Ethical Obligations

Business

Quiz 6 :
Legal, Regulatory, and Professional Obligations of Auditors

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Quiz 6 :
Legal, Regulatory, and Professional Obligations of Auditors

1. The US businesses should not considered it just to pay off to Nigerian officials as a cost of doing the business because FCPA declares it to be crime to provide or offer made to the foreign officials to continue their business or to retain their business. The statute applies to public as well as private US corporations. For the violation of FCPA, federal law imposes strict punishment and heavy fines. Moreover, this will lower down the reputation of the company as well as the members of the company. 2. 'Ethics must be global, not local'. Ethics are those values which governs the behavior or activity of the person. Ethics are the standards laid down to judge between right and wrong. Ethics should be universally followed specially in today's era where it is all about globalization. Due to globalization, every country is connected with another country due to trade and commerce. Therefore, it is very essential to abide by the ethical values. Otherwise, it would be difficult to perform the trade activities between the countries. Hence, it is also essential that ethics must be followed globally and not only in between the nation. 3. Bribery is really bad for the business in the long run. It might be possible at the early stage that bribery cannot be find out at an earlier stage but later on somehow, it cannot be concealed from the management of the business as in one way or other it will be uncovered. Ethics are those moral values which conducts the human behavior. Most of the businesses are involved in the bribery which is unethical in the world of business. It is necessary to follow ethics in the business otherwise; it will not only damage the reputation of the business but will totally destroy the company. Those companies involved in the charges of corruption have to pay a very high price as is evident from the various past case laws on such companies.

Common law liability is based on liability decided by judged cases. For accountants and auditors, they may come under common law liability of negligence if they fail to maintain professional standard in their work and cause losses to their client. Statutory liability is based on law. These are legislative requirements to hold certain people responsible for actions. For example, the Sox created the PCAOB which oversees accountant's work and can prosecute them for violations.

1. Utilitarian theory deals with the maximization of good and the theory of utilitarian analysis of harm states that issue is that what should be done about who produces significant harm and policies should be made to reduces that significant harm. In this case, FCPA distinguishes between so called facilitating payments and more serious activities. Such distinction and related penalties would make sense from the ethical perspective as these distinctions were made to reduce the overall harm caused and also deals with the person who creates such harm. Therefore, their penalty should be according to the nature of crime which perfectly fits the utilitarianism theory of harm. 2. The purpose of the accounting provision is to keep check on the records of company financial position. The checking of the records will help to prevent fraud, forgery or any kind of embezzlement with the funds of the company. The checking is necessary to prevent the company from engaging in illicit work or trade. It is necessary for the company to fulfill all the provision of FCPA and does not violate the law. Therefore, it is necessary for a company to maintain its business and records according to the FCPA and SEC laws. If C knew about the accounting of FCPA payments in the books and records of the company then auditors would be guilty of fraud. Fraud is a deception to secure unfair and unlawful gain. Therefore, in this case also, the auditors would be liable for the deception in order to secure unlawful gains. 3. It is highly unethical for companies to deduct payments from their income tax under facilitating payments provided by FCPA. This practice discourages investment as there were irregular payments and it promotes unfair competition as for the smaller business that has less financial opportunities to pay the amount to foreign officials. Therefore, it is highly unethical. However, outright bribery payments are totally prohibited by law. Outright bribery payments were made for the purpose of retaining in business or obtaining some favor in the business. FCPA prohibits such payments which are made with the purpose to influence the foreign officials. The law is silent about the tax deductibility in each instance.