The first half of the course compares accounting students' and professionals' perceptions of the ethics of earnings management from before and after the accounting scandals that led to passage of the Sarbanes-Oxley Act of 2002 (SOX).
The results suggest that professionals and students in the era following the passage of SOX find earnings management more questionable and less ethical than their pre-SOX counterparts. Overall, the high-profile accounting scandals appear to have had a bigger effect than SOX on the perceived ethics of earnings management.
The second half of the course features a case that won the 2010 Carl Menconi Case Writing Competition. This competition recognizes a business ethics case with specific application to management accounting and finance issues and that uses the IMA Statement of Ethical Professional Practice as a reference or guidance tool. The problem presented in this case involves the economic, legal, and moral issues surrounding a lumber company and whether it should continue to release creosote and PCP chemicals into a neighboring river.
After completing this course, you will be able to:
1. Summarize the findings of the major pre-SOX surveys, including those conducted by Merchant and Bruns, as well as Merchant and Rockness.
2. Identify the factors suggested by Merchant and Bruns as those affecting judgments about the acceptability of earnings management practices.
3. Summarize the central hypotheses of the Grasso, Tilley, and White post-SOX survey.
4. Compare and contrast some of the key differences between the responses of professional and student respondents to the pre- and post-SOX surveys.
5. Point out the behaviors that are considered most unethical by professionals and students in pre- and post-SOX surveys.
6. Explain Ben Watson's estimate of the costs, time frame, and economic effects of refitting the Lorman Lumber plant.
7. Identify the individuals who expressed support of Ben Watson's proposal.
8. Provide a definition of the IMA Statement of Ethical Professional Practice