individual who demonstrates adequacy in one component may not necessarily be adequate in another, and moral failure can occur when there is a deficiency in any one component. Give an example in accounting when ethical intent may not be sufficient to produce ethical behavior and explain why that is the case.
An example from accounting might be the public accounting firms’ conflict of responsibilities to the public and to the client organizations. The audit fees are paid by the client organization rather than the general public. (There is an old German proverb which says “Whose bread I eat, his song I sing.”) The general public including investors and creditors are the direct beneficiary of independent auditing services. The public interest often conflicts with the client interests over disclosures, transparency, and valuations in the balance sheet and income statement. It has often seemed as if the client interests (being the ones who paid the fees) won the conflict in the corporate accounting scandals of the early 2000s and the subprime mortgage bubble of the 2007-2008 financial crises.
The ethical domain for accountants and auditors involves (1) the client organization that hires and pays for accounting services; (2) the accounting firm; (3) accounting profession; and (4) the general public. In the Enron case, Enron was paying more consulting fees to Andersen than audit fees. As one of the largest clients of Andersen’s Houston office, if not entire firm, Enron expected Andersen to do the audit quickly and with minimal disruptions so that the consulting could continue to expand the business model, revenues and net income. Andersen wanted to continue as the largest accounting firm; this would only happen if the firm kept the high fees from Enron. The accounting profession, at the time, wanted more consulting engagements and was looking to rebrand the CPA as a “cognitor,” a certified consultant. The public wanted Enron to continue to grow so that the stock prices would remain high. The conflicting interests all seemed to be suggesting that Enron should continue to grow and all would be happy. The biggest conflict was if Andersen should have been concerned about upholding the accounting profession’s requirement to follow

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